Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> with the changes taking effect after the close of trading on 30 June.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>, <a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">KCE Electronics PCL (KCE TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a> have been added to the index, replacing <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a>, <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a>, <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>.</p><p><a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> are deletes on liquidity. We had <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> just about passing the liquidity test, while the SET sees it as failing the test.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a> was included in the index at the same review and has lost 11.4% since then.</p><p>One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.</p><p>With <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> shareholders meeting for their EGM on 25 June, the tender offer for <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> should be approved. <a href="https://www.smartkarma.com/entities/banpu-public-co-ltd" target="_blank" data-smartkarma-citation="entities:15363:1" rel="noopener">Banpu Public (BANPU TB)</a> is the frontrunner to join the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> once the <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> tender offer is complete and the free float drops below 20%.</p>

Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) with the changes taking effect after the close of trading on 30 June.IRPC PCL (IRPC TB), KCE Electronics PCL (KCE TB), Sri Trang Agro Industry (STA TB) and Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) have been added to the index, replacing Asset World Corporation (AWC TB), Bangkok Commercial Asset Management (BAM TB), TOA Paint (Thailand) (TOA TB) and VGI PCL (VGI TB).Asset World Corporation (AWC TB) and TOA Paint (Thailand) (TOA TB) are deletes on liquidity. We had Asset World Corporation (AWC TB) just about passing the liquidity test, while the SET sees it as failing the test.IRPC PCL (IRPC TB) was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while Bangkok Commercial Asset Management (BAM TB) was included in the index at the same review and has lost 11.4% since then.One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.With Gulf Energy Development Public Company (GULF TB) shareholders meeting for their EGM on 25 June, the tender offer for Intouch Holdings (INTUCH TB) should be approved. Banpu Public (BANPU TB) is the frontrunner to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) once the Intouch Holdings (INTUCH TB) tender offer is complete and the free float drops below 20%.

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

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

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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>DOHOME share price surged 90%YTD to trade at 55x trailing PE (+2S.D.) or 37xPE’21E as we believe it has already priced in near-term positive factors, and thus we maintain a HOLD rating with a target price of Bt26.5, based on 35xPE’22E, which is close to major listed home-improvement players in Thailand.</strong></p><div>• We foresee DOHOME’s SSSG at +22%YoY in 2Q21, (SSSG at +60% in April and roughly +25%YoY in May) supported by 1.) proactive management strategy to promote sales on E-commerce platform and deploy direct sales team, and, 2.) solid demand for construction materials especially in steel products  (construction materials contributed 44% of total sales).</div><div></div><div>• We still like DOHOME for its 1) its store locations that aim to tap high spending customers, 2) store network expansion plan with +25%CAGR in the next two years, and, 3) an ample room to improve its margin.</div>

DOHOME share price surged 90%YTD to trade at 55x trailing PE (+2S.D.) or 37xPE’21E as we believe it has already priced in near-term positive factors, and thus we maintain a HOLD rating with a target price of Bt26.5, based on 35xPE’22E, which is close to major listed home-improvement players in Thailand.• We foresee DOHOME’s SSSG at +22%YoY in 2Q21, (SSSG at +60% in April and roughly +25%YoY in May) supported by 1.) proactive management strategy to promote sales on E-commerce platform and deploy direct sales team, and, 2.) solid demand for construction materials especially in steel products  (construction materials contributed 44% of total sales).• We still like DOHOME for its 1) its store locations that aim to tap high spending customers, 2) store network expansion plan with +25%CAGR in the next two years, and, 3) an ample room to improve its margin.

<p><strong>We maintain HOLD rating with a new target price of Bt20.4 (Previous TP: Bt16.2), based on 35xPE’21E, which is close to major listed home-improvement players in Thailand. Our new target factors in upward earnings revision in 2021E, solid SSSG and outperforming earnings growth outlook relative to peers.</strong></p><p>• DOHOME plans to expand five large-size stores per year in 2022-2025, or 22%CAGR from 16 stores in 2021. At the same time, it expects these stores to be more cost-efficient thanks to lower CAPEX and operating cost per store, as it will be built on leased land instead of purchased land. The expansion plan should support revenue growth of 12% CAGR (2022-2025E).</p><div>• We revised up our net profit forecast by 23% in 2021E to factor in strong SSSG than our previous expectation.</div><div></div><div>• We still like DOHOME for its 1) store locations that aim to tap high spending customers; 2) store network expansion plan with +25%CAGR in the next five years; and 3) there is ample room to improve its margin.</div>

We maintain HOLD rating with a new target price of Bt20.4 (Previous TP: Bt16.2), based on 35xPE’21E, which is close to major listed home-improvement players in Thailand. Our new target factors in upward earnings revision in 2021E, solid SSSG and outperforming earnings growth outlook relative to peers.• DOHOME plans to expand five large-size stores per year in 2022-2025, or 22%CAGR from 16 stores in 2021. At the same time, it expects these stores to be more cost-efficient thanks to lower CAPEX and operating cost per store, as it will be built on leased land instead of purchased land. The expansion plan should support revenue growth of 12% CAGR (2022-2025E).• We revised up our net profit forecast by 23% in 2021E to factor in strong SSSG than our previous expectation.• We still like DOHOME for its 1) store locations that aim to tap high spending customers; 2) store network expansion plan with +25%CAGR in the next five years; and 3) there is ample room to improve its margin.

<p>DOHOME’s 4Q20 net profit was at Bt215m (+41%YoY, +15%QoQ), the highest level in the past seven quarters. The company reports 2020 net profit of Bt727m (flat YoY), which is higher than our expectation and the street.</p><div>• A YoY surge in 4Q20 earnings was mainly driven by solid sales growth of 12% to Bt4.8bn. The company’s SSSG grew by 4%YoY.</div><div></div><div>• We expect 1Q21 earnings performance to grow both YoY and QoQ driven by solid SSSG at 20%YTD from continuing demand recovery in construction materials.</div><div></div><div>• We still like DOHOME for its 1) its store locations that aim to tap high spending customers; 2) store network expansion plan with +25%CAGR in the next two years; and 3) the ample room to improve its margin.</div><div></div><p>DOHOME share price surged 26%YTD as we believe it has already priced in near-term positive factors while current price is trading at expensive zone at 56x trailing PE (+2S.D.) or 35xPE’21E and 31xPE’22E. Thus, we maintain HOLD rating with a higher target price of Bt16.2 (Previous TP of Bt14.2), which is derived from 33xPE’21E, which is close to the biggest home-improvement player in Thailand.</p>

DOHOME’s 4Q20 net profit was at Bt215m (+41%YoY, +15%QoQ), the highest level in the past seven quarters. The company reports 2020 net profit of Bt727m (flat YoY), which is higher than our expectation and the street.• A YoY surge in 4Q20 earnings was mainly driven by solid sales growth of 12% to Bt4.8bn. The company’s SSSG grew by 4%YoY.• We expect 1Q21 earnings performance to grow both YoY and QoQ driven by solid SSSG at 20%YTD from continuing demand recovery in construction materials.• We still like DOHOME for its 1) its store locations that aim to tap high spending customers; 2) store network expansion plan with +25%CAGR in the next two years; and 3) the ample room to improve its margin.DOHOME share price surged 26%YTD as we believe it has already priced in near-term positive factors while current price is trading at expensive zone at 56x trailing PE (+2S.D.) or 35xPE’21E and 31xPE’22E. Thus, we maintain HOLD rating with a higher target price of Bt16.2 (Previous TP of Bt14.2), which is derived from 33xPE’21E, which is close to the biggest home-improvement player in Thailand.

<p><strong>We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading range since its IPO in 2019 and at a 40% discount to the Asia ex-japan Consumer Discretionary Sector.</strong></p>
<p><strong>The story:</strong></p>
<ul>
<li>Enjoys strong market position in Thailand</li>
<li>Margin expansion in the next two years</li>
<li>Younique brand will drive S-curve growth</li>
<li>Online platform has good growth potential</li>
</ul>
<div>
<br>
</div>
<p><strong>Risks:</strong></p>
<ul>
<li>Highly competitive industry</li>
<li>Foreign exchange rate fluctuation</li>
</ul>
<p><strong>Background:</strong> Index Living Mall Public Company Limited (ILM) engages in the retail and wholesale of furniture, electronic and home decorative products in Thailand with 31 stand-alone stores nationwide. The company operates in four segments: furniture retail, furniture manufacturing, area rentals, and others. The company is also involved in the import, export and distribution of furniture and home appliances; and building and warehouse rental activities, as well as in the franchise business. In addition, it operates rental and retail space services in Index Living Malls and community malls under The Walk, Little Walk, and Index Mall brands. </p>

We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading range since its IPO in 2019 and at a 40% discount to the Asia ex-japan Consumer Discretionary Sector.
The story:

Enjoys strong market position in Thailand
Margin expansion in the next two years
Younique brand will drive S-curve growth
Online platform has good growth potential


 

Risks:

Highly competitive industry
Foreign exchange rate fluctuation

Background: Index Living Mall Public Company Limited (ILM) engages in the retail and wholesale of furniture, electronic and home decorative products in Thailand with 31 stand-alone stores nationwide. The company operates in four segments: furniture retail, furniture manufacturing, area rentals, and others. The company is also involved in the import, export and distribution of furniture and home appliances; and building and warehouse rental activities, as well as in the franchise business. In addition, it operates rental and retail space services in Index Living Malls and community malls under The Walk, Little Walk, and Index Mall brands. 

ILM: King of Home Furnishing Retailers in Thailand

Thailand

Com7 Public Company Limited operates a chain of retail outlets that imports, retails, and distributes computers and IT-related products in Thailand. The Company offers products, such as smartphones, tablets, notebooks, and computer sets. Com7 also offers computer components, such as CPUs, hard drives, and network and accessories.

PTG Energy PCL provides ready-made gasoline at retail stations. The Company operates gasoline tank farms and gasoline retail stations throughout Thailand.

Singer Thailand Public Company Limited assembles and distributes Singer brand household appliances such as sewing machines, refrigerators, televisions, washing machines, stereos, VCRs and gas stoves.  The Company has its own retail network and offers installment financing to its customers.

Jubilee Enterprise PCL operates as a diamond jewelry retailer. The Company's products consist of rings, necklaces, bracelets, etc.

Big Camera Corporation Public Company Limited, together with its subsidiaries, distributes cameras and photography-related products primarily in Thailand. The company offers digital cameras, VDO camcorders, lenses, flashes, binoculars, memory cards, filters, camera bags, tripods, batteries, printers, and other camera related products. It also distributes mobile phones and related products; and provides photographic processing and photographic equipment repair services, etc. The company is based in Bangkok, Thailand.

Big Camera Corporation Public Company (BIG TB)

Beauty Community PCL engages in cosmetic and beauty products retail business including make-up, Skin care and accessories.

IT City Public Company Limited is a retailer of computers, computer peripherals and accessories, and office equipment.  The Company also provides computer repair and maintenance services.

Saha Pathanapibul Public Company Limited distributes consumer products including toiletries, instant noodles, detergents, canned foods, snacks and candies. The Company markets more than 100 brands of products such as Mama instantnoodles, Pao detergents, and Kodomo baby powder and lotion.

Saha Pathanapibul Public Company Limited (SPC TB)

SPVI Public Company Limited distributes electronic products.The Company offers computers, laptops, mobile phones, tablets, software applications, hardware, printing solutions, and accessories.

I.C.C. International Public Company Limited imports and distributes a variety of products including cosmetics, clothing for men, women and children, sporting goods, footwear, food, beverages, as well as sewing machines, computers, fax machines, electric appliances, and medical equipment.

KOMERI CO., LTD. operates a home center chain based in Niigata Prefecture. The Company sells DIY (do-it-yourself) products, building materials, tools, hardware, household utensils, gardening materials, car care goods, and leisure goods.  Komeri also operates business in China.

PAL GROUP Holdings Co., Ltd. operates a chain of casual clothing stores based in Kansai area. The Company manufactures and retails men's and women's casual wear and accessories.  The Company also sells its products on the Internet.

Shoe Carnival, Inc., a retailer of family footwear, operates primarily in the Midwest, South, and Southeastern regions of the United States. The Company seeks to create a carnival-like atmosphere in each of its stores by decorating with bright lights, colors, and neon signs.

Chico's FAS, Inc. sells private label women's casual clothing and related accessories.  The Company's clothing includes tops, pants, shorts, skirts, and dresses.  Chico's owns and operates stores throughout the United States.

Sally Beauty Holdings, Inc. distributes and retails beauty products.  The Company distributes products directly to salons, and retails beauty products through a chain of cash and carry stores.

Franchise Group, Inc. is an owner and operator of franchised and franchisable businesses. The Company's business lines include pet supplies plus, american freight, the vitamin shoppe, badcock home furniture, buddy's home furnishings, and sylvan learning. Franchise Group serves customers in the United States and Canada.

T-GAIA CORPORATION sells cell-phone units and service contracts in Japan. The Company also offers high-speed internet connection service through sales agencies.

Nojima Corporation operates consumer electronic store chains that specialize in computers and communication products.  The Company also sells entertainment related items such as game software and CDs, and household appliances. The Company operates  and franchises stores in Kanagawa Prefecture.

NEXTAGE Co., Ltd. operates a used automobile business. Its main line of business is retail of used domestic cars but it also sells imported cars and SUV/vans. In addition, the company also operates an automobile maintenace business.

Adastria Co., Ltd. operates a chain of clothing stores in Japan. The Company also operates stores in China, Taiwan, Hong Kong and Korea.

Dohome Public Company Limited operates as a furnishing store. The Company retails hardware, tools, agricultural machinery, furniture, hvac equipment, and other related products. Dohome serves customers in Thailand.

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Dohome PCL (DOHOME TB)

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

There are 4 changes to the SET50 index with IRPC, KCE, STA & STGT replacing AWC, BAM, TOA & VGI. BANPU could be included in the next couple of...

Brian Freitas

DOHOME: Trading on High Valuation Zone

DOHOME share price surged 90%YTD to trade at 55x trailing PE (+2S.D.) or 37xPE’21E as we believe it has already priced in near-term positive...

Pi Securities PCL, Thailand

DOHOME: Solid Growth Outpacing Peers

We maintain HOLD rating with a new target price of Bt20.4 (Previous TP: Bt16.2), based on 35xPE’21E, which is close to major listed home...

Pi Securities PCL, Thailand

DOHOME: Trading on High Valuation Zone

DOHOME’s 4Q20 net profit was at Bt215m (+41%YoY, +15%QoQ), the highest level in the past seven quarters. The company reports 2020 net profit of...

Pi Securities PCL, Thailand

ILM: King of Home Furnishing Retailers in Thailand

We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading...

Pi Securities PCL, Thailand

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