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 maintain HOLD rating with new 1H23E target price at Bt19.80/share, from Bt25.50/share (-22%), derived from 19.9x PE’1H23E, which is its 5-year trading average.</strong></p><div>• MAJOR had net losses in 2Q21 at B218m, better than net losses of Bt475m in 2Q20 but worse than net losses of Bt120m in 1Q21.</div><div></div><div>• Well expenses control buoyed overall performance from Covid lockdown.</div><div></div><div>• The losses should still incur in 3Q21 given the lockdown situation before recover in 4Q21 on the expectation of cinemas reopening</div><div></div><div>• MAJOR will diversify business to content creator, serving to streaming platform.</div><div></div><div>• We revised down 2021E recurring earnings to losses and cut net profit forecast in 22-23E by 33% and 17%, respectively</div>

We maintain HOLD rating with new 1H23E target price at Bt19.80/share, from Bt25.50/share (-22%), derived from 19.9x PE’1H23E, which is its 5-year trading average.• MAJOR had net losses in 2Q21 at B218m, better than net losses of Bt475m in 2Q20 but worse than net losses of Bt120m in 1Q21.• Well expenses control buoyed overall performance from Covid lockdown.• The losses should still incur in 3Q21 given the lockdown situation before recover in 4Q21 on the expectation of cinemas reopening• MAJOR will diversify business to content creator, serving to streaming platform.• We revised down 2021E recurring earnings to losses and cut net profit forecast in 22-23E by 33% and 17%, respectively

<p><strong>Yesterday MAJOR noticed to SET about an approving of the sale of its 30.36% share in Siam Future Development PCL (SF) to o Central Pattana PCL (CPN) for Bt7.77bn.</strong></p><div>• The company would book Bt2.8bn extra gain from the transaction.</div><div></div><div>• The cash from the transaction would be used for debt repayment of Bt5.3bn, business expansion of Bt265m, and working capital of Bt2.2bn.</div><div></div><div>• The debt repayment will lean its gearing and save Bt159m interest expenses annually, which would mostly match a sacrifice of equity income from SF.</div><div>
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</div><p><strong>We downgrade our recommendation to HOLD rating, from BUY, with unchanged target price at Bt25.50/share, derived from 3.5x PBV’21E, which is its 5-year trading average and near pre-covid level at 3.6x. The stock increased 22% since our upgrade last month, on the expectation to be prime beneficiary from Covid ease. However, the situation seems worsen thus the recovery should be delayed.</strong></p>

Yesterday MAJOR noticed to SET about an approving of the sale of its 30.36% share in Siam Future Development PCL (SF) to o Central Pattana PCL (CPN) for Bt7.77bn.• The company would book Bt2.8bn extra gain from the transaction.• The cash from the transaction would be used for debt repayment of Bt5.3bn, business expansion of Bt265m, and working capital of Bt2.2bn.• The debt repayment will lean its gearing and save Bt159m interest expenses annually, which would mostly match a sacrifice of equity income from SF.
 
We downgrade our recommendation to HOLD rating, from BUY, with unchanged target price at Bt25.50/share, derived from 3.5x PBV’21E, which is its 5-year trading average and near pre-covid level at 3.6x. The stock increased 22% since our upgrade last month, on the expectation to be prime beneficiary from Covid ease. However, the situation seems worsen thus the recovery should be delayed.

MAJOR: Sell 30% Investment in SF for Bt7.8bn

<p>We maintain BUY rating and upgrade our target price to Bt25.50/share, from Bt22.50/share (+13%), derived from 3.5x PBV’21E, which is its 5-year trading average and near pre-covid level at 3.6x.</p><div>• We revised down 2021-22E earning by 74% and 7%, respectively, to reflect Covid overhang.</div><div></div><div>• We expect MAJOR to recovery strongly from the third wave outbreak just like it did in the easing of the first wave.</div><div></div><div>• Also, the vaccine roll out will be relieve the situation sustainably.</div><div></div><div>• Given the long time Covid overhang, many quality movies has been awaited to be screened when the situation eases.</div><div></div><div>• We believe the pent-up movies supply meeting with pent-up moviegoers demand would firmly boost MAJOR earning performance.</div><div></div><div>• MAJOR is trading at 2.9x trailing PBV below pre-Covid trailing PBV at 3.6x.</div><div></div><div>• With an assumption that Covid situation is on the recovery path, we expected the valuation gap will gradually close.</div>

We maintain BUY rating and upgrade our target price to Bt25.50/share, from Bt22.50/share (+13%), derived from 3.5x PBV’21E, which is its 5-year trading average and near pre-covid level at 3.6x.• We revised down 2021-22E earning by 74% and 7%, respectively, to reflect Covid overhang.• We expect MAJOR to recovery strongly from the third wave outbreak just like it did in the easing of the first wave.• Also, the vaccine roll out will be relieve the situation sustainably.• Given the long time Covid overhang, many quality movies has been awaited to be screened when the situation eases.• We believe the pent-up movies supply meeting with pent-up moviegoers demand would firmly boost MAJOR earning performance.• MAJOR is trading at 2.9x trailing PBV below pre-Covid trailing PBV at 3.6x.• With an assumption that Covid situation is on the recovery path, we expected the valuation gap will gradually close.

<p><strong>We downgrade our recommendation to HOLD rating, from BUY, with new 2022E target price at Bt19.70, from Bt18.20, derived from 17.6xPE’22E, which is -1 SD of its 3-year trading average.</strong></p><div>• MAJOR 4Q20 net profit was Bt328m, up 24% YoY and turning from losses of Bt125m in 3Q19.</div><div></div><div>• 4Q20 EBIT turned black at Bt363m from the losses of Bt258-766m during 1Q20-3Q20.</div><div></div><div>• MAJOR expected revenue recovery to be seen in 2021E, on the back of Covid-19 ease and more attractive blockbuster to be released.</div><div></div><div>• It would hiccup in 1Q21 given the new round of Covid spread, before a hopeful recovery in 2Q21, which was normally a high season for business.</div><div></div><div>• MAJOR targeted to produce 18 Thai movies in 2021E, more aggressive than the past norm at 7-10 movies per year. It planed to serve both cinema release and demand from streaming platform.</div><p></p><p><strong>We think the Covid situation should make stock unattractive in 1H21, thus we downgrade our recommendation to HOLD.</strong></p>

We downgrade our recommendation to HOLD rating, from BUY, with new 2022E target price at Bt19.70, from Bt18.20, derived from 17.6xPE’22E, which is -1 SD of its 3-year trading average.• MAJOR 4Q20 net profit was Bt328m, up 24% YoY and turning from losses of Bt125m in 3Q19.• 4Q20 EBIT turned black at Bt363m from the losses of Bt258-766m during 1Q20-3Q20.• MAJOR expected revenue recovery to be seen in 2021E, on the back of Covid-19 ease and more attractive blockbuster to be released.• It would hiccup in 1Q21 given the new round of Covid spread, before a hopeful recovery in 2Q21, which was normally a high season for business.• MAJOR targeted to produce 18 Thai movies in 2021E, more aggressive than the past norm at 7-10 movies per year. It planed to serve both cinema release and demand from streaming platform.We think the Covid situation should make stock unattractive in 1H21, thus we downgrade our recommendation to HOLD.

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Thematic (Sector/Industry)

<p>Resistance is futile in the world of technology. In this review, we observe a number of Thai companies getting on the bandwagon. Others are finding it more difficult to adapt. For those with the strength to make real progress, it may be worth a look.</p><ul>
<li>
<strong>BAY upgrades Finnovate to venture capital </strong>after years of being an integral part of the bank. Finnovate's portfolio now includes Omise (cryptocurrency), Grab (food delivery), and Finnomena (financial advisory).</li>
<li>
<strong>Rise of robots. </strong>Thailand emerges as top ten user of industrial robots globally and key player in emerging markets and threatening both agricultural and industrial jobs nationwide, according to<em> TNN Business Watch</em>.</li>
<li>
<strong>RS reported strong profit growth of over 60% </strong>but more importantly, much of this is driven by yet a new business....e-commerce.</li>
<li>
<strong>Three interesting Thai startups </strong>were recently identified based on their strong funding: 1) a CP Group-backed AI firm Amity; 2) aCommerce, an e-commerce end-to-end enabler; and 3) Synqa, the parent company of Omise.</li>
<li>
<strong>Lazada goes omni-channel. </strong>Lazada sets up its first pop-up store at Siam Center emulating American leaders like WalMart and Amazon. They may have lost the crown to Shoppee, but it's still a better investment that local defender COL, which partners with rival JD.com.</li>
</ul>

Resistance is futile in the world of technology. In this review, we observe a number of Thai companies getting on the bandwagon. Others are finding it more difficult to adapt. For those with the strength to make real progress, it may be worth a look.

BAY upgrades Finnovate to venture capital after years of being an integral part of the bank. Finnovate's portfolio now includes Omise (cryptocurrency), Grab (food delivery), and Finnomena (financial advisory).

Rise of robots. Thailand emerges as top ten user of industrial robots globally and key player in emerging markets and threatening both agricultural and industrial jobs nationwide, according to TNN Business Watch.

RS reported strong profit growth of over 60% but more importantly, much of this is driven by yet a new business....e-commerce.

Three interesting Thai startups were recently identified based on their strong funding: 1) a CP Group-backed AI firm Amity; 2) aCommerce, an e-commerce end-to-end enabler; and 3) Synqa, the parent company of Omise.

Lazada goes omni-channel. Lazada sets up its first pop-up store at Siam Center emulating American leaders like WalMart and Amazon. They may have lost the crown to Shoppee, but it's still a better investment that local defender COL, which partners with rival JD.com.


Silicon Stories M: If You Can't Beat Them, Join Them

Thailand

Major Cineplex Group Public Company Limited operates movie theater chain under Major Cineplex name, and bowling alley chain under Major Bowl name. The Company also provides theater advertising services and concession stand rentals in its movie and bowling complexes.

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Major Cineplex Group (MAJOR TB)

MAJOR: Taking Longer to Recover

We maintain HOLD rating with new 1H23E target price at Bt19.80/share, from Bt25.50/share (-22%), derived from 19.9x PE’1H23E, which is its 5-year...

Pi Securities PCL, Thailand

MAJOR: Sell 30% Investment in SF for Bt7.8bn

Yesterday MAJOR noticed to SET about an approving of the sale of its 30.36% share in Siam Future Development PCL (SF) to o Central Pattana PCL...

Pi Securities PCL, Thailand

MAJOR: Prime Beneficiary from Covid Ease

We maintain BUY rating and upgrade our target price to Bt25.50/share, from Bt22.50/share (+13%), derived from 3.5x PBV’21E, which is its 5-year...

Pi Securities PCL, Thailand

MAJOR: To Recover from 2Q21 Onward

We downgrade our recommendation to HOLD rating, from BUY, with new 2022E target price at Bt19.70, from Bt18.20, derived from 17.6xPE’22E, which is ...

Pi Securities PCL, Thailand

Silicon Stories M: If You Can't Beat Them, Join Them

Resistance is futile in the world of

Athaporn Arayasantiparb, CFA

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