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.

Equity Bottom-Up

<ul><li>The 1Q24 earnings increased YoY due to a wider profit margin but decreased 32% QoQ owing to higher operating expenses.</li><li>M’s earnings came in 8% below our projection thanks to higher-than-expected operating expenses.</li><li>The 1Q24 core profit accounted for 20% of our 2024E earnings projection, which we maintain.</li></ul>

The 1Q24 earnings increased YoY due to a wider profit margin but decreased 32% QoQ owing to higher operating expenses.M’s earnings came in 8% below our projection thanks to higher-than-expected operating expenses.The 1Q24 core profit accounted for 20% of our 2024E earnings projection, which we maintain.

MK RESTAURANT GROUP - 1Q24 Earnings up 7% YoY but Down 32% QoQ, 8% Below the Estimate

<ul><li>We cut our earnings forecasts to reflect weak purchasing power and increased competition in the restaurant business.</li><li>As a result, the three-year earnings growth is projected to decelerate to a CAGR of just 6%, following 17% growth in 2023.</li><li>This diminishes the stock's appeal in terms of the growth potential.</li></ul>

We cut our earnings forecasts to reflect weak purchasing power and increased competition in the restaurant business.As a result, the three-year earnings growth is projected to decelerate to a CAGR of just 6%, following 17% growth in 2023.This diminishes the stock's appeal in terms of the growth potential.

Mk Restaurant Group M - Weak Purchasing Power, Higher Competition

Thematic (Sector/Industry)

<ul><li>The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.</li><li>In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.</li><li>Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. </li></ul>

The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. 

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

<div><div><div><div><ul><li>2Q23E earnings are expected to have fallen 2% YoY but increased 33% QoQ: KTX expects M to report a 2Q23E net profit of Bt432mn (-2% YoY, +33% QoQ) due to the continued recovery in the number of dine-in customers in all of M's restaurant chains.</li><li>Economic activities and higher tourist arrivals, along with the series of public holidays in April, likely contributed to the rise in customer visits.</li><li>Compared to 2Q22, the SSSG for 2Q23E is expected to have increased further at 11%, 6% and 14% for MKR, Yayoi and LCS, respectively. </li></ul></div></div></div></div>

2Q23E earnings are expected to have fallen 2% YoY but increased 33% QoQ: KTX expects M to report a 2Q23E net profit of Bt432mn (-2% YoY, +33% QoQ) due to the continued recovery in the number of dine-in customers in all of M's restaurant chains.Economic activities and higher tourist arrivals, along with the series of public holidays in April, likely contributed to the rise in customer visits.Compared to 2Q22, the SSSG for 2Q23E is expected to have increased further at 11%, 6% and 14% for MKR, Yayoi and LCS, respectively. 

MK Restaurant Group Plc (M) - 2Q23E Earnings Expected to Have Fallen 2% YoY but Increased 33% QoQ

<div><div><div><ul><li>The return of tourist arrivals alongside the strong branding of the firm’s restaurant chains makes M attractive in the food and beverage sector.</li><li>Its two-year earnings (2022-24E) are expected to achieve a 25% CAGR.</li><li>While M is likely to face higher costs, the negative impact may be partially offset by economies of scale, keeping the stock appealing.</li></ul></div></div></div>

The return of tourist arrivals alongside the strong branding of the firm’s restaurant chains makes M attractive in the food and beverage sector.Its two-year earnings (2022-24E) are expected to achieve a 25% CAGR.While M is likely to face higher costs, the negative impact may be partially offset by economies of scale, keeping the stock appealing.

Mk Restaurant Group -Two-Year Earnings to Achieve a 25% CAGR

Thailand

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

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MK Restaurants Group (M TB)

MK RESTAURANT GROUP - 1Q24 Earnings up 7% YoY but Down 32% QoQ, 8% Below the Estimate

The 1Q24 earnings increased YoY due to a wider profit margin but decreased 32% QoQ owing to higher operating expenses. M’s earnings came in 8%...

Krungthai XSpring

Mk Restaurant Group M - Weak Purchasing Power, Higher Competition

We cut our earnings forecasts to reflect weak purchasing power and increased competition in the restaurant business. As a result, the three-year...

Krungthai XSpring

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits

Krungthai XSpring

MK Restaurant Group Plc (M) - 2Q23E Earnings Expected to Have Fallen 2% YoY but Increased 33% QoQ

Economic activities and higher tourist arrivals, along with the series of public holidays in April, likely contributed to the rise in customer visits.

Krungthai XSpring

Mk Restaurant Group -Two-Year Earnings to Achieve a 25% CAGR

The return of tourist arrivals alongside the strong branding of the firm’s restaurant chains makes M attractive in the food and beverage sector.

Krungthai XSpring

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