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>RS reports 3Q22 net profit at Bt82m,the highest level in the past six quarter,which is 46% above market estimate.Impressive earnings resulted mainly supported by solid recovery in multi-platform commerce (MPC)</li>
<li>3Q22 profit recovered from bottom quarter in 2Q22 RS reported 3Q22 net profit at Bt82m (+528%QoQ turnaround from loss of Bt0.3m in 3Q21).YoY and QoQ improvement in earnings mainly supported</li>
<li>However, equity income fell to the lowest level at Bt6m (-81%YoY -38%QoQ) due to weak performance for debt collection business under Chase Asia. (35% holding stake) amid sluggish domestic economy.</li>
</ul>


RS reports 3Q22 net profit at Bt82m,the highest level in the past six quarter,which is 46% above market estimate.Impressive earnings resulted mainly supported by solid recovery in multi-platform commerce (MPC)
3Q22 profit recovered from bottom quarter in 2Q22 RS reported 3Q22 net profit at Bt82m (+528%QoQ turnaround from loss of Bt0.3m in 3Q21).YoY and QoQ improvement in earnings mainly supported
However, equity income fell to the lowest level at Bt6m (-81%YoY -38%QoQ) due to weak performance for debt collection business under Chase Asia. (35% holding stake) amid sluggish domestic economy.


RS : 3Q22 Earnings Show Sign of Positive Recovery

<ul>
<li>We downgrade RS to HOLD while trim down target price to Bt15.0 (Previous TP:Bt20) after revise down earnings in 2022-23E by 41-52%in order to factor in disappointed revenue from multi-platform </li>
<li>2Q22 should be the bottom quarter   RS reported 2Q22 net profit at Bt13m (-76%YoY -76%QoQ), significantly below our expectation. YoY drop in earnings pressured by weak performance for MPC </li>
<li>QoQ fall in profit dragged down by an increase in expense from ULife (acquired in May’22), which resulted in increasing SG&amp;A to sales ratio to 45.8% (vs.41.4% in 1Q22). Meanwhile</li>
</ul>


We downgrade RS to HOLD while trim down target price to Bt15.0 (Previous TP:Bt20) after revise down earnings in 2022-23E by 41-52%in order to factor in disappointed revenue from multi-platform 
2Q22 should be the bottom quarter   RS reported 2Q22 net profit at Bt13m (-76%YoY -76%QoQ), significantly below our expectation. YoY drop in earnings pressured by weak performance for MPC 
QoQ fall in profit dragged down by an increase in expense from ULife (acquired in May’22), which resulted in increasing SG&amp;A to sales ratio to 45.8% (vs.41.4% in 1Q22). Meanwhile


RS : 2H22 Earnings Recovery Remains Challenging

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 selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have fallen out of our top rankings.</li><li>We add AJ to the portfolio thanks to the positive momentum for demand for commodity goods, which has continued to grow alongside the demand growth in sanitary products amid the spread of infectious diseases. This should drive the growth of demand for AJ’s packaging film.</li><li>We project the 2022E earnings at Bt625mn (+46.02% YoY).</li></ul>

We recommend selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have fallen out of our top rankings.We add AJ to the portfolio thanks to the positive momentum for demand for commodity goods, which has continued to grow alongside the demand growth in sanitary products amid the spread of infectious diseases. This should drive the growth of demand for AJ’s packaging film.We project the 2022E earnings at Bt625mn (+46.02% YoY).

<div><div><div><div><ul><li>Yesterday, our Small Cap portfolio generated a return of +0.17%, lower than the SET Index’s return of +0.35%, as the market was driven mainly by the electronics sector, which has a minor weighting in our portfolio.</li><li>The stocks in our portfolio whose share prices gained notably yesterday were TK (+2.02%), DOD (+1.94%), WICE (+0.84%) and TOG (+0.63%).</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>

Yesterday, our Small Cap portfolio generated a return of +0.17%, lower than the SET Index’s return of +0.35%, as the market was driven mainly by the electronics sector, which has a minor weighting in our portfolio.The stocks in our portfolio whose share prices gained notably yesterday were TK (+2.02%), DOD (+1.94%), WICE (+0.84%) and TOG (+0.63%).AH’s main business is OEM auto parts, contributing 74% of revenue in 2021.

Thailand

RS Public Company Limited operate diversified media and entertainment business. The Company and its subsidiaries produces recorded music on CDs and tapes, television shows and dramas, radio programs, and movies, as well as publishes books and magazines.

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RS PCL (RS TB)

RS : 3Q22 Earnings Show Sign of Positive Recovery

RS reports 3Q22 net profit at Bt82m, the highest level in the past six quarter, which is 46% above market estimate. Impressive earnings resulted...

Pi Securities PCL, Thailand

RS : 2H22 Earnings Recovery Remains Challenging

We downgrade RS to HOLD while trim down target price to Bt15.0 (Previous TP: Bt20) after revise down earnings in 2022-23E by 41-52% in order to...

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

Small Cap Top Picks - August 5, 2022

We recommend selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have...

Krungthai XSpring

Small Cap Top Picks - August 4, 2022

The stocks in our portfolio whose share prices gained notably yesterday were TK (+2.02%), DOD (+1.94%), WICE (+0.84%) and TOG (+0.63%).

Krungthai XSpring

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