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.

Equity Bottom-Up

<ul><li>We maintain an Outperform rating as the current price still offers 18% upside to the 12M fair value of Bt4.70 (based on a required return of 3.4%).</li><li>In addition, strong operational growth is expected over the next two years, with an EPS CAGR of +10%.</li><li>Tactically, the upside risk is limited, given that the current stock price is trading slightly below the 6-month historical average.</li></ul>

We maintain an Outperform rating as the current price still offers 18% upside to the 12M fair value of Bt4.70 (based on a required return of 3.4%).In addition, strong operational growth is expected over the next two years, with an EPS CAGR of +10%.Tactically, the upside risk is limited, given that the current stock price is trading slightly below the 6-month historical average.

The Erawan Group - Rising D/E Concerns Given Resumed Investments in Non- Budget Hotels

<ul><li>Our Outperform rating is maintained, with a positive view on the differential between the current share price and the 12M fair value of Bt4.70 (based on a required return of 3.4%), offering 20% upside.</li><li>In addition, the performance over the next two years should show solid growth, with an expected EPS CAGR of +10%, slightly below the industry average of +14%.</li><li>The tactical view is neutral, as the current stock price is trading close to the 6-month historical average.</li></ul>

Our Outperform rating is maintained, with a positive view on the differential between the current share price and the 12M fair value of Bt4.70 (based on a required return of 3.4%), offering 20% upside.In addition, the performance over the next two years should show solid growth, with an expected EPS CAGR of +10%, slightly below the industry average of +14%.The tactical view is neutral, as the current stock price is trading close to the 6-month historical average.

<ul><li>We downgrade our rating to Outperform (from Buy) after revising our long-term profit growth outlook to steady (previously strong), as revenue from the Grand Hyatt Erawan is weaker than expected.</li><li>The projected CAGR for profit in 2024-26E is now +10% (previously +16%).</li><li>ERW remains fundamentally attractive to buy, as we believe the 22% YTD drop in the stock price has likely priced in the weak 3Q24E performance.</li></ul>

We downgrade our rating to Outperform (from Buy) after revising our long-term profit growth outlook to steady (previously strong), as revenue from the Grand Hyatt Erawan is weaker than expected.The projected CAGR for profit in 2024-26E is now +10% (previously +16%).ERW remains fundamentally attractive to buy, as we believe the 22% YTD drop in the stock price has likely priced in the weak 3Q24E performance.

<ul><li>We hold a neutral view on the 2Q24 core profit (excluding the extra gain from the ERWPF fund cancellation), which aligned with expectations at Bt145m (+2% YoY, -49% QoQ).</li><li>This was supported by the YoY expansion of RevPAR and improved operations in Japan due to seasonal factors.</li><li>In the short term, we estimate the 3Q24E core profit to remain flat both YoY and QoQ, with an expected improvement in 4Q24E as the year-end tourism season begins.</li></ul>

We hold a neutral view on the 2Q24 core profit (excluding the extra gain from the ERWPF fund cancellation), which aligned with expectations at Bt145m (+2% YoY, -49% QoQ).This was supported by the YoY expansion of RevPAR and improved operations in Japan due to seasonal factors.In the short term, we estimate the 3Q24E core profit to remain flat both YoY and QoQ, with an expected improvement in 4Q24E as the year-end tourism season begins.

The Erawan Group - In-Line 2Q24 Core Profit

<ul><li>Mr. Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO), has tasked the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited and Dhanarak Asset Development Co., Ltd. to discuss guidelines for land lease rates.</li><li>These guidelines were resolved in March 2024 by the State Enterprise Policy Committee, chaired by the prime minister.</li><li>The discussion aims to explore the possibility of merging the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited with Dhanarak Asset Development Co., Ltd. or establishing it as a subsidiary of the latter. </li></ul>

Mr. Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO), has tasked the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited and Dhanarak Asset Development Co., Ltd. to discuss guidelines for land lease rates.These guidelines were resolved in March 2024 by the State Enterprise Policy Committee, chaired by the prime minister.The discussion aims to explore the possibility of merging the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited with Dhanarak Asset Development Co., Ltd. or establishing it as a subsidiary of the latter. 

The Erawan Group - SEPO to Consider Raising the Land Lease Rate at the Grand Hyatt Erawan Hotel

Thailand

The Erawan Group Public Company Limited develops and operates luxurious hotels, office buildings and shopping centers in the heart of Bangkok.

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Erawan Group (ERW TB)

The Erawan Group - Rising D/E Concerns Given Resumed Investments in Non- Budget Hotels

We maintain an Outperform rating as the current price still offers 18% upside to the 12M fair value of Bt4.70 (based on a required return of 3.4%).

Krungthai XSpring

The Erawan Group - In-Line 3Q24 Earnings

Our Outperform rating is maintained, with a positive view on the differential between the current share price and the 12M fair value of Bt4.70...

Krungthai XSpring

The Erawan Group - Weak 3Q24E Earnings

We downgrade our rating to Outperform (from Buy) after revising our long-term profit growth outlook to steady (previously strong)

Krungthai XSpring

The Erawan Group - In-Line 2Q24 Core Profit

We hold a neutral view on the 2Q24 core profit (excluding the extra gain from the ERWPF fund cancellation), which aligned with expectations at...

Krungthai XSpring

The Erawan Group - SEPO to Consider Raising the Land Lease Rate at the Grand Hyatt Erawan Hotel

Mr. Thibodi emphasized that with the expiration of the hotel's land lease, managing the lease and hotel buildings should yield better returns than...

Krungthai XSpring

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