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

<p><strong>We upgrade our recommendation to BUY rating, from HOLD, with 2022E target price of Bt4.36, derived from 38.6x PE, which is its 3-year trading average.</strong></p><div>• The windfall from Covid in 2Q21 will be even stronger in 3Q21E, given the escalation of Covid outbreak. Although, there was a pay cut for Covid diagnostic from government welfare segment, the volume should  increase, and it could negotiate the cost down. In addition, it expanded service capacity for Covid patients.</div><div></div><div>• It expected to receive 200,000 quotas for alternative vaccine, from Moderna.</div><div></div><div>• Recently, CHG received 3 heart center management contracts, total of Bt1.1bn. This would be about Bt110m additional revenue each quarter.</div><div></div><div>• The new two expansion projects is still ongoing.</div><div>
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</div><p><strong>The covid new normal should lift group long-term performance even after the current outbreak peak, given the expectation that Covid will be endemic, just like flu but need more intense care.</strong></p>

We upgrade our recommendation to BUY rating, from HOLD, with 2022E target price of Bt4.36, derived from 38.6x PE, which is its 3-year trading average.• The windfall from Covid in 2Q21 will be even stronger in 3Q21E, given the escalation of Covid outbreak. Although, there was a pay cut for Covid diagnostic from government welfare segment, the volume should  increase, and it could negotiate the cost down. In addition, it expanded service capacity for Covid patients.• It expected to receive 200,000 quotas for alternative vaccine, from Moderna.• Recently, CHG received 3 heart center management contracts, total of Bt1.1bn. This would be about Bt110m additional revenue each quarter.• The new two expansion projects is still ongoing.
 
The covid new normal should lift group long-term performance even after the current outbreak peak, given the expectation that Covid will be endemic, just like flu but need more intense care.

<p><strong>We maintain HOLD rating with 2022E target price of Bt4.36, +28% from Bt3.40 previously, derived from 38.6x PE, which is its 3-year trading average.</strong></p><div>• CHG net profit in 2Q21 was Bt576m (+272%YoY, +128% QoQ).</div><div></div><div>• The result was 61% better than consensus forecast.</div><div></div><div>• Solid performance was supported by an increase in OPD and social welfare programs revenue.</div><div></div><div>• CHG announced interim dividend payment of Bt0.03/share, which is equivalent to 0.7% upcoming dividend yield. XD on 23-Aug-21.</div><div></div><div>• 2021-23F earnings revised up by 75%, 30% and 30%, respectively.</div><div></div><div><strong>We like CHG because of its locations at Eastern region, which is the strongest economic area in Thailand. However, we think the benefit from Covid is not long term, thus we maintain our HOLD recommendation.</strong></div>

We maintain HOLD rating with 2022E target price of Bt4.36, +28% from Bt3.40 previously, derived from 38.6x PE, which is its 3-year trading average.• CHG net profit in 2Q21 was Bt576m (+272%YoY, +128% QoQ).• The result was 61% better than consensus forecast.• Solid performance was supported by an increase in OPD and social welfare programs revenue.• CHG announced interim dividend payment of Bt0.03/share, which is equivalent to 0.7% upcoming dividend yield. XD on 23-Aug-21.• 2021-23F earnings revised up by 75%, 30% and 30%, respectively.We like CHG because of its locations at Eastern region, which is the strongest economic area in Thailand. However, we think the benefit from Covid is not long term, thus we maintain our HOLD recommendation.

CHG: Covid Windfall Boosted 2Q21 Performance

<p><strong>We maintain HOLD rating with 2022E target price of Bt3.40, derived from 38.6x PE, which is its 3-year trading average. We attended analyst conference yesterday and came up with key information as followed;</strong></p><div>• CHG net profit in 1Q21 was Bt252m (+35%YoY, flat QoQ). The Covid related revenue and new source of income from public hospital management helped supporting 1Q21 performance, despite the IPD patients traffic declined.</div><div></div><div>• The drivers in 1Q21 should continuously support CHG performance in 2Q21.</div><div></div><div>• The company planned to provide vaccination services. We expect it to be available in 4Q21.</div><div></div><div>• Two expansion projects is ongoing and will commence in 2022.</div><p></p><p><strong>We like CHG because of its locations at Eastern region, which is the strongest economic area in Thailand. However, recent increase in stock price seem to price in the Covid windfall, which we think it is not long term, thus we toned down our call to HOLD.</strong></p>

We maintain HOLD rating with 2022E target price of Bt3.40, derived from 38.6x PE, which is its 3-year trading average. We attended analyst conference yesterday and came up with key information as followed;• CHG net profit in 1Q21 was Bt252m (+35%YoY, flat QoQ). The Covid related revenue and new source of income from public hospital management helped supporting 1Q21 performance, despite the IPD patients traffic declined.• The drivers in 1Q21 should continuously support CHG performance in 2Q21.• The company planned to provide vaccination services. We expect it to be available in 4Q21.• Two expansion projects is ongoing and will commence in 2022.We like CHG because of its locations at Eastern region, which is the strongest economic area in Thailand. However, recent increase in stock price seem to price in the Covid windfall, which we think it is not long term, thus we toned down our call to HOLD.

CHG: Its Resiliency During Covid Seems to Price In

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p>On 6 May 2021, Bloomberg reported that <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a>, the largest shareholder with a 32.90% stake, is currently exploring a proposal to privatise <a href="https://www.smartkarma.com/entities/ihh-healthcare-bhd" target="_blank" data-smartkarma-citation="entities:876:1" rel="noopener">IHH Healthcare (IHH MK)</a>. Mitsui is aiming to partner with private equity firms and has reached out to Khazanah Nasional Berhad, the second-largest shareholder with a 26.02% stake, to acquire its stake, according to Bloomberg. Mitsui and IHH have not formally commented on the report. On the back of the report, the shares have risen 8.8% from the unaffected price of RM5.20 (5 May) to the last close price of RM5.66. </p><p>IHH is listed on the Main Markets of Bursa Malaysia and the Singapore Stock Exchange. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. Mitsui sits just below the threshold and the acquisition of further shares from Khazanah Nasional Berhad would trigger an MGO. </p><div class="content-highlight"><p>We think that report has some credibility due to Mitsui’s view that IHH is a core asset to fulfil its ambition of expanding in the largest healthcare ecosystem in Asia. Also, Mitsui has a previous working relationship with Khazanah Nasional Berhad and announced the acquisition of a 16% stake in IHH from Khazanah Nasional Berhad in November 2018. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal). </p></div>

On 6 May 2021, Bloomberg reported that Mitsui &amp; Co Ltd (8031 JP), the largest shareholder with a 32.90% stake, is currently exploring a proposal to privatise IHH Healthcare (IHH MK). Mitsui is aiming to partner with private equity firms and has reached out to Khazanah Nasional Berhad, the second-largest shareholder with a 26.02% stake, to acquire its stake, according to Bloomberg. Mitsui and IHH have not formally commented on the report. On the back of the report, the shares have risen 8.8% from the unaffected price of RM5.20 (5 May) to the last close price of RM5.66. IHH is listed on the Main Markets of Bursa Malaysia and the Singapore Stock Exchange. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. Mitsui sits just below the threshold and the acquisition of further shares from Khazanah Nasional Berhad would trigger an MGO. We think that report has some credibility due to Mitsui’s view that IHH is a core asset to fulfil its ambition of expanding in the largest healthcare ecosystem in Asia. Also, Mitsui has a previous working relationship with Khazanah Nasional Berhad and announced the acquisition of a 16% stake in IHH from Khazanah Nasional Berhad in November 2018. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (announcement of a formal proposal). 

IHH Healthcare’s Possible Privatisation by Mitsui

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<p>We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p>

We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

Thailand

Chularat Hospital PCL owns medical centers and hospitals. The Company operates a variety of centers specializing in treatments such as hand surgery, open heart surgery, and strokes as well as providing emergency services and patient care. Chularat Hospital serves the medial industry throughout Thailand.

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Chularat Hospital (CHG TB)

CHG: Even Stronger in 3Q21E

We upgrade our recommendation to BUY rating, from HOLD, with 2022E target price of Bt4.36, derived from 38.6x PE, which is its 3-year trading average.

Pi Securities PCL, Thailand

CHG: Covid Windfall Boosted 2Q21 Performance

We maintain HOLD rating with 2022E target price of Bt4.36, +28% from Bt3.40 previously, derived from 38.6x PE, which is its 3-year trading average.

Pi Securities PCL, Thailand

CHG: Its Resiliency During Covid Seems to Price In

We maintain HOLD rating with 2022E target price of Bt3.40, derived from 38.6x PE, which is its 3-year trading average. We attended analyst...

Pi Securities PCL, Thailand

IHH Healthcare’s Possible Privatisation by Mitsui

Mitsui, the largest shareholder, is currently exploring a proposal to privatise IHH. Overall, at the last close price, the downside risk is low...

Arun George

The Stocks to Own in ASEAN – Vol. 34

Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or...

A. Stotz Investment Research

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