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

<ul>
<li>We downgrade to HOLD and lower our TP to Bt47.75(-9% from previous TP),based on 18.4xPE’23E (average of 5-year trading history). Analyst meeting came with a slightly positive tone. Management expects</li>
<li>Analyst meeting details Management remains cautious of the recession further impacting the mobile.WhileRFID and automotive segments are currently stable they expect high interest rates will impact demand in those segments</li>
<li>However,management believes that the additional capacity in their U.S.factory and the new Korean factory will help offset the downturn from the recession as production will begin to ramp-up by 1Q23.</li>
</ul>


We downgrade to HOLD and lower our TP to Bt47.75(-9% from previous TP),based on 18.4xPE’23E (average of 5-year trading history). Analyst meeting came with a slightly positive tone. Management expects
Analyst meeting details Management remains cautious of the recession further impacting the mobile.WhileRFID and automotive segments are currently stable they expect high interest rates will impact demand in those segments
However,management believes that the additional capacity in their U.S.factory and the new Korean factory will help offset the downturn from the recession as production will begin to ramp-up by 1Q23.


HANA : Recession Should Impact 23E Earnings

<ul>
<li>We maintain BUY with TP of Bt52.50 based on 21.3xPE’1H23E (+1S.D. of 10-year trading history).3Q22 earnings was at Bt417m(-26% YoY, +71% QoQ)due to large FX and derivative losses worth Bt423m</li>
<li>3Q22 net profit suffered but core remains intact Its 3Q22 earnings was at Bt417m (-26% YoY,+71% QoQ) due to large FX and derivative losses worth Bt423m. These losses are likely </li>
<li>Stripping out FX and derivative losses, core profit stood at Bt840m (+20% YoY, +41% QoQ).Both YoY and QoQ increase was led by revenue growth, but QoQ growth was further supported</li>
</ul>


We maintain BUY with TP of Bt52.50 based on 21.3xPE’1H23E (+1S.D. of 10-year trading history).3Q22 earnings was at Bt417m(-26% YoY, +71% QoQ)due to large FX and derivative losses worth Bt423m
3Q22 net profit suffered but core remains intact Its 3Q22 earnings was at Bt417m (-26% YoY,+71% QoQ) due to large FX and derivative losses worth Bt423m. These losses are likely 
Stripping out FX and derivative losses, core profit stood at Bt840m (+20% YoY, +41% QoQ).Both YoY and QoQ increase was led by revenue growth, but QoQ growth was further supported


HANA : 3Q22 Earnings Impacted by FX Items

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.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.</li><li>Our recommended stocks are CBG and SCGP.</li><li><div><div><p>The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.</p></div></div></li></ul></div></div></div></div>

We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.Our recommended stocks are CBG and SCGP.The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

<ul>
<li>We maintain BUY but cut TP by 9% to Bt52.50 based on 21.3xPE’1H23E (+1S.D.of 5-year average trading) to reflect more cautious view on its earnings growth in 2H22 and 2023. </li>
<li>Lower USD sales but improving gross margin in2Q22Weak 2Q22 USD sales at US$186m (-4%YoY,flat QoQ)was caused by waning demand for PC and Mobile PCBs and ICs (~30%of HANA’s total sales)</li>
<li>Gross margin expansion QoQ to 13.7% in 2Q22 (-3.0ppts YoY,+2.9ppts QoQ) was caused by favorable exchange rates and economies of scale.We share management’s  belief that the margin is unsustainable </li>
</ul>


We maintain BUY but cut TP by 9% to Bt52.50 based on 21.3xPE’1H23E (+1S.D.of 5-year average trading) to reflect more cautious view on its earnings growth in 2H22 and 2023. 
Lower USD sales but improving gross margin in2Q22Weak 2Q22 USD sales at US$186m (-4%YoY,flat QoQ)was caused by waning demand for PC and Mobile PCBs and ICs (~30%of HANA’s total sales)
Gross margin expansion QoQ to 13.7% in 2Q22 (-3.0ppts YoY,+2.9ppts QoQ) was caused by favorable exchange rates and economies of scale.We share management’s  belief that the margin is unsustainable 


<ul>
<li>We maintain BUY with TP of Bt57.50 based on 21.3xPE’22E(+1S.D. of 5-year trading history).2Q22 net profit of Bt244m (-67% YoY,-33% QoQ) was under our expectations due to large FX losses.</li>
<li>2Q22 result below expectation but unlikely an issue Net profit was at Bt244m(-67% YoY,-33%QoQ).Both YoY and QoQ declined due to FX losses. Stripping FX losses, core profit was at Bt597m </li>
<li>Revenue was at Bt6.4bn (+5% YoY, +5% QoQ). QoQ and YoY growth was mainly due to Baht depreciation. QoQ also grew due to growth in IC Thailand segment.</li>
</ul>


We maintain BUY with TP of Bt57.50 based on 21.3xPE’22E(+1S.D. of 5-year trading history).2Q22 net profit of Bt244m (-67% YoY,-33% QoQ) was under our expectations due to large FX losses.
2Q22 result below expectation but unlikely an issue Net profit was at Bt244m(-67% YoY,-33%QoQ).Both YoY and QoQ declined due to FX losses. Stripping FX losses, core profit was at Bt597m 
Revenue was at Bt6.4bn (+5% YoY, +5% QoQ). QoQ and YoY growth was mainly due to Baht depreciation. QoQ also grew due to growth in IC Thailand segment.


Thailand

Hana Microelectronics Public Company Limited is an electronics manufacturing service company.  The Company manufactures electronic components on behalf of its customers for shipment to them or their customers.

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Hana Microelectronics (HANA TB)

HANA : Recession Should Impact 23E Earnings

We downgrade to HOLD and lower our TP to Bt47.75 (-9% from previous TP), based on 18.4xPE’23E (average of 5-year trading history). Analyst meeting...

Pi Securities PCL, Thailand

HANA : 3Q22 Earnings Impacted by FX Items

We maintain BUY with TP of Bt52.50 based on 21.3xPE’1H23E (+1S.D. of 10-year trading history). 3Q22 earnings was at Bt417m (-26% YoY, +71% QoQ) due...

Pi Securities PCL, Thailand

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth...

Krungthai XSpring

HANA : Weaker Outlook on 2H22

We maintain BUY but cut TP by 9% to Bt52.50 based on 21.3xPE’1H23E (+1S.D. of 5-year average trading) to reflect more cautious view on its earnings...

Pi Securities PCL, Thailand

HANA : Core Earnings Should Grow in 2H22

We maintain BUY with TP of Bt57.50 based on 21.3xPE’22E (+1S.D. of 5-year trading history). 2Q22 net profit of Bt244m (-67% YoY, -33% QoQ) was...

Pi Securities PCL, Thailand

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