Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

Central Retail Corp Ltd / Equity Bottom-Up

<ul>
<li>Maintain HOLD recommendation with a target price of Bt43 due to limited upside to our target price.CRC’s 3Q22 net profit came in at Bt1.2bn (turnaround from a loss of Bt2.2bn,-21%QoQ)</li>
<li>3Q22 profit thanks to strong recover in fashion business   Excluding extraordinary items, core profit was at Bt1.29bn (turnaround from a loss of Bt2.1bn,-30%QoQ). The 9M22 result accounted for 70%</li>
<li>Food business (39% sales contribution), Food revenue was at Bt21bn (+26%YoY, +3%QoQ), following strong SSSG in Thailand (+3%YoY) and Vietnam (+54%YoY), supported by a recovery in customer traffic in stores </li>
</ul>


Maintain HOLD recommendation with a target price of Bt43 due to limited upside to our target price.CRC’s 3Q22 net profit came in at Bt1.2bn (turnaround from a loss of Bt2.2bn,-21%QoQ)
3Q22 profit thanks to strong recover in fashion business   Excluding extraordinary items, core profit was at Bt1.29bn (turnaround from a loss of Bt2.1bn,-30%QoQ). The 9M22 result accounted for 70%
Food business (39% sales contribution), Food revenue was at Bt21bn (+26%YoY, +3%QoQ), following strong SSSG in Thailand (+3%YoY) and Vietnam (+54%YoY), supported by a recovery in customer traffic in stores 


<ul>
<li>Downgrade recommendation for CRC to HOLD from BUY with a target price of Bt43. Our downgrade reflects 1)challenging performance outlook for operation in Italy due to a rise of inflation </li>
<li>Expect 3Q22 earnings to recover to profit Revenue in 3Q22 is expected to report at Bt53bn(+38%YoY,+1%QoQ)driven by an expected positive SSSG in all segments comprise of Food segment at +21%YoY</li>
<li>Gross profit margin in 3Q22 should expand YoY and QoQ to 27.5% backed by heathier margin from sales at 25.6% from 23.1% in 3Q21 and 25.5% in 2Q22</li>
</ul>


Downgrade recommendation for CRC to HOLD from BUY with a target price of Bt43. Our downgrade reflects 1)challenging performance outlook for operation in Italy due to a rise of inflation 
Expect 3Q22 earnings to recover to profit Revenue in 3Q22 is expected to report at Bt53bn(+38%YoY,+1%QoQ)driven by an expected positive SSSG in all segments comprise of Food segment at +21%YoY
Gross profit margin in 3Q22 should expand YoY and QoQ to 27.5% backed by heathier margin from sales at 25.6% from 23.1% in 3Q21 and 25.5% in 2Q22


CRC : Solid Earnings Recovery, but It Has Mostly in the Price

Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>Global fund managers still suggest increasing holdings of safe-haven assets, such as cash, or investing in sectors with recurring income, notably utilities and health care stocks, while they are bearish on risk assets and global growth in the next 12 months.</li><li>Investors also repriced their expectations regarding the terminal fed funds rate in 1Q23 by 50 bps higher.</li><li>However, we expect the Thai market to see a limited impact from the bearishness thanks to the good earnings recovery momentum, in contrast to global economies, as well as the boost from the huge growth in the number of tourist arrivals from 400k in 2021 to an expected 21mn in 2023E.</li></ul>

Global fund managers still suggest increasing holdings of safe-haven assets, such as cash, or investing in sectors with recurring income, notably utilities and health care stocks, while they are bearish on risk assets and global growth in the next 12 months.Investors also repriced their expectations regarding the terminal fed funds rate in 1Q23 by 50 bps higher.However, we expect the Thai market to see a limited impact from the bearishness thanks to the good earnings recovery momentum, in contrast to global economies, as well as the boost from the huge growth in the number of tourist arrivals from 400k in 2021 to an expected 21mn in 2023E.

<ul><li>The Global Fund Manager Survey in October reconfirms a bear market atmosphere due to concerns over a global economic slowdown, which is prompting investors to overweight cash and underweight equities.</li><li>While the Thai market has not escaped being impacted by the bearishness as evidenced from the net selling by foreign investors and the weaker baht amid the stronger USD, we still hold a positive view thanks to the outlook for a more outstanding recovery in Thailand than other countries, based on the upward revision to the World Bank’s 2022E GDP projection from +2.9% to +3.1% YoY.</li><li>We maintain our recommendation for stocks under the reopening theme that should benefit from the peak seasons for spending and tourism. </li></ul>

The Global Fund Manager Survey in October reconfirms a bear market atmosphere due to concerns over a global economic slowdown, which is prompting investors to overweight cash and underweight equities.While the Thai market has not escaped being impacted by the bearishness as evidenced from the net selling by foreign investors and the weaker baht amid the stronger USD, we still hold a positive view thanks to the outlook for a more outstanding recovery in Thailand than other countries, based on the upward revision to the World Bank’s 2022E GDP projection from +2.9% to +3.1% YoY.We maintain our recommendation for stocks under the reopening theme that should benefit from the peak seasons for spending and tourism. 

Special Report: Global Fund Manager Survey

<ul>
<li>Maintain BUY recommendation for CRC with a target price of Bt43. CRC’s 2Q22 net profit came in at Bt1.49bn (recovering from a loss YoY, +24%QoQ).</li>
<li>Impressive recovery in profit in 2Q22   CRC’s 2Q22 net profit came in at Bt1.49bn (recovering from a loss of Bt471m YoY, +24%QoQ).1H22 result accounted for 49% of our 2022E.</li>
<li>The YoY recovery in earnings driven by a recovery in customer traffic in three countries (Thailand, Vietnam, and Italy) and an increase in rental &amp; service income as a result</li>
</ul>


Maintain BUY recommendation for CRC with a target price of Bt43. CRC’s 2Q22 net profit came in at Bt1.49bn (recovering from a loss YoY, +24%QoQ).
Impressive recovery in profit in 2Q22   CRC’s 2Q22 net profit came in at Bt1.49bn (recovering from a loss of Bt471m YoY, +24%QoQ).1H22 result accounted for 49% of our 2022E.
The YoY recovery in earnings driven by a recovery in customer traffic in three countries (Thailand, Vietnam, and Italy) and an increase in rental &amp; service income as a result


Thailand

Central Retail Corp Ltd operates general merchandise stores. The Company offers electronics, sports, stationery, home improvement, and office products. Central Retail serves customers in Thailand.

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Central Retail Corp Ltd (CRC TB)

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CRC : Solid Earnings Recovery, but It Has Mostly in the Price

Downgrade recommendation for CRC to HOLD from BUY with a target price of Bt43. Our downgrade reflects 1) challenging performance outlook for...

Pi Securities PCL, Thailand

Fund Manager Survey - No Cuts, No Glory

Global fund managers still suggest increasing holdings of safe-haven assets, such as cash, or investing in sectors with recurring income, notably...

Krungthai XSpring

Special Report: Global Fund Manager Survey

We maintain our recommendation for stocks under the reopening theme that should benefit from the peak seasons for spending and tourism

Krungthai XSpring

CRC : 2Q22 Performance Turned to Profit

Maintain BUY recommendation for CRC with a target price of Bt43. CRC’s 2Q22 net profit came in at Bt1.49bn(recovering from a loss...

Pi Securities PCL, Thailand

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