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>We revise up the target price to Bt43.0 (from previous Bt41.4) incorporating the Bt1.6 from additional stake in INTUCH. Our valuation is derived from SOTP methodology, implying 61x PE’22.</strong></p><div>• Positive view on GULF’s investment in INTUCH considering the value accretive investment strategy.</div><div></div><div>• Minimal risk of capital increase as the company intends to only acquire INTUCH shares at premium. ADVANC offer price is 27% discount to market price.</div><div></div><div>• Upside of Bt4.0/sh to our target price, if GULF manages to achieve a minimum of 50% stake in INTUCH.</div><div></div><div>• The 1Q21 core earnings is expected to improve both YoY and QoQ on the back of full quarter profit recognition from BKR2 wind project (3Q20), better IPP seasonality and lower SG&amp;A expenses.</div>

We revise up the target price to Bt43.0 (from previous Bt41.4) incorporating the Bt1.6 from additional stake in INTUCH. Our valuation is derived from SOTP methodology, implying 61x PE’22.• Positive view on GULF’s investment in INTUCH considering the value accretive investment strategy.• Minimal risk of capital increase as the company intends to only acquire INTUCH shares at premium. ADVANC offer price is 27% discount to market price.• Upside of Bt4.0/sh to our target price, if GULF manages to achieve a minimum of 50% stake in INTUCH.• The 1Q21 core earnings is expected to improve both YoY and QoQ on the back of full quarter profit recognition from BKR2 wind project (3Q20), better IPP seasonality and lower SG&amp;A expenses.

GULF: The Energy Giant to Acquire Telecom Big Shot

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>On 19 April, <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> made a conditional voluntary tender offer for all shares in <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> that it did not hold at THB 65/share.</p><p>In the event that <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>'s tender offer results in them holding over 50% of the voting rights in <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>, it also announced that it would make a downstream offer for <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> at THB 122.86/share, while requesting the SEC for a waiver of the obligation to make a tender offer for all shares of <a href="https://www.smartkarma.com/entities/thaicom-pcl" target="_blank" data-smartkarma-citation="entities:18019:1" rel="noopener">Thaicom Pcl (THCOM TB)</a>.</p><p>The record date to attend the <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> shareholder EGM is 14 May and the EGM will be held on 25 June.</p><p><a href="https://www.smartkarma.com/entities/singapore-telecommunications" target="_blank" data-smartkarma-citation="entities:20:1" rel="noopener">Singtel (ST SP)</a> is a large shareholder in <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> and media reports indicate that they will not tender their shares. <a href="https://www.smartkarma.com/entities/singapore-telecommunications" target="_blank" data-smartkarma-citation="entities:20:1" rel="noopener">Singtel (ST SP)</a> said that they view their stakes in <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> and <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> as strategic investments.</p><p><a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">Kce Electronics Pub (KCE TB)</a> is the most likely replacement candidate 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> in 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>.</p>

On 19 April, Gulf Energy Development Public Company (GULF TB) made a conditional voluntary tender offer for all shares in Intouch Holdings (INTUCH TB) that it did not hold at THB 65/share.In the event that Gulf Energy Development Public Company (GULF TB)'s tender offer results in them holding over 50% of the voting rights in Intouch Holdings (INTUCH TB), it also announced that it would make a downstream offer for Advanced Info Service (ADVANC TB) at THB 122.86/share, while requesting the SEC for a waiver of the obligation to make a tender offer for all shares of Thaicom Pcl (THCOM TB).The record date to attend the Gulf Energy Development Public Company (GULF TB) shareholder EGM is 14 May and the EGM will be held on 25 June.Singtel (ST SP) is a large shareholder in Intouch Holdings (INTUCH TB) and media reports indicate that they will not tender their shares. Singtel (ST SP) said that they view their stakes in Intouch Holdings (INTUCH TB) and Advanced Info Service (ADVANC TB) as strategic investments.Kce Electronics Pub (KCE TB) is the most likely replacement candidate for Intouch Holdings (INTUCH TB) in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX).

GULF Offer for INTUCH: Index Implications

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p>On 19 April, <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>, which is controlled by billionaire Sarath Ratanavadi, announced a conditional voluntary tender offer to acquire all of <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>’s shares for THB65.00 cash per share, an 11.1% premium to the unaffected price of THB58.50 per share. As of 16 April, Gulf Energy’s shareholding in Intouch stood at 18.93% of the outstanding shares. </p><p>If the tender offer results in Gulf Energy holding 50% or more of Intouch’s total voting rights, Gulf Energy will be required to make tender offers for all the shares of <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> and <a href="https://www.smartkarma.com/entities/thaicom-pcl" target="_blank" data-smartkarma-citation="entities:18019:1" rel="noopener">Thaicom Pcl (THCOM TB)</a> based on the chain principle. The potential tender offer price for Advanced Info Services is THB122.86 per share, which is a -27% discount to the unaffected price of THB168 per share.</p><p>In response to the announcement, <a href="https://www.smartkarma.com/entities/singapore-telecommunications" target="_blank" data-smartkarma-citation="entities:20:1" rel="noopener">Singtel (ST SP)</a> which owns 21.00% of Intouch and 23.32% of Advanced Info Services, stated that it “<em>views its stakes in INTUCH and ADVANC as strategic investments and we believe in the long term outlook of the businesses.</em>” Singtel will review its strategic options to ensure that Intouch and Advanced Info Services shareholders get the full benefit of the intrinsic value of the businesses.</p><div class="content-highlight"><p>The launch of the Intouch tender offer is subject to key conditions precedents which are Gulf Energy shareholder approval (no less than three-quarters of the total votes from shareholders with no conflict of interests) and SEC waiver for the requirement to make a tender offer for Thaicom according to the chain principle. Post EGM approval for the tender, Gulf Energy may also buy Intouch shares before and after the tender. The tender offer has no minimum acceptance condition. Overall, we think the tender offer price is fair. </p></div>

On 19 April, Gulf Energy Development Public Company (GULF TB), which is controlled by billionaire Sarath Ratanavadi, announced a conditional voluntary tender offer to acquire all of Intouch Holdings (INTUCH TB)’s shares for THB65.00 cash per share, an 11.1% premium to the unaffected price of THB58.50 per share. As of 16 April, Gulf Energy’s shareholding in Intouch stood at 18.93% of the outstanding shares. If the tender offer results in Gulf Energy holding 50% or more of Intouch’s total voting rights, Gulf Energy will be required to make tender offers for all the shares of Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB) based on the chain principle. The potential tender offer price for Advanced Info Services is THB122.86 per share, which is a -27% discount to the unaffected price of THB168 per share.In response to the announcement, Singtel (ST SP) which owns 21.00% of Intouch and 23.32% of Advanced Info Services, stated that it “views its stakes in INTUCH and ADVANC as strategic investments and we believe in the long term outlook of the businesses.” Singtel will review its strategic options to ensure that Intouch and Advanced Info Services shareholders get the full benefit of the intrinsic value of the businesses.The launch of the Intouch tender offer is subject to key conditions precedents which are Gulf Energy shareholder approval (no less than three-quarters of the total votes from shareholders with no conflict of interests) and SEC waiver for the requirement to make a tender offer for Thaicom according to the chain principle. Post EGM approval for the tender, Gulf Energy may also buy Intouch shares before and after the tender. The tender offer has no minimum acceptance condition. Overall, we think the tender offer price is fair. 

Intouch’s Conditional Voluntary Tender Offer from Gulf Energy

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>On the 26 June 2020, <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> disclosed it held 147mn shares (~4.58%) in <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>. Gulf continued to increase its stake - and make public announcements after the fact - culminating in a holding of 15% on <a href="https://www.nationthailand.com/news/30402235" target="_blank" rel="noopener">28 January</a>.</p>
<p>In its FY20 results, the <a href="https://www.set.or.th/dat/news/202102/21018001.pdf" target="_blank" rel="noopener">management discussion</a> shed no new light as to their forward intention on Intouch.</p>
<p>Technically, Gulf could take its take all the way up to 24.99% before it was obligated to make an MGO - see <em><a href="https://skr.ma/m2vxP" target="_blank" rel="noopener">Quiddity M&amp;A Guide 2021: Thailand</a></em>.</p>
<p>But an energy company making a tilt for a satellite, internet, and telecommunications company?</p>
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<div>
<h3>The New News</h3>
<p>Gulf has <a href="https://www.set.or.th/set/pdfnews.do?newsId=16187886028860&amp;sequence=0" target="_blank" rel="noopener">announced</a> it intends to make a Voluntary Tender Offer (VTO) for shares not held in Intouch at Bt65/share. If it gets to 50%, it will make a downstream offer for <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl-ca1a971f-2f70-4565-b1fd-dda5b533acd3" target="_blank" data-smartkarma-citation="entities:27653:1" rel="noopener">Advanced Info Service PCL (ADVANC-R TB)</a> at Bt122.86/share. The VTO is conditional, amongst other things, on a waiver NOT to make a  downstream offer for <a href="https://www.smartkarma.com/entities/thaicom-pcl" target="_blank" data-smartkarma-citation="entities:18019:1" rel="noopener">Thaicom Pcl (THCOM TB</a>.</p>
<p>Bt65/share is bang-in-line with Intouch's NAV/share.</p>
<p>The Tender Offer has no minimum acceptance condition.</p>
<p>Gulf currently holds 18.93% (there was no prior announcement they had cleared 15%) of shares outstanding. If Singtel (21%) and Temasek (5.2%) tender, Gulf only needs another 4.87% to clear 50%.</p>
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<p>Talk about being caught off-guard. I did not expect Gulf to lift its stake from 5% to 10%, then again to 15%. And I certainly did not expect a full Offer for Intouch.</p>
<p>More below the fold.</p>
</div>


On the 26 June 2020, Gulf Energy Development Public Company (GULF TB) disclosed it held 147mn shares (~4.58%) in Intouch Holdings (INTUCH TB). Gulf continued to increase its stake - and make public announcements after the fact - culminating in a holding of 15% on 28 January.
In its FY20 results, the management discussion shed no new light as to their forward intention on Intouch.
Technically, Gulf could take its take all the way up to 24.99% before it was obligated to make an MGO - see Quiddity M&amp;A Guide 2021: Thailand.
But an energy company making a tilt for a satellite, internet, and telecommunications company?




The New News
Gulf has announced it intends to make a Voluntary Tender Offer (VTO) for shares not held in Intouch at Bt65/share. If it gets to 50%, it will make a downstream offer for Advanced Info Service PCL (ADVANC-R TB) at Bt122.86/share. The VTO is conditional, amongst other things, on a waiver NOT to make a  downstream offer for Thaicom Pcl (THCOM TB.
Bt65/share is bang-in-line with Intouch's NAV/share.
The Tender Offer has no minimum acceptance condition.
Gulf currently holds 18.93% (there was no prior announcement they had cleared 15%) of shares outstanding. If Singtel (21%) and Temasek (5.2%) tender, Gulf only needs another 4.87% to clear 50%.



Talk about being caught off-guard. I did not expect Gulf to lift its stake from 5% to 10%, then again to 15%. And I certainly did not expect a full Offer for Intouch.
More below the fold.


Intouch Holdings: Gulf's Inexplicable Offer

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<p>This week in StubWorld ...</p>
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<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>'s long-term discount to NAV and the simple ratio (Intouch over <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a>) are at all-time extremes.  <br><br><a href="https://www.smartkarma.com/entities/8122" target="_blank" data-smartkarma-citation="entities:8122:1" rel="noopener"></a>And <a href="https://www.smartkarma.com/entities/people-s-insurance-co-grou-h" target="_blank" data-smartkarma-citation="entities:362:1" rel="noopener">People's Insurance Co (PICC) (1339 HK)</a> is coming up "cheap" after fully correcting last years' narrowing.</div>
<div>Preceding my comments on Intouch and PICC, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</div>
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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>
</div>


This week in StubWorld ...



Intouch Holdings (INTUCH TB)'s long-term discount to NAV and the simple ratio (Intouch over Advanced Info Service (ADVANC TB)) are at all-time extremes.    And People's Insurance Co (PICC) (1339 HK) is coming up "cheap" after fully correcting last years' narrowing.
Preceding my comments on Intouch and PICC, 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%.


StubWorld: Reverse Intouch's Stub; (Potentially) Set Up PICC (1339 HK)'s

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: The Energy Giant to Acquire Telecom Big Shot

We revise up the target price to Bt43.0 (from previous Bt41.4) incorporating the Bt1.6 from additional stake in INTUCH. Our valuation is derived...

Pi Securities PCL, Thailand

GULF Offer for INTUCH: Index Implications

GULF has made a conditional voluntary tender offer for shares in INTUCH that it does not hold at THB 65/share. KCE could enter the SET50 index at...

Brian Freitas

Intouch’s Conditional Voluntary Tender Offer from Gulf Energy

Gulf Energy announced a conditional voluntary tender offer to acquire all of Intouch shares for THB65.00 cash per share. Overall, we think the...

Arun George

Intouch Holdings: Gulf's Inexplicable Offer

I don't get the logic behind the Offer. Still, this looks done. Trading at a 4.4%/11.2% gross/annualised spread, assuming five months to complete....

David Blennerhassett

StubWorld: Reverse Intouch's Stub; (Potentially) Set Up PICC (1339 HK)'s

Intouch Holdings (INTUCH TB)'s long-term discount to NAV and the simple ratio (Intouch over Advanced Info Service (ADVANC TB)) are at all-time...

David Blennerhassett

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