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 profit hit a new high and marked bigger-than-expected growth due to an upbeat margin. Sales grew in line with the expectation.</li><li>1H is the peak sales season of the beverage business in Thailand and Asia, and 3Q is a good sales season for European and US markets.</li><li>We maintain our 2024E earnings forecast, with potential upside.</li></ul>

The 1Q24 profit hit a new high and marked bigger-than-expected growth due to an upbeat margin. Sales grew in line with the expectation.1H is the peak sales season of the beverage business in Thailand and Asia, and 3Q is a good sales season for European and US markets.We maintain our 2024E earnings forecast, with potential upside.

Sappe -1Q24 Sales and Profit Growth Hit New Highs

<ul><li>The 1Q24E core profit is expected to have grown 20% YoY and 123% QoQ, driven by overseas sales growth, especially in the Middle East and the US, as well as a stronger gross profit margin YoY and QoQ.</li><li>1H is the peak sales season of the beverage market domestically and in Asia, while 3Q is a good sales season for European and US markets. We maintain our 2024E core profit forecast.</li><li>KTX switches to a Neutral rating, with a fair value of Bt95, based on the earnings yield and a required rate of return of 4.5% (vs. Outperform with a FV of Bt93.32 previously).</li></ul>

The 1Q24E core profit is expected to have grown 20% YoY and 123% QoQ, driven by overseas sales growth, especially in the Middle East and the US, as well as a stronger gross profit margin YoY and QoQ.1H is the peak sales season of the beverage market domestically and in Asia, while 3Q is a good sales season for European and US markets. We maintain our 2024E core profit forecast.KTX switches to a Neutral rating, with a fair value of Bt95, based on the earnings yield and a required rate of return of 4.5% (vs. Outperform with a FV of Bt93.32 previously).

Sappe -1Q24E Sales Growth and Core Profit to Hit New Highs

<ul><li>The 2023 core profit was in line with our expectation, but the 4Q23 core profit fell short of the estimate by 9% due to higher- than-expected operating expenses.</li><li>The firm normally sees higher operating expenses in 2H of each year as it seeks to expand markets to bolster sales for the following year.</li><li>The outlook for 1H each year is supported by the peak sales season for beverages in the domestic and Asian markets.</li></ul>

The 2023 core profit was in line with our expectation, but the 4Q23 core profit fell short of the estimate by 9% due to higher- than-expected operating expenses.The firm normally sees higher operating expenses in 2H of each year as it seeks to expand markets to bolster sales for the following year.The outlook for 1H each year is supported by the peak sales season for beverages in the domestic and Asian markets.

Sappe -Downbeat 4Q23 Earnings but In-Line 2023 Earnings

Thematic (Sector/Industry)

<ul>
<li>The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.</li>
<li>Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.</li>
<li>For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. </li>
</ul>


The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.
Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.
For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. 


Agribusiness and Food and Beverage Sectors - October 4, 2024

<ul><li>The Fed’s first interest rate cut, a significant reduction of 50 bps, coincided with the ECB lowering rates and the BoE holding rates steady as expected.</li><li>The dot plot indicates that the Fed may continue to cut the fed funds rate by an additional 250 bps, bringing it down to 3.0% by 2026.</li><li>In contrast, Japan maintained its interest rate in its recent meeting, but the ongoing upward trend in Japanese rates — where the consensus expects quarterly increases to reach 1% by 2026 — could narrow the interest rate differential to around 3.5%. </li></ul>

The Fed’s first interest rate cut, a significant reduction of 50 bps, coincided with the ECB lowering rates and the BoE holding rates steady as expected.The dot plot indicates that the Fed may continue to cut the fed funds rate by an additional 250 bps, bringing it down to 3.0% by 2026.In contrast, Japan maintained its interest rate in its recent meeting, but the ongoing upward trend in Japanese rates — where the consensus expects quarterly increases to reach 1% by 2026 — could narrow the interest rate differential to around 3.5%. 

Economic Update: Central Banks: Fed, BoE, BoJ and ECB - SEPTEMBER 24, 2024

Thailand

Sappe Public Company Limited manufactures and distributes health drinks. The Company manufactures dietary and fruit juice drinks. Sappe distributes their products internationally.

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Sappe Pcl (SAPPE TB)

Sappe -1Q24 Sales and Profit Growth Hit New Highs

The 1Q24 profit hit a new high and marked bigger-than-expected growth due to an upbeat margin. Sales grew in line with the expectation.

Krungthai XSpring

Sappe -1Q24E Sales Growth and Core Profit to Hit New Highs

KTX switches to a Neutral rating, with a fair value of Bt95, based on the earnings yield and a required rate of return of 4.5% (vs. Outperform with...

Krungthai XSpring

Sappe -Downbeat 4Q23 Earnings but In-Line 2023 Earnings

The 2023 core profit was in line with our expectation, but the 4Q23 core profit fell short of the estimate by 9% due to higher- than-expected...

Krungthai XSpring

Agribusiness and Food and Beverage Sectors - October 4, 2024

The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in...

Krungthai XSpring

Economic Update: Central Banks: Fed, BoE, BoJ and ECB - SEPTEMBER 24, 2024

The Fed’s first interest rate cut, a significant reduction of 50 bps, coincided with the ECB lowering rates and the BoE holding rates steady as...

Krungthai XSpring

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