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

Gulf Energy Development  / Equity Bottom-Up

<p><strong>GULF decided to treat INTUCH in its financial statement using the equity method. We see the decision to be appropriate given GULF’s net profit will be higher under this method, compared to consolidation.</strong></p><div>• Potential saving of Bt2,0bn per year if using equity method, thanks to no amortization expenses of ADVANC’s intangible assets.</div><div></div><div>• The company will book dividend income from INTUCH in 3Q, and record profit under equity method 4Q21 onwards.</div><div></div><div>• Expect 3Q21 net profit to improve both YoY and QoQ on the back of a huge dividend income of around B1.6bn from INTUCH (42.25% stake).</div><div></div><div><strong>We revise up the target price by 7% to Bt46.0, incorporating the Bt3.0/sh contribution from increase of stake in INTUCH ( from 19% to 42.25%). Meanwhile, we downgrade the recommendation to HOLD due to limited upside from current share price. Our valuation is derived using SOTP methodology and implies 61x PE’22E.</strong></div>

GULF decided to treat INTUCH in its financial statement using the equity method. We see the decision to be appropriate given GULF’s net profit will be higher under this method, compared to consolidation.• Potential saving of Bt2,0bn per year if using equity method, thanks to no amortization expenses of ADVANC’s intangible assets.• The company will book dividend income from INTUCH in 3Q, and record profit under equity method 4Q21 onwards.• Expect 3Q21 net profit to improve both YoY and QoQ on the back of a huge dividend income of around B1.6bn from INTUCH (42.25% stake).We revise up the target price by 7% to Bt46.0, incorporating the Bt3.0/sh contribution from increase of stake in INTUCH ( from 19% to 42.25%). Meanwhile, we downgrade the recommendation to HOLD due to limited upside from current share price. Our valuation is derived using SOTP methodology and implies 61x PE’22E.

GULF: INTUCH to Be Treated Under Equity Method 4Q21 Onwards

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Taiwan Semiconductor (TSMC) / Technical Analysis

<p>Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.</p>

Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

Shanghai Stock Exchange Composite Index / Technical Analysis

<p>While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.</p>

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

<p><strong>We maintain the BUY recommendation based on a target price of Bt43.0 derived using SOTP methodology, implying 57x PE’22E.</strong></p><div>• GULF reported 2Q21 net profit of Bt1.4bn  (-25% YoY, -14% QoQ), excluding FX and other extraordinary items the recurring net profit stood same at Bt1.4bn, improving +42% YoY and declining 41% QoQ.</div><div></div><div>• The QoQ decline was due to absence of dividend income from INTUCH and  declined revenue share from BKR2 offshore wind power plant. While the full quarter revenue recognition of GSRC (COD in 1Q21) and higher IU electricity sales from GMP resulted the YoY growth.</div><div></div><div>• GULF increased its stake in INTUCH to 42.5%, making it the largest share holder. The company will book dividend income from INTUCH in 3Q, and either consolidate or record profit under equity method 4Q21 onwards.</div><div></div><div>• Expect 3Q21 recurring net profit to improve both YoY and QoQ on the back of a huge dividend income of around B1.6bn from INTUCH.</div>

We maintain the BUY recommendation based on a target price of Bt43.0 derived using SOTP methodology, implying 57x PE’22E.• GULF reported 2Q21 net profit of Bt1.4bn  (-25% YoY, -14% QoQ), excluding FX and other extraordinary items the recurring net profit stood same at Bt1.4bn, improving +42% YoY and declining 41% QoQ.• The QoQ decline was due to absence of dividend income from INTUCH and  declined revenue share from BKR2 offshore wind power plant. While the full quarter revenue recognition of GSRC (COD in 1Q21) and higher IU electricity sales from GMP resulted the YoY growth.• GULF increased its stake in INTUCH to 42.5%, making it the largest share holder. The company will book dividend income from INTUCH in 3Q, and either consolidate or record profit under equity method 4Q21 onwards.• Expect 3Q21 recurring net profit to improve both YoY and QoQ on the back of a huge dividend income of around B1.6bn from INTUCH.

GULF: Huge Dividend Gain from INTUCH in 3Q21

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>In StubWorld this week ...</p>
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<p><a href="https://www.smartkarma.com/entities/indofood-sukses-makmur-tbk-p" target="_blank" data-smartkarma-citation="entities:1053:1" rel="noopener"></a>Beleaguered <a href="https://www.smartkarma.com/entities/china-evergrande-group" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a>'s shares bounced after the company <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0810/2021081001009.pdf" target="_blank" rel="noopener">said</a> it is in talks to sell stakes in two of its units. But optimism over improved capital management appears naive. </p>
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<p>Preceding my comments on Evergrande are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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<p>As always, more below the fold.</p>
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In StubWorld this week ...




Beleaguered Evergrande Real Estate Group (3333 HK)'s shares bounced after the company said it is in talks to sell stakes in two of its units. But optimism over improved capital management appears naive. 




Preceding my comments on Evergrande are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


As always, more below the fold.


Thailand

Gulf Energy Development Public Company Limited produces and sells electricity and steam. The Company manages a portfolio of gas-fired and renewable power projects, as well as supplies steam and chilled water. Gulf Energy Development serves customers in Thailand.

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Gulf Energy Development (GULF TB)

GULF: INTUCH to Be Treated Under Equity Method 4Q21 Onwards

GULF decided to treat INTUCH in its financial statement using the equity method. We see the decision to be appropriate given GULF’s net profit will...

Pi Securities PCL, Thailand

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

We see early signs of positive change within EM, and we present a strong case as to why we believe now is an opportune time to add exposure.

Vermilion Research

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs...

Vermilion Research

GULF: Huge Dividend Gain from INTUCH in 3Q21

We maintain the BUY recommendation based on a target price of Bt43.0 derived using SOTP methodology, implying 57x PE’22E.

Pi Securities PCL, Thailand

StubWorld: What To Do With Evergrande?

Evergrande Auto is not worth what its market cap suggests to an independent third party; and Property Services may or may not be worth what people...

David Blennerhassett

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