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>Maintain BUY recommendation for M with a target price of Bt64. We expect the company to report 3Q22 net profit at Bt426m(-3%QoQ)and recovery from a loss of Bt257m in 3Q21.</li>
<li>Expect 3Q22 turn to profit but should be soften QoQ   We expect 3Q22 net profit to be at Bt426m (-3%QoQ), recovery from a loss of Bt257m in 3Q21.</li>
<li>Revenue in 3Q22 is expected at Bt4bn (+104%YoY,flat QoQ) supported by solid SSSG in three main brands(MK at +109%YoY,Yayoi at +85%YoY,LCS at +120%YoY)and the selling price adjustment in June 2022.  </li>
</ul>


Maintain BUY recommendation for M with a target price of Bt64. We expect the company to report 3Q22 net profit at Bt426m(-3%QoQ)and recovery from a loss of Bt257m in 3Q21.
Expect 3Q22 turn to profit but should be soften QoQ   We expect 3Q22 net profit to be at Bt426m (-3%QoQ), recovery from a loss of Bt257m in 3Q21.
Revenue in 3Q22 is expected at Bt4bn (+104%YoY,flat QoQ) supported by solid SSSG in three main brands(MK at +109%YoY,Yayoi at +85%YoY,LCS at +120%YoY)and the selling price adjustment in June 2022.  


<ul>
<li>Maintain BUY recommendation for M with a target price of Bt64. A strong earnings recovery outlook in restaurant with an additional catalyst from international tourist arrivals.</li>
<li>Solid SSSG amid rising inflation SSSG in three main brands remain solid at +170%YoY in July 2022 and SSSG is discount at 10-15% from pre-COVID level in Aug 2022 supported </li>
<li>Insignificant impact from minimum wage adjustment The restaurant business is a labor-intensive industry which depends very much on employees. Cost of employee accounted for 48%-52% of operating expense during 2019-2021.</li>
</ul>


Maintain BUY recommendation for M with a target price of Bt64. A strong earnings recovery outlook in restaurant with an additional catalyst from international tourist arrivals.
Solid SSSG amid rising inflation SSSG in three main brands remain solid at +170%YoY in July 2022 and SSSG is discount at 10-15% from pre-COVID level in Aug 2022 supported 
Insignificant impact from minimum wage adjustment The restaurant business is a labor-intensive industry which depends very much on employees. Cost of employee accounted for 48%-52% of operating expense during 2019-2021.


<ul>
<li>Maintain BUY recommendation for M with a target price of Bt64. M’s 2Q22 net profit came in at Bt439m (+62%QoQ) and recovery from a loss of Bt99m in 2Q21</li>
<li>Solid earnings amid rising food costs M reported a net profit of Bt439m in 2Q22 (+62%QoQ) and recovery from a loss of Bt99m in 2Q21.The 1H22 result accounted for 56% </li>
<li>The YoY recovery in earnings supported by top-line recovery and GPM expansion YoY from resuming dine-in services.</li>
</ul>


Maintain BUY recommendation for M with a target price of Bt64. M’s 2Q22 net profit came in at Bt439m (+62%QoQ) and recovery from a loss of Bt99m in 2Q21
Solid earnings amid rising food costs M reported a net profit of Bt439m in 2Q22 (+62%QoQ) and recovery from a loss of Bt99m in 2Q21.The 1H22 result accounted for 56% 
The YoY recovery in earnings supported by top-line recovery and GPM expansion YoY from resuming dine-in services.


Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.</li><li>We project the firm’s earnings to turn around from the Bt99mn loss reported in 2Q21 to a net profit of Bt392mn in 2Q22E, up 494% YoY and 45% QoQ, driven by the expected increase in SSSG at its chain restaurants, i.e., MK at +60%, Yayoi at +53% and Laem Charoen at +54%.</li><li><span style="font-size: var(--content-font-size);">AH’s main business is OEM auto parts, contributing 74% of revenue in 2021.</span></li></ul></div></div></div></div>

We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.We project the firm’s earnings to turn around from the Bt99mn loss reported in 2Q21 to a net profit of Bt392mn in 2Q22E, up 494% YoY and 45% QoQ, driven by the expected increase in SSSG at its chain restaurants, i.e., MK at +60%, Yayoi at +53% and Laem Charoen at +54%.AH’s main business is OEM auto parts, contributing 74% of revenue in 2021.

<ul>
<li>We recommend BUY for M supported by three main reason:1) a strong earnings recovery outlook in 2022-24,2) net cash position with upside from new M&amp;A deal and LCS franchise fees</li>
<li>Earnings is expected to turn positive and strongly QoQ improvement in 2Q22 We expect 2Q22 net profit to be at Bt444m (+64%QoQ), recovery from a loss of Bt99m in 2Q21</li>
<li>Rising food costs are manageable   Most of costs are raw material costs and the major portion of food cost are pork and poultry.</li>
</ul>


We recommend BUY for M supported by three main reason:1) a strong earnings recovery outlook in 2022-24,2) net cash position with upside from new M&amp;A deal and LCS franchise fees
Earnings is expected to turn positive and strongly QoQ improvement in 2Q22 We expect 2Q22 net profit to be at Bt444m (+64%QoQ), recovery from a loss of Bt99m in 2Q21
Rising food costs are manageable   Most of costs are raw material costs and the major portion of food cost are pork and poultry.


Thailand

MK Restaurants Group PCL operates restaurants. The Company supplies traditional Thai food.

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MK Restaurants Group (M TB)

M : Expect 3Q22 Profit to Remain Solid

Maintain BUY recommendation for M with a target price of Bt64. We expect the company to report 3Q22 net profit at Bt426m (-3%QoQ) and recovery from...

Pi Securities PCL, Thailand

M : Bright Earnings Outlook in 2022-24

Maintain BUY recommendation for M with a target price of Bt64. A strong earnings recovery outlook in restaurant with an additional catalyst from...

Pi Securities PCL, Thailand

M : Solid 2Q22 Earnings as Expected

Maintain BUY recommendation for M with a target price of Bt64. M’s 2Q22 net profit came in at Bt439m (+62%QoQ) and recovery from a loss of Bt99m in...

Pi Securities PCL, Thailand

Small Cap Top Picks - August 8, 2022

We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.

Krungthai XSpring

M : Time to Harvest

We recommend BUY for M supported by three main reason: 1) a strong earnings recovery outlook in 2022-24, 2) net cash position with upside from new...

Pi Securities PCL, Thailand

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