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

Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt15.6, which is derived from 33xPE’21E, a 40% premium to Thai Consumer Discretionary.<div>• SSSG turned to positive at double digit growth in April 2021 due to the low base from last year. Meanwhile, we believe SSSG in 2Q21 will improve to 5% from +0.6% and -6.3% in 1Q21 and 4Q20, respectively.  </div><div></div><div>• We foresee 2Q21 earnings to grow YoY from a low base in 2Q20 but flat QoQ driven by gross profit margin expansion from increasing product mix toward more on private label segment.</div><div>
 
</div>We still like HMPRO for its 1) the margin expansion on the back of increasing revenue contribution from private label segment, 2) strong recovery of its SSSG following a development in COVID-19 vaccination progress, 3) potential revenue from of Omni-channel as it will be key revenue driver in the long term, and, 4) potential branch expansion in overseas market such as Vietnam.

Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt15.6, which is derived from 33xPE’21E, a 40% premium to Thai Consumer Discretionary.• SSSG turned to positive at double digit growth in April 2021 due to the low base from last year. Meanwhile, we believe SSSG in 2Q21 will improve to 5% from +0.6% and -6.3% in 1Q21 and 4Q20, respectively.  • We foresee 2Q21 earnings to grow YoY from a low base in 2Q20 but flat QoQ driven by gross profit margin expansion from increasing product mix toward more on private label segment.
 
We still like HMPRO for its 1) the margin expansion on the back of increasing revenue contribution from private label segment, 2) strong recovery of its SSSG following a development in COVID-19 vaccination progress, 3) potential revenue from of Omni-channel as it will be key revenue driver in the long term, and, 4) potential branch expansion in overseas market such as Vietnam.

HMPRO: Expect 2Q21 Earnings Recover YoY from Low Base

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

A conversation with <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> management post its recent results revealed a company primed for a rebound as the Thai economy recovers and eventually tourism recovers.
4Q2020 saw some recovery QoQ with the glass and aluminium can businesses only down slightly versus 4Q2019. The was despite major repair (scheduled) to one of the company's glass furnaces in 4Q2020 with a 60-day shutdown.
Demand for aluminium cans was impacted by the lack of tourists and less cross-border trade but boosted by new RTD customers plus the introduction of new can variants, which will continue into 2021. 
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> has already added new aluminium can capacity to take advantage of increased demand in Vietnam from Sabeco. 
Big C continues to suffer from a high-base effect from last year and will also suffer from this in 2Q2021 before YoY comparisons start to improve in 2Q2021. 
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> will resume its store expansion and widespread renovation in 2021, which will support future growth and returns. 
The company is taking a more digital approach to marketing using Nielsen data plus collaborating with platforms such as Food Panda, Happy Fresh, Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>), and Lazada to sell more online. 
Competitive pressures remain as always although probably lessening from Tesco as it is slowly rebranded under Lotus, with the main pressure for Big C now coming from government copayment schemes, which have just been extended. 
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> will start to see much better numbers from 2Q2021 but 1Q2021 should see sequential improvements QoQ, underlining the momentum behind the recovery.  
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a>trades on 25.5x FY21E PER and 21.6x FY22E PER versus its 5-year aveRage forward PER of 29.4x. The company is also expected to see EPS growth of +44% and +18% for FY21E and FY22E respectively, making it look like an attractive recovery prospect and looks like good value versus peers.

A conversation with Berli Jucker (BJC TB) management post its recent results revealed a company primed for a rebound as the Thai economy recovers and eventually tourism recovers.
4Q2020 saw some recovery QoQ with the glass and aluminium can businesses only down slightly versus 4Q2019. The was despite major repair (scheduled) to one of the company's glass furnaces in 4Q2020 with a 60-day shutdown.
Demand for aluminium cans was impacted by the lack of tourists and less cross-border trade but boosted by new RTD customers plus the introduction of new can variants, which will continue into 2021. 
Berli Jucker (BJC TB) has already added new aluminium can capacity to take advantage of increased demand in Vietnam from Sabeco. 
Big C continues to suffer from a high-base effect from last year and will also suffer from this in 2Q2021 before YoY comparisons start to improve in 2Q2021. 
Berli Jucker (BJC TB) will resume its store expansion and widespread renovation in 2021, which will support future growth and returns. 
The company is taking a more digital approach to marketing using Nielsen data plus collaborating with platforms such as Food Panda, Happy Fresh, Shopee (Sea Ltd (SE US)), and Lazada to sell more online. 
Competitive pressures remain as always although probably lessening from Tesco as it is slowly rebranded under Lotus, with the main pressure for Big C now coming from government copayment schemes, which have just been extended. 
Berli Jucker (BJC TB) will start to see much better numbers from 2Q2021 but 1Q2021 should see sequential improvements QoQ, underlining the momentum behind the recovery.  
Berli Jucker (BJC TB)trades on 25.5x FY21E PER and 21.6x FY22E PER versus its 5-year aveRage forward PER of 29.4x. The company is also expected to see EPS growth of +44% and +18% for FY21E and FY22E respectively, making it look like an attractive recovery prospect and looks like good value versus peers.

Berli Jucker (BJC TB) - Primed for Rebound

<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> is finally starting to see the light of day across is numerous consumer-related businesses in3Q2020, from its core Thai retail business through BigC to its aluminum can and glass bottling across SE Asia, as well as its consumer supply chain business. The company's packaging supply chain business, which includes glass bottling and aluminum cans continues to see improvements since the trough in 2Q2020, with cans driving by new sizes. <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a>'s Big C retail business under modern supply chain continues to suffer from the lack of tourists in Thailand but is seeing some improvements with Mini BigC doing especially well. Rentals have started to pick up, which is positive for profitability going forward. The company's consumer supply chain business has seen a decent pick up with 3Q2020 sales growing by +15.1% YoY and +12.6% YoY for 9M2020 driven by non-food, international trading, and logistics.Valuations look attractive versus historical levels, especially in view of an impending recovery, with the company trading on 22.7x FY21E PER versus its 3-year average of 28.3x forward PER.

Berli Jucker (BJC TB) is finally starting to see the light of day across is numerous consumer-related businesses in3Q2020, from its core Thai retail business through BigC to its aluminum can and glass bottling across SE Asia, as well as its consumer supply chain business. The company's packaging supply chain business, which includes glass bottling and aluminum cans continues to see improvements since the trough in 2Q2020, with cans driving by new sizes. Berli Jucker (BJC TB)'s Big C retail business under modern supply chain continues to suffer from the lack of tourists in Thailand but is seeing some improvements with Mini BigC doing especially well. Rentals have started to pick up, which is positive for profitability going forward. The company's consumer supply chain business has seen a decent pick up with 3Q2020 sales growing by +15.1% YoY and +12.6% YoY for 9M2020 driven by non-food, international trading, and logistics.Valuations look attractive versus historical levels, especially in view of an impending recovery, with the company trading on 22.7x FY21E PER versus its 3-year average of 28.3x forward PER. 

Berli Jucker (BJC TB) - Consumer Kingpin on the Cusp of Recovery

We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading range since its IPO in 2019 and at a 40% discount to the Asia ex-japan Consumer Discretionary Sector.
The story:
<ul>
<li>Enjoys strong market position in Thailand</li>
<li>Margin expansion in the next two years</li>
<li>Younique brand will drive S-curve growth</li>
<li>Online platform has good growth potential</li>
</ul>
<div>
 
</div>
Risks:
<ul>
<li>Highly competitive industry</li>
<li>Foreign exchange rate fluctuation</li>
</ul>
Background: Index Living Mall Public Company Limited (ILM) engages in the retail and wholesale of furniture, electronic and home decorative products in Thailand with 31 stand-alone stores nationwide. The company operates in four segments: furniture retail, furniture manufacturing, area rentals, and others. The company is also involved in the import, export and distribution of furniture and home appliances; and building and warehouse rental activities, as well as in the franchise business. In addition, it operates rental and retail space services in Index Living Malls and community malls under The Walk, Little Walk, and Index Mall brands.

We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading range since its IPO in 2019 and at a 40% discount to the Asia ex-japan Consumer Discretionary Sector.
The story:

Enjoys strong market position in Thailand
Margin expansion in the next two years
Younique brand will drive S-curve growth
Online platform has good growth potential


 

Risks:

Highly competitive industry
Foreign exchange rate fluctuation

Background: Index Living Mall Public Company Limited (ILM) engages in the retail and wholesale of furniture, electronic and home decorative products in Thailand with 31 stand-alone stores nationwide. The company operates in four segments: furniture retail, furniture manufacturing, area rentals, and others. The company is also involved in the import, export and distribution of furniture and home appliances; and building and warehouse rental activities, as well as in the franchise business. In addition, it operates rental and retail space services in Index Living Malls and community malls under The Walk, Little Walk, and Index Mall brands. 

ILM: King of Home Furnishing Retailers in Thailand

We downgrade DOHOME from BUY to HOLD due to limited upside to our target. Our new target price of Bt14.2 (Previous TP; 16.50) derived from 33xPE’21E, which is close to the biggest home-improvement player in Thailand. Our target price cut factored in 17% dilution to EPS’21 from stock dividend paid during 3Q20 DOHOME reported 3Q20 net profit at Bt187m (+40%YoY, +28%QoQ). The 9M20 result was in-line with our expectation and accounted for 73% of 2020E forecast.<ul>
<li>We expect 4Q20 earnings performance to grow YoY, but flat QoQ driven by government stimulus scheme and improving margin from higher retail sales contribution.</li>
<li>We still like DOHOME for its 1) cheapest valuation with high potential growth compared to peers; 2) its store locations that aim to tap high spending customers; 3) store network expansion plan with +25%CAGR in the next two years; and 4) the ample room to improve its margin.</li>
</ul>

We downgrade DOHOME from BUY to HOLD due to limited upside to our target. Our new target price of Bt14.2 (Previous TP; 16.50) derived from 33xPE’21E, which is close to the biggest home-improvement player in Thailand. Our target price cut factored in 17% dilution to EPS’21 from stock dividend paid during 3Q20 DOHOME reported 3Q20 net profit at Bt187m (+40%YoY, +28%QoQ). The 9M20 result was in-line with our expectation and accounted for 73% of 2020E forecast.
We expect 4Q20 earnings performance to grow YoY, but flat QoQ driven by government stimulus scheme and improving margin from higher retail sales contribution.
We still like DOHOME for its 1) cheapest valuation with high potential growth compared to peers; 2) its store locations that aim to tap high spending customers; 3) store network expansion plan with +25%CAGR in the next two years; and 4) the ample room to improve its margin.


DOHOME: Solid SSSG Drove 3Q20 Earnings to Grow YoY

Thailand

Home Product Center Public Company Limited is a retailer of building materials and home improvement products.

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Home Product Center (HMPRO TB)

HMPRO: Expect 2Q21 Earnings Recover YoY from Low Base

Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt15.6, which is derived from 33xPE’21E, a...

Pi Securities PCL, Thailand

Berli Jucker (BJC TB) - Primed for Rebound

Berli Jucker is an interesting proxy for the consumer rebound in Thailand and Vietnam through its consumer packaging, retail, and other consumer...

Angus Mackintosh

Berli Jucker (BJC TB) - Consumer Kingpin on the Cusp of Recovery

Berli Jucker (BJC TB) remains an interesting proxy for domestic consumer recovery in SE Asia through its consumer packaging business, and more...

Angus Mackintosh

ILM: King of Home Furnishing Retailers in Thailand

We initiate coverage of ILM with a BUY rating, based on a target price of Bt22.0, which is derived from 15xPE’21E, close to its average trading...

Pi Securities PCL, Thailand

DOHOME: Solid SSSG Drove 3Q20 Earnings to Grow YoY

We expect 4Q20 earnings performance to grow YoY, but flat QoQ driven by government stimulus scheme and improving margin from higher retail sales...

Pi Securities PCL, Thailand

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