CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<ul>
<li>We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology</li>
<li>Portfolio changes: Five stocks remain, nine new join the fray</li>
<li>Since inception, the portfolio has gained 94% versus the SET 100 Index’s return of 37%</li>
</ul>


We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology
Portfolio changes: Five stocks remain, nine new join the fray
Since inception, the portfolio has gained 94% versus the SET 100 Index’s return of 37%


The Stocks to Own in Thailand – Vol. 35

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>Yesterday analysts meeting came out with a positive tone. Large capacity expansions in PCBA Thailand (+25% capacity) and IC China (+100% capacity) will lead to strong top-line growth.New SiC business</li>
<li>Revised up 2022E and 2023E net profit growth to 26% and 9%, respectively.</li>
<li>New TP factors in capacity expansion in PCBA Thailand and IC China, as well as new SiC business contribution</li>
</ul>


Yesterday analysts meeting came out with a positive tone. Large capacity expansions in PCBA Thailand (+25% capacity) and IC China (+100% capacity) will lead to strong top-line growth.New SiC business
Revised up 2022E and 2023E net profit growth to 26% and 9%, respectively.
New TP factors in capacity expansion in PCBA Thailand and IC China, as well as new SiC business contribution


HANA: Strong Outlook for 2022 and Beyond, but Priced-In

<p><strong>We maintained HOLD rating with new 2022E target price at Bt71.00, (up 35% from Bt52.50), derived from 18.5xPE’22E, which is +2SD of its 3-year trading average.</strong></p><div>• HANA recurring profit was Bt769m (+58%YoY, +87%QoQ).</div><div></div><div>• The result was 48% better than consensus forecast.</div><div></div><div>• 1H21 net profit accounted for 46% of our full year forecast. There might be upside risk to our forecast from recent Baht depreciation.</div><div></div><div>• 2Q21 revenue was Bt6.1bn (+32%YoY, +16%QoQ).</div><div></div><div>• Gross profit margin was at 16.8% (+1.4ppts YoY, +4.9ppts QoQ).</div><div></div><div>• SG&amp;A to sales was at 6.2%, compared to 7.1% in 1Q20, and 6.0% in 1Q21.</div><div>
<br>
</div><p><strong>The demand should remain strong in 2H21E. Meanwhile, Baht depreciation should accommodation HANA performance. The company estimated each 10% depreciation in Baht, It would gain benefit of Bt200m/quarter. However, the global chip shortage is the factor that might affect it operation in 2H21E.</strong></p>

We maintained HOLD rating with new 2022E target price at Bt71.00, (up 35% from Bt52.50), derived from 18.5xPE’22E, which is +2SD of its 3-year trading average.• HANA recurring profit was Bt769m (+58%YoY, +87%QoQ).• The result was 48% better than consensus forecast.• 1H21 net profit accounted for 46% of our full year forecast. There might be upside risk to our forecast from recent Baht depreciation.• 2Q21 revenue was Bt6.1bn (+32%YoY, +16%QoQ).• Gross profit margin was at 16.8% (+1.4ppts YoY, +4.9ppts QoQ).• SG&amp;A to sales was at 6.2%, compared to 7.1% in 1Q20, and 6.0% in 1Q21.
 
The demand should remain strong in 2H21E. Meanwhile, Baht depreciation should accommodation HANA performance. The company estimated each 10% depreciation in Baht, It would gain benefit of Bt200m/quarter. However, the global chip shortage is the factor that might affect it operation in 2H21E.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of 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> with the changes taking effect after the close of trading on 30 June.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>, <a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">KCE Electronics PCL (KCE TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a> have been added to the index, replacing <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a>, <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a>, <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>.</p><p><a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> are deletes on liquidity. We had <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> just about passing the liquidity test, while the SET sees it as failing the test.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a> was included in the index at the same review and has lost 11.4% since then.</p><p>One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.</p><p>With <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> shareholders meeting for their EGM on 25 June, the tender offer 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> should be approved. <a href="https://www.smartkarma.com/entities/banpu-public-co-ltd" target="_blank" data-smartkarma-citation="entities:15363:1" rel="noopener">Banpu Public (BANPU TB)</a> is the frontrunner to join 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> once the <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> tender offer is complete and the free float drops below 20%.</p>

Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) with the changes taking effect after the close of trading on 30 June.IRPC PCL (IRPC TB), KCE Electronics PCL (KCE TB), Sri Trang Agro Industry (STA TB) and Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) have been added to the index, replacing Asset World Corporation (AWC TB), Bangkok Commercial Asset Management (BAM TB), TOA Paint (Thailand) (TOA TB) and VGI PCL (VGI TB).Asset World Corporation (AWC TB) and TOA Paint (Thailand) (TOA TB) are deletes on liquidity. We had Asset World Corporation (AWC TB) just about passing the liquidity test, while the SET sees it as failing the test.IRPC PCL (IRPC TB) was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while Bangkok Commercial Asset Management (BAM TB) was included in the index at the same review and has lost 11.4% since then.One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.With Gulf Energy Development Public Company (GULF TB) shareholders meeting for their EGM on 25 June, the tender offer for Intouch Holdings (INTUCH TB) should be approved. Banpu Public (BANPU TB) is the frontrunner to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) once the Intouch Holdings (INTUCH TB) tender offer is complete and the free float drops below 20%.

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

<p><strong>We maintained HOLD rating with new 2022E target price at Bt52.50, (up 13% from Bt46.50), derived from 18.5xPE’22E, which is +1SD of its 3-year trading average.</strong></p><div>• HANA recurring profit was Bt412m (-16%YoY, -6%QoQ). The shortfall in YoY performance was due to high profitability base in 1Q20, given Baht weakness. The QoQ hiccup came from higher SG&amp;A expenses.</div><div></div><div>• There is strong demand for electronic components from automotive, cloud computing, 5G related, industrial and consumer electronic industries.</div><div></div><div>• However, the benefit from the solid demand should be limited by raw material shortage, particularly chip.</div><div></div><div>• HANA disclosed its plan to enter power management and Silicon Carbide (SiC) business, which has high growth, driven by EV industry.</div><div></div><div>• We think development in power management and SiC should be rerating catalyst for the stock, thus we upgraded our target price.</div>

We maintained HOLD rating with new 2022E target price at Bt52.50, (up 13% from Bt46.50), derived from 18.5xPE’22E, which is +1SD of its 3-year trading average.• HANA recurring profit was Bt412m (-16%YoY, -6%QoQ). The shortfall in YoY performance was due to high profitability base in 1Q20, given Baht weakness. The QoQ hiccup came from higher SG&amp;A expenses.• There is strong demand for electronic components from automotive, cloud computing, 5G related, industrial and consumer electronic industries.• However, the benefit from the solid demand should be limited by raw material shortage, particularly chip.• HANA disclosed its plan to enter power management and Silicon Carbide (SiC) business, which has high growth, driven by EV industry.• We think development in power management and SiC should be rerating catalyst for the stock, thus we upgraded our target price.

HANA: Benefit from Strong Demand Could Be Limited by Chip Shortage

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)

The Stocks to Own in Thailand – Vol. 35

Our research team constantly reviews the Thai market to try to find interesting ideas based upon Fundamentals or Valuation or Momentum or Risk or...

A. Stotz Investment Research

HANA: Strong Outlook for 2022 and Beyond, but Priced-In

Yesterday analysts meeting came out with a positive tone. Large capacity expansions in PCBA Thailand (+25% capacity) and IC China (+100% capacity)...

Pi Securities PCL, Thailand

HANA: Robust Sales and Margin

We maintained HOLD rating with new 2022E target price at Bt71.00, (up 35% from Bt52.50), derived from 18.5xPE’22E, which is +2SD of its 3-year...

Pi Securities PCL, Thailand

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

There are 4 changes to the SET50 index with IRPC, KCE, STA & STGT replacing AWC, BAM, TOA & VGI. BANPU could be included in the next couple of...

Brian Freitas

HANA: Benefit from Strong Demand Could Be Limited by Chip Shortage

We maintained HOLD rating with new 2022E target price at Bt52.50, (up 13% from Bt46.50), derived from 18.5xPE’22E, which is +1SD of its 3-year...

Pi Securities PCL, Thailand

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