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)

<p>We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p>

We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.

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

<p><strong>We reiterate a BUY rating and upgrade our target price to Bt50.0, derived from 2xPBV’21E. We expect IVL’s earnings to strongly improve in 1Q21 following an oil price and spread recovery and expect earning peak in 2Q21 from seasonality.</strong></p><div>• IVL posted a net profit of Bt1,310m (flipped from a loss YoY, 245%QoQ).</div><div></div><div>• Excluding stock gain at Bt798m and unusual items, its core profit was Bt1,459m (841%YoY,</div><div>82%QoQ), mainly improved by integrated PET spread, increase in sales volume and fiber margin.</div><div></div><div>• We have a positive view on IVL’s earnings and expect a YoY and QoQ growth in 1H21 following a spread recovery and seasonality in 2Q21.</div><div></div><div>• We upgrade our target price to Bt50.0 (from Bt30), derived from 2xPBV’21E which is equal to world material sector.</div><div></div><div>• Integrated PET spread QTD spikes to US$526/Ton (32%YoY, 27%QoQ).</div>

We reiterate a BUY rating and upgrade our target price to Bt50.0, derived from 2xPBV’21E. We expect IVL’s earnings to strongly improve in 1Q21 following an oil price and spread recovery and expect earning peak in 2Q21 from seasonality.• IVL posted a net profit of Bt1,310m (flipped from a loss YoY, 245%QoQ).• Excluding stock gain at Bt798m and unusual items, its core profit was Bt1,459m (841%YoY,82%QoQ), mainly improved by integrated PET spread, increase in sales volume and fiber margin.• We have a positive view on IVL’s earnings and expect a YoY and QoQ growth in 1H21 following a spread recovery and seasonality in 2Q21.• We upgrade our target price to Bt50.0 (from Bt30), derived from 2xPBV’21E which is equal to world material sector.• Integrated PET spread QTD spikes to US$526/Ton (32%YoY, 27%QoQ).

IVL: Expect Strong Earnings Momentum in 1Q21 and Peak in 2Q21

<p><strong>Crude: Bright E&amp;P business performance from recovering crude price</strong></p><ul><li>We expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021. <strong> PTTEP is our top pick</strong>, the E&amp;P business will most benefit from recovering crude price.</li></ul><p><strong>Refinery: Improving product demand to drive GRM</strong></p><ul><li>Thai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). <strong>TOP is our top pick </strong>among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).</li></ul><p><strong>Petrochemicals: Benefit from global recovery</strong></p><ul><li>We foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). <strong>PTTGC is our top pick</strong> as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.</li></ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/642/original/SMK1.png?1611645077" class="editor-image img-responsive" data-smartkarma-image-id="184642"></figure><p style="text-align: center;"><strong>Valuation Summary*</strong></p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/643/original/Picture1.jpg?1611645252" class="editor-image img-responsive" data-smartkarma-image-id="184643"></figure></section><p style="text-align: center;"><em>Source: CGS Research, Company data, SET</em></p></section>

Crude: Bright E&amp;P business performance from recovering crude priceWe expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021.  PTTEP is our top pick, the E&amp;P business will most benefit from recovering crude price.Refinery: Improving product demand to drive GRMThai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). TOP is our top pick among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).Petrochemicals: Benefit from global recoveryWe foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). PTTGC is our top pick as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.Valuation Summary*
Source: CGS Research, Company data, SET

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

<p><strong>Analyst meeting yesterday came out with a neutral tone. We expect 4Q20 core operation to gradual recover, led by sales volume growth in all business units and margin improvement in IOD unit. </strong></p><ul>
<li>We foresee a slight recovery in IVL’s earnings in 4Q20, as we expect sales volume to continuously grow QoQ. Also, we believe fiber, MEG and MTBE margin to start improving after polyester and oil consumption have recovered in 3Q20.</li>
<li>Meanwhile, we expect core PET business to strengthen as PET margin in US and Europe starts to rise in September.</li>
<li>IVL reported a core profit at Bt800m (-71%YoY, -69%QoQ). A weak performance was dragged by i) margin contraction in combine PET and IOD products and ii) plant shutdown due to hurricane Laura and lightning strike (in IOD unit), despite sales volume growth YoY and QoQ.</li>
<li>We revise down 2020E earning by 70% to factor in a weakness in 3Q2o.</li>
</ul><p><strong>We maintain our BUY rating with a trimmed target price at Bt30.0 (from Bt32), based on 14.4xPE’21E which is equal to world materials sector average.</strong></p>

Analyst meeting yesterday came out with a neutral tone. We expect 4Q20 core operation to gradual recover, led by sales volume growth in all business units and margin improvement in IOD unit. 
We foresee a slight recovery in IVL’s earnings in 4Q20, as we expect sales volume to continuously grow QoQ. Also, we believe fiber, MEG and MTBE margin to start improving after polyester and oil consumption have recovered in 3Q20.
Meanwhile, we expect core PET business to strengthen as PET margin in US and Europe starts to rise in September.
IVL reported a core profit at Bt800m (-71%YoY, -69%QoQ). A weak performance was dragged by i) margin contraction in combine PET and IOD products and ii) plant shutdown due to hurricane Laura and lightning strike (in IOD unit), despite sales volume growth YoY and QoQ.
We revise down 2020E earning by 70% to factor in a weakness in 3Q2o.
We maintain our BUY rating with a trimmed target price at Bt30.0 (from Bt32), based on 14.4xPE’21E which is equal to world materials sector average.

<section><div id="ember1732"><div><p>We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p></div></div></section>

Thailand

PTT Global Chemical PCL is a fully integrated petrochemical and chemical company. The Company's products are derived from its main product, Olefins, namely ethylene and propylene.

TOA Paint (Thailand) Public Company Limited manufactures paint products. The Company offers wood, protective, and marine coatings, as well as decorative and heavy paints, chemical construction, aerosol spray, and abrasive products. TOA Paint serves household and industrial market in southeast Asia.

Thai Central Chemical Public Company Limited produces chemical fertilizers. Through it subsidiaries, the company imports and markets fertilizers, agro-chemicals, minerals, plastic, and industrial solvents.

Eastern Polymer Group Public Company Limited operates in a range of industries. The Company, through its subsidiaries, manufactures rubber insulation and accessories for air-conditioning systems, automotive parts and accessories and disposable food packaging and plastic sheets.

Thai Rayon Public Company Limited manufactures various types of fiber and chemicals, including micro denier, normal denier, coarser denier and viscose rayon staple fibre.  Through joint venture, the Company produces carbon black, sodium tripolyphosphate, acrylic fiber and epoxy resins.

Global Green Chemicals Public Company Limited manufactures chemicals. The Company produces and sells methyl esters, fatty alcohols, refined glycerine, and other oleochemical products. Global Green Chemicals serves customers worldwide.

Siam Pan Group Public Company Limited is an importer and sole distributor of lubricating oil and grease of Trane, Daimond and Crocodile brand names.  The Company also distributes Boliden brand batteries.

Thai Mitsuwa PCL develops, manufactures, assembles, silk-screens and sprays plastics parts for electric, electronic, and automotive products for sale to OEMs (Original Equipment Manufacturers).  Main products are plastic parts for VCR, DVD, TV, handy cam, camera, body parts for facsimile, copier, printer, microwave oven, car bumper, car door mirror and car audio equipment.

Selic Corp Public Company Limited manufactures and sells adhesives for application in footwear, furniture, food and beverage, bookbinding, packaging, construction, automotive, and electronic industries in Thailand and internationally. Selic Corp Public Company Limited is based in Bangkok, Thailand.

Chememan Public Company Limited operates as a mineral and chemical company. The Company transforms natural resources into basic and specialty chemicals and synthetic products. Chememan offers lime production for agricultural farm, feed mill, glass and bottle, paper, pulp, petrochemical, sugar products, and non-ferrous metals. Chememan serves customers worldwide.

NOF CORPORATION is a diversified chemical producer whose products include processed oil/fats, explosives and other chemical products. The Company has manufacturing/sales subsidiaries in US, Indonesia and China.

K+S AG manufactures and markets within the fertilizer division standard and speciality fertilizers to the agricultural and industrial industries worldwide. In its salt business, the company produces de-icing salt, food grade salt, industrial salt and salt for chemical use.

Hangzhou Oxygen Plant Group Co.,Ltd. manufactures industrial gas machinery products. The Company produces air separation equipment, small-scale air separation equipment, liquefied nitrogen wash cold boxes, liquefied natural gas separation equipment, and other products. Hangzhou Oxygen Plant Group markets its products worldwide.

Finolex Industries Limited manufactures PVC pipes and fittings, which are sold primarily to businesses in the agricultural sector.  The Company also manufactures PVC resins, which are used as raw materials for PVC pipes and fittings.

Castrol (India) Limited manufactures and markets automotive and industrial lubricants and specialty products. The Company's products include lubricating oils, greases and brake fluids. The Company also manufactures cable filling compounds, jellies, waxes and other items.

Kumho Petrochemical Co., Ltd. manufactures synthetic rubbers, synthetic resins, and rubber chemicals.  The Company's products include styrene butadiene, acrylonitrile butadiene, polystyrene, expandable polystyrene, and antioxidant.  Kumho Petrochemical provides construction, transportation, and financial services through its subsidiaries.

Quaker Chemical Corporation produces, develops, and markets custom-formulated chemical specialty products.  The Company also provides fluid management services for manufacturers around the world, primarily in the steel, automotive, and can industries.

Kingfa Sci. & Tech. Co., Ltd. manufactures and markets modified plastic products, including fire resistant resin, reinforced resin, plastic alloy, and other related products.

ADEKA CORPORATION manufactures basic chemicals and foodstuffs.  The Company's products include resin products, insulators, and processed fat/oil products.

Navin Fluorine International Limited manufactures fluorochemicals. The Company produces benzotrifuoride derivatives, fluoro benzene derivatives, fluoro toluene derivatives, and aliphatic fluoro compounds.

Indorama Ventures PCL manufactures and distributes polyethylene terephthalate ("PET"), purified terephthalic acid ("PTA") and related products, polyester fibers and yarns, and wool products.

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Indorama Ventures (IVL TB)

The Stocks to Own in ASEAN – Vol. 34

Our research team constantly reviews the ASEAN markets to try to find interesting ideas based on Fundamentals or Valuation or Momentum or Risk or...

A. Stotz Investment Research

IVL: Expect Strong Earnings Momentum in 1Q21 and Peak in 2Q21

We reiterate a BUY rating and upgrade our target price to Bt50.0, derived from 2xPBV’21E. We expect IVL’s earnings to strongly improve in 1Q21...

Pi Securities PCL, Thailand

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Energy Sector : Overweight- Oil demand recovery to drive 2021 earnings. We expect bright E&P business performance from recovering crude price, and...

Pi Securities PCL, Thailand

IVL: Expects a Gradual Recovery in 4Q20

We foresee a slight recovery in IVL’s earnings in 4Q20, as we expect sales volume to grow QoQ. Also, we believe fiber, MEG and MTBE margin to start...

Pi Securities PCL, Thailand

The Stocks to Own in ASEAN – Vol. 32

We highlight 14 stocks in ASEAN that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the ASEAN...

A. Stotz Investment Research

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