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

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Thai Equity - Bottom-up - Equities

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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

Thematic (Sector/Industry)

<p><strong>BCPG, GUNKUL, GULF top pick growth stocks</strong></p><ul>
<li>
<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>
<li>
<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

Equity Bottom-Up

Gulf Energy Development  / Equity Bottom-Up

<p><strong>Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt41.4 derived using sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.</strong></p><div>• The 4Q20 earnings is expected to improve YoY on the back of better GPM, and profit recognition from 230MWe power generation capacity added in 3Q20. While soften QoQ due to lower IPP seasonal contribution and higher SG&amp;A expenses</div><div></div><div>• We maintain the positive 2021 earnings outlook as we expect a 30% YoY EPS growth from 1) Improving GPM due to declining gas cost (-10% YoY) 2) Full year &amp; partial earnings recognition from 1.1GWe projects COD in 2020-21.</div><div></div><div>• The company has 2.92GWe of power generation capacity in operation and have  additional 5.1GWe projects going online in 2021-2017 period, representing a 15% CAGR growth.</div>

Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt41.4 derived using sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.• The 4Q20 earnings is expected to improve YoY on the back of better GPM, and profit recognition from 230MWe power generation capacity added in 3Q20. While soften QoQ due to lower IPP seasonal contribution and higher SG&amp;A expenses• We maintain the positive 2021 earnings outlook as we expect a 30% YoY EPS growth from 1) Improving GPM due to declining gas cost (-10% YoY) 2) Full year &amp; partial earnings recognition from 1.1GWe projects COD in 2020-21.• The company has 2.92GWe of power generation capacity in operation and have  additional 5.1GWe projects going online in 2021-2017 period, representing a 15% CAGR growth.

GULF: 22% CAGR Capacity Expansion in Next 5 Years

<p><strong>Last week analyst meeting came out in a positive tone. We maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived using sum-of-the-parts (SOTP) methodology, implying a 75x PE’21.</strong></p><ul>
<li>The 9.1% EPS dilution from capital increase is expected to be compensated by 22% CAGR EPS growth for 2020-22E, leaving insignificant impact to our valuation.</li>
<li>Expect 3Q20 core profit to improve both YoY and QoQ backed by 1) increase in IU sales from post COVID-19 recovery 2) Lowering SPP gas cost at -10% QoQ, and 3) lower planned maintenance shutdown of GJP compared to 2019.</li>
<li>Maintain long term positive 2020-24 earnings outlook  on the back of expected 20% CAGR EPS growth from 5.0GWe projects in pipeline, and aggressive integrated power and infrastructure business expansion strategy.</li>
</ul>

Last week analyst meeting came out in a positive tone. We maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived using sum-of-the-parts (SOTP) methodology, implying a 75x PE’21.
The 9.1% EPS dilution from capital increase is expected to be compensated by 22% CAGR EPS growth for 2020-22E, leaving insignificant impact to our valuation.
Expect 3Q20 core profit to improve both YoY and QoQ backed by 1) increase in IU sales from post COVID-19 recovery 2) Lowering SPP gas cost at -10% QoQ, and 3) lower planned maintenance shutdown of GJP compared to 2019.
Maintain long term positive 2020-24 earnings outlook  on the back of expected 20% CAGR EPS growth from 5.0GWe projects in pipeline, and aggressive integrated power and infrastructure business expansion strategy.


GULF: Expect 3Q20 Earnings to Grow Both YoY and QoQ

<p><strong>We see the fall in GULF’s share price by 9% due to the news on capital increase and ADB's divestment of stake in GULF as an opportunity for accumulative buying given there is minimal impact to our valuation. Thus, we maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived using sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.</strong></p><p><strong>Story:</strong></p><ul>
<li>GULF announced increase of paid-up capital from Bt10.66bn to Bt11.73bn by issuing new 1.07bn common shares through rights offering.</li>
<li>Limited impact on GULFS valuation from ADB’s divestment of 1.7% stake in the company.</li>
</ul>

We see the fall in GULF’s share price by 9% due to the news on capital increase and ADB's divestment of stake in GULF as an opportunity for accumulative buying given there is minimal impact to our valuation. Thus, we maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived using sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.Story:
GULF announced increase of paid-up capital from Bt10.66bn to Bt11.73bn by issuing new 1.07bn common shares through rights offering.
Limited impact on GULFS valuation from ADB’s divestment of 1.7% stake in the company.


GULF: Short Term Negative Sentiments from Capital Increase

<p>We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.</p><p><strong>Story:</strong></p><ul>
<li>Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.</li>
<li>Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.</li>
</ul>

We revise up our target price to Bt45.4 (from previous Bt44.6)  incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our valuation is derived from sum-of-the-parts (SOTP) methodology, implying a 78x PE’21.Story:
Positive view on GULF’s investment in INTUCH considering the short term value accretive investment strategy.
Upside of 0.9/sh from acquisition of 4.6% stake in INTUCH.


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)

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

GULF: 22% CAGR Capacity Expansion in Next 5 Years

Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt41.4 derived using sum-of-the...

Pi Securities PCL, Thailand

GULF: Expect 3Q20 Earnings to Grow Both YoY and QoQ

Last week analyst meeting came out in a positive tone. We maintain our positive outlook and recommend BUY with a target price of Bt45.4 derived...

Pi Securities PCL, Thailand

GULF: Short Term Negative Sentiments from Capital Increase

We see the fall in GULF’s share price by 9% due to the news on capital increase and ADB's divestment of stake in GULF as an opportunity for...

Pi Securities PCL, Thailand

GULF: Upside from Investment in INTUCH

We revise up our target price to Bt45.4 (from previous Bt44.6) incorporating the contribution of Bt0.9/sh from new investment in INTUCH. Our...

Pi Securities PCL, Thailand

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