Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>In this weeks recap, we look at:</p><ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul><p>There are no major index events in the coming week - there were enough in the last week!</p><p>There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>. </p>

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

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>Last week analyst meeting came out in a positive tone. We maintain our target price of Bt48.0, while downgrade the recommendation to HOLD due to limited upside from current share price. Our valuation is derived using SOTP methodology, implying 9xPE’22E.</strong></p><div>• Expect 3Q21 recurring profit to improve both YoY and QoQ on the back of 1) solid performance of RG. HPC, 2) seasonal better hydro power plants operation and 3) Full quarter revenue recognition from 377MW new power plant COD in Australia (1Q21).</div><div></div><div>• Positive view on RATCH’s acquisition of 45% stake in 2.0GW coal power plant (Paiton) in Indonesia, given the project delivers an EIRR of 13%, and its solid cash flow (PPA till 2042) will compensate the dip from RG’s PPA termination in 2025. The deal will be completed in 1Q22.</div><div>• The 55% capital increase plan by issuing 769m shares through PPO offering is expected to be competed by 4Q21. Net EPS dilution for 2022E is estimated to be less then 5% after Paiton inclusion.</div><div></div><div>•Announced interim dividend of Bt1.15/sh. XD is on 7th Sept 2021.</div>

Last week analyst meeting came out in a positive tone. We maintain our target price of Bt48.0, while downgrade the recommendation to HOLD due to limited upside from current share price. Our valuation is derived using SOTP methodology, implying 9xPE’22E.• Expect 3Q21 recurring profit to improve both YoY and QoQ on the back of 1) solid performance of RG. HPC, 2) seasonal better hydro power plants operation and 3) Full quarter revenue recognition from 377MW new power plant COD in Australia (1Q21).• Positive view on RATCH’s acquisition of 45% stake in 2.0GW coal power plant (Paiton) in Indonesia, given the project delivers an EIRR of 13%, and its solid cash flow (PPA till 2042) will compensate the dip from RG’s PPA termination in 2025. The deal will be completed in 1Q22.• The 55% capital increase plan by issuing 769m shares through PPO offering is expected to be competed by 4Q21. Net EPS dilution for 2022E is estimated to be less then 5% after Paiton inclusion.•Announced interim dividend of Bt1.15/sh. XD is on 7th Sept 2021.

RATCH: Below 5% EPS Dilution After Paiton Inclusion

<p><strong>We have a negative view on RATCH’s capital increase plan as the expected EPS dilution is higher than forecasted EPS growth for 2021E. Thus, we revise down the target price by 30% to Bt48.0 and downgrade the rating to HOLD. Our target price is derived using SOTP methodology, implying 10.2xPE’22E.</strong></p><div>• RATCH announced raising registered capital from Bt14.5bn to Bt22.5bn by way of issuing 769m ordinary shares through PPO to existing shareholders (at a ratio of 1.885:1), and private placement. PPO price and date to be announced on a later date.</div><div></div><div>• Expect the stock to under perform due to 1) the estimated EPS dilution of 35% is higher than 6% EPS growth in 2021E. And 2) the upside from new coal power acquisition will be dragged by ESG concerns.</div><div></div><div>• We expect the EPS dilution from capital raising will be offset fully by 2023, after full year profit recognition from new projects. We will be incorporating the upside from new projects to our TP after more clarity on the transaction.</div>

We have a negative view on RATCH’s capital increase plan as the expected EPS dilution is higher than forecasted EPS growth for 2021E. Thus, we revise down the target price by 30% to Bt48.0 and downgrade the rating to HOLD. Our target price is derived using SOTP methodology, implying 10.2xPE’22E.• RATCH announced raising registered capital from Bt14.5bn to Bt22.5bn by way of issuing 769m ordinary shares through PPO to existing shareholders (at a ratio of 1.885:1), and private placement. PPO price and date to be announced on a later date.• Expect the stock to under perform due to 1) the estimated EPS dilution of 35% is higher than 6% EPS growth in 2021E. And 2) the upside from new coal power acquisition will be dragged by ESG concerns.• We expect the EPS dilution from capital raising will be offset fully by 2023, after full year profit recognition from new projects. We will be incorporating the upside from new projects to our TP after more clarity on the transaction.

RATCH: Negative View on Capital Increase Plan

Thematic (Sector/Industry)

<h2>CGS: 3Q21 Road Show</h2><ul>
<li><h3>Performance review of CGS‘s stock picks</h3></li>
<li><h3>CGS Strategy</h3></li>
<li>
<h3>Our stock picks for 3Q21</h3>
<ul><li><ul>
<li>
<strong>KBANK</strong>:  Most benefit amongst big banks post-COVID recovery</li>
<li>
<strong>EPG</strong>: Global-standard polymer converter assured of sustainable growth</li>
<li>
<strong><strong>CKP:</strong></strong> Positive 2021-22 outlook from the better hydro operation</li>
</ul></li></ul>
</li>
<li>
<h3>Power sector</h3>
<ul><li><ul>
<li>
<strong>RATCH</strong>: Stable earnings outlook and a high dividend yield</li>
<li>
<strong>GULF</strong>: Earning growth and upside from INTUCH investment</li>
</ul></li></ul>
</li>
</ul>

CGS: 3Q21 Road Show
Performance review of CGS‘s stock picks
CGS Strategy

Our stock picks for 3Q21


KBANK:  Most benefit amongst big banks post-COVID recovery

EPG: Global-standard polymer converter assured of sustainable growth

CKP: Positive 2021-22 outlook from the better hydro operation



Power sector


RATCH: Stable earnings outlook and a high dividend yield

GULF: Earning growth and upside from INTUCH investment




<p><strong>Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt70.5 derived using SOTP methodology, implying 15.0xPE’22E.</strong></p><div>• Expect 2Q21 recurring profit to improve both YoY and QoQ on the back of 1) seasonal better contribution of IPP and hydro power plants, and 2) profit recognition from 377MWe new power plant COD in Australia during 1Q-2Q21.</div><div></div><div>• Maintain positive outlook towards the 2021-25 earnings backed by COD of 1.3GWe projects in pipeline, representing a 19% expansion by 2025.</div><div></div><div>• Negative view on investment in PRINC, as we expect no returns (dividend income) in near term (2021-23) and lack of synergy benefits.</div><div></div><div>• The stock is quite attractive given its cheap valuation of 11.4x PE’21E (-1SD, 10-year historical PE) and the current price provides an attractive dividend yield of 5.3-to-5.8% in 2021-23.</div>

Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt70.5 derived using SOTP methodology, implying 15.0xPE’22E.• Expect 2Q21 recurring profit to improve both YoY and QoQ on the back of 1) seasonal better contribution of IPP and hydro power plants, and 2) profit recognition from 377MWe new power plant COD in Australia during 1Q-2Q21.• Maintain positive outlook towards the 2021-25 earnings backed by COD of 1.3GWe projects in pipeline, representing a 19% expansion by 2025.• Negative view on investment in PRINC, as we expect no returns (dividend income) in near term (2021-23) and lack of synergy benefits.• The stock is quite attractive given its cheap valuation of 11.4x PE’21E (-1SD, 10-year historical PE) and the current price provides an attractive dividend yield of 5.3-to-5.8% in 2021-23.

RATCH: Cheap Valuation and Attractive Dividend Yield

Thailand

Ratch Group PCL operates as a power producer company. The Company focuses on investment fossil fuel power generation and renewable projects, as well as businesses adjacent to electricity generation and energy. Ratchaburi Group serves customers in Asia.

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Ratch Group PCL (RATCH TB)

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

RATCH: Below 5% EPS Dilution After Paiton Inclusion

Last week analyst meeting came out in a positive tone. We maintain our target price of Bt48.0, while downgrade the recommendation to HOLD due to...

Pi Securities PCL, Thailand

RATCH: Negative View on Capital Increase Plan

We have a negative view on RATCH’s capital increase plan as the expected EPS dilution is higher than forecasted EPS growth for 2021E. Thus, we...

Pi Securities PCL, Thailand

3Q21 Road Show

CGS's roadshow : Performance review of CGS ‘s stock picks, CGS Strategy, Our stock picks for 3Q21, Power sector outlook 3Q21

Pi Securities PCL, Thailand

RATCH: Cheap Valuation and Attractive Dividend Yield

Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt70.5 derived using SOTP...

Pi Securities PCL, Thailand

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