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

We expect the delay of EA’s 1GWh ESS plant COD and EV-Car sales from 4Q20 to 1Q20 could induce a negative sentiments and pressure the stock performance in short-term. Thus, we recommend to trade and gradually accumulate the stock by 1Q21.<ul>
<li>The ESS plant COD and the EV-Car delivery to Suvarnabhumi pattana taxi union is postponed to 1Q20. We expect a 80% drop in number of cars sales from earlier guidance of 5,000 units for 2021.</li>
<li>Expect 3Q20 earnings to slightly improve both YoY and QoQ. The lower availability of solar power plants is expected to be compensated by better seasonal wind power plant operation..</li>
<li>Potential upside from EV-bus sales. EA plan to commence sales of EV buses by 2H21 and target 200-unit sales in 2021.</li>
</ul>We maintain our buy recommendation while revise down the target price to Bt49 (from previous Bt51) to factor in the 5 to 8% earnings revision for 2021-22E due to delay in EV-car sales. Our valuation is derived using SOTP method, implying 26x PE’21.

We expect the delay of EA’s 1GWh ESS plant COD and EV-Car sales from 4Q20 to 1Q20 could induce a negative sentiments and pressure the stock performance in short-term. Thus, we recommend to trade and gradually accumulate the stock by 1Q21.
The ESS plant COD and the EV-Car delivery to Suvarnabhumi pattana taxi union is postponed to 1Q20. We expect a 80% drop in number of cars sales from earlier guidance of 5,000 units for 2021.
Expect 3Q20 earnings to slightly improve both YoY and QoQ. The lower availability of solar power plants is expected to be compensated by better seasonal wind power plant operation..
Potential upside from EV-bus sales. EA plan to commence sales of EV buses by 2H21 and target 200-unit sales in 2021.
We maintain our buy recommendation while revise down the target price to Bt49 (from previous Bt51) to factor in the 5 to 8% earnings revision for 2021-22E due to delay in EV-car sales. Our valuation is derived using SOTP method, implying 26x PE’21.

EA: ESS Plant COD and EV Car Sales Delayed to 2021

We initiate coverage of EA with a BUY rating, based on a 2021E target price of Bt51, which is derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPEG for 2021E, lower than the Thailand and World utilities sector’s 0.9x and 2.1x respectively.The story:<ul>
<li>Secured stable income from power generation arm until 2023.</li>
<li>New S-curve driver from EV and ESS business</li>
<li>Synergy benefits from integrated EV-ESS business line</li>
<li>PCM and green diesel the new game changer for palm oil-based business</li>
</ul>Risks:<ul><li>Raw material price fluctuation, Delays and failure of new project, Capital increase and EPS dilution</li></ul>Background: Energy Absolute Public Company Limited (EA) together with its subsidiaries engage in manufacturing and distribution of biodiesel &amp; glycerol products both domestically and overseas. Moreover, the company generates and sells electricity in Thailand from solar and wind energy sources totaling 664MWe. In addition, the company operates charging stations under the brand “EA Anywhere”, and conducts R&amp;D into electric vehicles (EV) and energy storage systems (ESS). The company was the first in Thailand to launch electric vehicles (under the brand “MINE Mobility”). EA was founded in 2006 and is headquartered in Bangkok.

We initiate coverage of EA with a BUY rating, based on a 2021E target price of Bt51, which is derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPEG for 2021E, lower than the Thailand and World utilities sector’s 0.9x and 2.1x respectively.The story:
Secured stable income from power generation arm until 2023.
New S-curve driver from EV and ESS business
Synergy benefits from integrated EV-ESS business line
PCM and green diesel the new game changer for palm oil-based business
Risks:Raw material price fluctuation, Delays and failure of new project, Capital increase and EPS dilutionBackground: Energy Absolute Public Company Limited (EA) together with its subsidiaries engage in manufacturing and distribution of biodiesel &amp; glycerol products both domestically and overseas. Moreover, the company generates and sells electricity in Thailand from solar and wind energy sources totaling 664MWe. In addition, the company operates charging stations under the brand “EA Anywhere”, and conducts R&amp;D into electric vehicles (EV) and energy storage systems (ESS). The company was the first in Thailand to launch electric vehicles (under the brand “MINE Mobility”). EA was founded in 2006 and is headquartered in Bangkok.

EA: One of the Prime Beneficiary of Global EV Boom

Thailand

Prima Marine Public Company Limited operates as a marine vessel management firm. The Company offers oil-tanker, crude oil, liquefied petrochemicals, and petroleum products transportation services. Prima Marine also provides shipbuilding, shipping, and storage services. Prima Marine serves customers in the Asia Pacific region.

Siamgas & Petrochemicals PCL distributes liquefied petroleum gas (LPG). The Company provides LPG, ammonia and other related petrochemical products such as propane, butane and propellant. Siamgas is also involved in the logistics services for LPG and petrochemical products.

The Lanna Resources Public Company Limited mines and distributes lignite and granite products in Thailand.  The Company produces two types of granite products, polished granite slab and granite block.  Its lignite is supplied to power generation, cement, paper, and food industries.  Additionally, Lanna imports coal for domestic distribution.

Esso Thailand PCL is a fully integrated oil business, including oil refinery and production. The Company provides liquefied petroleum gas (LPG), gasoline, aviation fuel, diesel, marine fuel, lubricants, aromatic products and other related products such as purified terephthalic acid (PTA), solvents, plasticizers, and benzene concentrate stream.

SUSCO Pcl distributes petroleum products including unleaded and regular gasoline and diesel oil through its gasoline filling stations and directly to large end-users.  Through its subsidiaries, the Company acts as an oil agent and offers marine freight transportation services.

IRPC PCL produces a variety of petrochemical products including polypropylene, high density polyethylene and expandable polystyrene primarily used in packaging materials. Through its subsidiaries, the Company produces and distributes gasoline, liquefied petroleumgas (LPG), asphalt, as well as electricity and construction materials.

Asian Insulators Public Company Limited manufactures electrical porcelain insulators for use in low, medium and high voltage applications such as underground power lines, overhead power lines, and power distribution systems and sub-stations.

Sea Oil PCL supplies marine bunker fuels and lubricant products and food services to all kinds of ships at all major ports in Thailand and in the SouthEast Asian region.

Power Solution Technologies PCL manages and designs electrical systems. The Company provides solutions in telecom power, power supplies, batteries, renewable energy, environment monitoring/control and biomass.

RPCG Public Company Limited distillates condensate residue (CR) into petroleum and petrochemical products such as low sulfur high-speed diesel, fuel oil and intermediate chemical products.  The Company distributes its products to wholesalers as well as to retail service stations owned by its subsidiary.

PT Indika Energy Tbk is an energy company. The Company provides energy services, energy resources and infrastructure, primarily in the areas of coal production, engineering, procurement and construction services and power generation services.

Erin Energy Corporation operates as an independent oil and gas exploration and production company. The Company offers crude oil, natural gas, and other oil products. Erin Energy owns a portfolio of onshore and offshore assets in the United States, Nigeria, Kenya, Gambia, South Africa, and Ghana.

Petron Corporation refines crude oil and sells a full range of petroleum products. The Company transports its products by sea, using tankers and barges. Petron also retails gasoline, diesel, and kerosene to motorists, public transportation operators and households through its service stations. Petro also provides insurance & reinsurance service and leases property.

Pakistan Oil Fields Limited specializes in the exploration, drilling, production and transmission of petroleum.  The Company also markets Liquified Petroleum Gas (LPG).

SandRidge Energy, Inc. explores and produces natural gas and crude oil. The Company owns and operates gas gathering, processing facilities, carbon dioxide treating, and transportation facilities. SandRidge Energy serves customers in the United States.

Clean Energy Fuels Corporation designs, builds, finances and operates natural gas filling stations for vehicle fleets.  The Company also helps its customers acquire and finance natural gas vehicles and obtain local, state, and federal clean air rebates and incentives.

Excelerate Energy, Inc. operates as an oil and natural gas company. The Company offers flexible liquefied natural gas sales and distribution solutions, as well as provides LNG terminal services. Excelerate Energy serves customers worldwide.

China Aviation Oil Singapore Corporation Limited supplies jet fuel to foreign and domestic airlines flying through China's airports.  The Company also trades in other oil products such as fuel oil, gas oil, crude oil, petrochemical products, including physical and paper swaps, and futures trading.

China Aviation Oil Singapore Corp (CAO SP)

Energy Resources of Australia Limited is a uranium company which mines, processes and sells uranium oxide from the Ranger mine in the Northern Territory and uranium concentrates sourced outside Australia to nuclear electric utilities in Japan, South Korea, Europe and North America.  The Company also provides environmental consulting services.

Productive Technologies Company Limited provides productivity solutions to semiconductor and solar cell manufacturers. The Company is engaged in advanced manufacturing of equipment applied in semiconductor and solar power businesses, as well as operates a crude oil asset. Productive Technologies serves customers in China.

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: ESS Plant COD and EV Car Sales Delayed to 2021

We expect the delay of EA 1GWh ESS plant COD and EV-Car sales from 4Q20 to 1Q20 could pressure the stock performance in short-term. Thus recommend...

Pi Securities PCL, Thailand

EA: One of the Prime Beneficiary of Global EV Boom

We initiate coverage of EA with a BUY rating, based on a 2021E target price of Bt51, which is derived from a sum-of-the-parts (SOTP) methodology....

Pi Securities PCL, Thailand

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