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>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

Equity Bottom-Up

<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.

<p><strong>Analyst meeting last week came out with a slight positive tone. We expect 3Q20 core operation to recover. In long term, the company continues its growth path via an acquisition in recycling and cost saving.</strong></p><ul>
<li>We expects core earnings to recover in 3Q20, led by growing in sales volume and margin recovery in IOD segment.</li>
<li>Meanwhile, IVL continues its long-term growth path by expansion in recycling business together with cost transformation projects.</li>
<li>We revise down 2020E earning by 54% to factor a weakness in 1H20</li>
</ul><p><strong>We upgrade our recommendation to BUY from HOLD and roll over target price to Bt30.50 (from Bt30), based on 14.2xPE’21E which is equal to world materials sector average.</strong></p>

Analyst meeting last week came out with a slight positive tone. We expect 3Q20 core operation to recover. In long term, the company continues its growth path via an acquisition in recycling and cost saving.
We expects core earnings to recover in 3Q20, led by growing in sales volume and margin recovery in IOD segment.
Meanwhile, IVL continues its long-term growth path by expansion in recycling business together with cost transformation projects.
We revise down 2020E earning by 54% to factor a weakness in 1H20
We upgrade our recommendation to BUY from HOLD and roll over target price to Bt30.50 (from Bt30), based on 14.2xPE’21E which is equal to world materials sector average.

<p>We maintain our ‘BUY’ rating but cut our earnings forecast and target price by 25% to Bt30, based on 13.5xPE’20 which is world materials sector average, as we expect product spread to fluctuate in the low level. However, we expect Huntsman to top up 26% EBITDA in 2020E.</p><p>The story:</p><div>• Revise earnings down by 25% as spread recovery delays</div><div>• Spindletop asset to drive EBITDA by 26%YoY starting in 1Q20E</div><div></div><p>Risks:</p><div>• Raw material price fluctuation</div><div>• Currency exchange rate</div><div>• Continuation in economic slowdown</div>

We maintain our ‘BUY’ rating but cut our earnings forecast and target price by 25% to Bt30, based on 13.5xPE’20 which is world materials sector average, as we expect product spread to fluctuate in the low level. However, we expect Huntsman to top up 26% EBITDA in 2020E.The story:• Revise earnings down by 25% as spread recovery delays• Spindletop asset to drive EBITDA by 26%YoY starting in 1Q20ERisks:• Raw material price fluctuation• Currency exchange rate• Continuation in economic slowdown

IVL: Growth from Acquisition Amid Spread Contraction

<p><strong>Analyst meeting held yesterday came out with a positive tone for overall IVL business. During next era, 2018-2023, its growth are expected to driven by cost efficiency, organic growth and underdevelopment projects.</strong></p><p>Key takeaway:</p><ul>
<li>Management expects EBITDA to reach US$2.4-2.6bn by 2023 (up from US$ 1.4bn in 2018), while ROCE to maintain at 15%.</li>
<li>A cost saving program will be key priority during 2019-23, especially in fibers.</li>
<li>PET business to slightly expand from packaging and IPA recovery, amid slim integrated PET spread at US$219/ton in 2020 (-11%YoY).</li>
<li>Integrated oxide segment to benefits from Huntsman acquisition and new projects in 2020.</li>
</ul><div>
<br>
</div><p><strong>We maintain our BUY rating with a target price of Bt40, derived from world materials sector of 13.5xPE’20, as we expect a potential growth in integrated oxide and fibers segments. Meanwhile, we expect PET to nearly bottom out by 1Q20E.</strong></p>

Analyst meeting held yesterday came out with a positive tone for overall IVL business. During next era, 2018-2023, its growth are expected to driven by cost efficiency, organic growth and underdevelopment projects.Key takeaway:
Management expects EBITDA to reach US$2.4-2.6bn by 2023 (up from US$ 1.4bn in 2018), while ROCE to maintain at 15%.
A cost saving program will be key priority during 2019-23, especially in fibers.
PET business to slightly expand from packaging and IPA recovery, amid slim integrated PET spread at US$219/ton in 2020 (-11%YoY).
Integrated oxide segment to benefits from Huntsman acquisition and new projects in 2020.

 
We maintain our BUY rating with a target price of Bt40, derived from world materials sector of 13.5xPE’20, as we expect a potential growth in integrated oxide and fibers segments. Meanwhile, we expect PET to nearly bottom out by 1Q20E.

IVL: Next Era to Driven by Cost Transformation and Organic Growth

Thailand

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)

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

IVL: Back to Its Growth Path in 3Q20E

Analyst meeting last week came out with a slight positive tone. We expect 3Q20 core operation to recover. In long term, the company continues its...

Pi Securities PCL, Thailand

IVL: Growth from Acquisition Amid Spread Contraction

We maintain our ‘BUY’ rating but cut our earnings forecast and target price by 25% to Bt30, based on 13.5xPE’20 which is world materials sector...

Pi Securities PCL, Thailand

IVL: Next Era to Driven by Cost Transformation and Organic Growth

Analyst meeting held yesterday came out with a positive tone for overall IVL business. During next era, 2018-2023, its growth are expected to...

Pi Securities PCL, Thailand

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