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

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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>Yesterday analyst meeting come out in a positive tone. The 1.0GWh ESS plant is scheduled to commence operation in 3Q21. The company also plan to deliver 100 E-Buses and set 28 E ferry ready for operation in 2H21.</strong></p><div>• Expect 3Q21 net profit to improve YoY and QoQ backed by 1) first time revenue recognition of EV business (100 E bus delivery scheduled for 2H21), and 2) solid biodiesel business performance.</div><div></div><div>• Positive 2021-25E outlook as we expect a 15% CAGR net profit growth on the back of incrementing contribution from new EV-ESS businesses (commencing on 3Q-4Q21), viz., EV car/bus/truck sales, and ESS (battery) supply to B2B clients.</div><div></div><div><strong>We upgrade our recommendation to BUY and revise up the SOTP based target price by 43% of Bt70.0, factoring in the 15% CAGR net profit growth in 2021-25, and incrementing future growth following Global EV trend. Our valuation implies 34x PE,22E.</strong></div>

Yesterday analyst meeting come out in a positive tone. The 1.0GWh ESS plant is scheduled to commence operation in 3Q21. The company also plan to deliver 100 E-Buses and set 28 E ferry ready for operation in 2H21.• Expect 3Q21 net profit to improve YoY and QoQ backed by 1) first time revenue recognition of EV business (100 E bus delivery scheduled for 2H21), and 2) solid biodiesel business performance.• Positive 2021-25E outlook as we expect a 15% CAGR net profit growth on the back of incrementing contribution from new EV-ESS businesses (commencing on 3Q-4Q21), viz., EV car/bus/truck sales, and ESS (battery) supply to B2B clients.We upgrade our recommendation to BUY and revise up the SOTP based target price by 43% of Bt70.0, factoring in the 15% CAGR net profit growth in 2021-25, and incrementing future growth following Global EV trend. Our valuation implies 34x PE,22E.

EA: EV-ESS Business to Kick Start in 3Q21

<p><strong>Yesterday analyst meeting came out in a negative tone. We maintain the SELL rating, over the concerns that delay of EV-ESS business commencement could pressure the stock performance. Our target price of Bt49.0 is derived using SOTP methodology, implying 24.0x PE’22E.</strong></p><div>• Expect 2Q21 earnings to soften QoQ due to poor biodiesel business contribution and seasonal lower wind power plant operation. While Improve YoY supported by better contribution from new PCM business COD in 4Q20.</div><div></div><div>• ESS (battery) plant COD, and EV delivery delayed to 2H21 due to COVID-19 crisis.</div><div></div><div>• We like EA’s EV &amp; ESS business expansion strategy, however, maintain a cautious short-term outlook (12-months) due to continuous project delays and concerns over the business success.</div>

Yesterday analyst meeting came out in a negative tone. We maintain the SELL rating, over the concerns that delay of EV-ESS business commencement could pressure the stock performance. Our target price of Bt49.0 is derived using SOTP methodology, implying 24.0x PE’22E.• Expect 2Q21 earnings to soften QoQ due to poor biodiesel business contribution and seasonal lower wind power plant operation. While Improve YoY supported by better contribution from new PCM business COD in 4Q20.• ESS (battery) plant COD, and EV delivery delayed to 2H21 due to COVID-19 crisis.• We like EA’s EV &amp; ESS business expansion strategy, however, maintain a cautious short-term outlook (12-months) due to continuous project delays and concerns over the business success.

EA: EV-ESS Business Commencement Delayed to 2H21

<p><strong>Yesterday analyst meeting come out in a neutral tone. We maintain the SELL rating, as the delay of EV-ESS business commencement and concerns over competency will pressure the stock performance. Our target price of Bt49.0 is derived using SOTP methodology, implying 26.0x PE’21.</strong></p><div>• Expect 1Q21 earnings to improve both YoY and QoQ, on the back of better power plant operation, biodiesel business contribution and earnings recognition from bio-PCM business COD in 3Q20.</div><div></div><div>• ESS (battery) plant COD postponed to 2Q21. EV-Car delivery delayed to 2H21 due to COVID-19 crisis.</div><div></div><div>• We like EA’s EV &amp; ESS business expansion strategy, but we see no upside to our earnings forecast without the new business success.</div>

Yesterday analyst meeting come out in a neutral tone. We maintain the SELL rating, as the delay of EV-ESS business commencement and concerns over competency will pressure the stock performance. Our target price of Bt49.0 is derived using SOTP methodology, implying 26.0x PE’21.• Expect 1Q21 earnings to improve both YoY and QoQ, on the back of better power plant operation, biodiesel business contribution and earnings recognition from bio-PCM business COD in 3Q20.• ESS (battery) plant COD postponed to 2Q21. EV-Car delivery delayed to 2H21 due to COVID-19 crisis.• We like EA’s EV &amp; ESS business expansion strategy, but we see no upside to our earnings forecast without the new business success.

EA: EV-ESS Earnings to Kick in at Best by Late 2021-1H22

Thematic (Sector/Industry)

<p><strong>BCPG, GUNKUL, GULF top pick growth stocks</strong></p><ul>
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<strong>Earnings upcycle in 2021:</strong> We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.</li>
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<strong>Declining gas price to support SPP performance:</strong> The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.</li>
</ul><p><strong>EGCO, RATCH top pick value stocks</strong></p><ul>
<li>
<strong>Cheap valuation:</strong> The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.</li>
<li>
<strong>Decent dividend yield:</strong> We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.</li>
</ul><p><strong>Maintain HOLD rating on BGRIM, EA and GPSC</strong></p><ul><li>We have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.</li></ul>

BCPG, GUNKUL, GULF top pick growth stocks

Earnings upcycle in 2021: We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.

Declining gas price to support SPP performance: The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.
EGCO, RATCH top pick value stocks

Cheap valuation: The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.

Decent dividend yield: We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.
Maintain HOLD rating on BGRIM, EA and GPSCWe have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.

Thailand Power Sector: Overweight-Bright 2021 Performance

<p><strong>Yesterday analyst meeting come in a neutral tone. We maintain the BUY recommendation based on a target price of Bt49.0 derived using SOTP methodology, implying 26.0x PE’21.</strong></p><div>• Expect 4Q20 earnings to remain flat YoY, while improve QoQ,  on the back of recovering wind power plant operations, enhancing contribution from biodiesel business, and earnings recognition from PCM business for the first time after commencing operation in 3Q20.</div><div></div><div>• Though the delay of EV-ESS business to 2021 could pressure the stock performance in short-term, we maintain our positive outlook for 2021-22, given the strong 12.0% CAGR EPS growth expectation backed by gradual earnings recognition from new businesses (EV-ESS).</div>

Yesterday analyst meeting come in a neutral tone. We maintain the BUY recommendation based on a target price of Bt49.0 derived using SOTP methodology, implying 26.0x PE’21.• Expect 4Q20 earnings to remain flat YoY, while improve QoQ,  on the back of recovering wind power plant operations, enhancing contribution from biodiesel business, and earnings recognition from PCM business for the first time after commencing operation in 3Q20.• Though the delay of EV-ESS business to 2021 could pressure the stock performance in short-term, we maintain our positive outlook for 2021-22, given the strong 12.0% CAGR EPS growth expectation backed by gradual earnings recognition from new businesses (EV-ESS).

EA: EV-ESS Business Success to Drive Future Earnings

Thailand

Energy Absolute Public Company Limited engages in the research, development, and production of biodiesel products in Thailand.

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Energy Absolute (EA TB)

EA: EV-ESS Business to Kick Start in 3Q21

Yesterday analyst meeting come out in a positive tone. The 1.0GWh ESS plant is scheduled to commence operation in 3Q21. The company also plan to...

Pi Securities PCL, Thailand

EA: EV-ESS Business Commencement Delayed to 2H21

Yesterday analyst meeting came out in a negative tone. We maintain the SELL rating, over the concerns that delay of EV-ESS business commencement...

Pi Securities PCL, Thailand

EA: EV-ESS Earnings to Kick in at Best by Late 2021-1H22

Yesterday analyst meeting come out in a neutral tone. We maintain the SELL rating, as the delay of EV-ESS business commencement and concerns over...

Pi Securities PCL, Thailand

Thailand Power Sector: Overweight-Bright 2021 Performance

Power Sector: Overweight-Bright 2021 sector performance. BCPG, GUNKUL, GULF top pick growth stocks. EGCO, RATCH top pick value stocks

Pi Securities PCL, Thailand

EA: EV-ESS Business Success to Drive Future Earnings

Yesterday analyst meeting come in a neutral tone. We maintain the BUY recommendation based on a target price of Bt49.0 derived using SOTP...

Pi Securities PCL, Thailand

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