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>We reiterate our BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.</li>
<li>From the management guidance, GLOBAL plan to open two stores in 4Q21 (+3%QoQ) and 7-8 stores in 2022-23 (+9%CAGR). Management maintain its strategy: 1) focus on stores expansion and </li>
<li>We anticipate SSSG to continue positive at double digit growth in 4Q21 from +13% in 3Q21 supported by an increase in demand for construction materials.</li>
</ul>


We reiterate our BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.
From the management guidance, GLOBAL plan to open two stores in 4Q21 (+3%QoQ) and 7-8 stores in 2022-23 (+9%CAGR). Management maintain its strategy: 1) focus on stores expansion and 
We anticipate SSSG to continue positive at double digit growth in 4Q21 from +13% in 3Q21 supported by an increase in demand for construction materials.


GLOBAL: Expect 4Q21 Earnings Grow Both QoQ and YoY

<p><strong>We reiterate BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.</strong></p><div>• We expect GLOBAL to report 3Q21 net profit at Bt665m (+46%YoY, -32%QoQ). YoY growth will be supported by gross profit margin expansion from a higher revenue contribution from in-house brand products and an increase in profit margin from steel products. The QoQ drop in earnings will be due to lower revenue from low-season quarter in 3Q as it is a rainy season.</div><div></div><div>• We expect GLOBAL earnings to increase QoQ and YoY in 4Q21 supported by (1) demand from home renovation after a flood, (2) YoY growth in construction materials demand on the back of increasing construction activities, and (3) QoQ increase in rental income.</div><div></div><div>• Construction Materials Price Index (CMI) was flat MoM and increased 8.6%YoY in September 2021 mainly driven by steel products, which increased 37%YoY. Moreover, TPSO anticipate CMI to continue to increase YoY in 4Q21.</div>

We reiterate BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.• We expect GLOBAL to report 3Q21 net profit at Bt665m (+46%YoY, -32%QoQ). YoY growth will be supported by gross profit margin expansion from a higher revenue contribution from in-house brand products and an increase in profit margin from steel products. The QoQ drop in earnings will be due to lower revenue from low-season quarter in 3Q as it is a rainy season.• We expect GLOBAL earnings to increase QoQ and YoY in 4Q21 supported by (1) demand from home renovation after a flood, (2) YoY growth in construction materials demand on the back of increasing construction activities, and (3) QoQ increase in rental income.• Construction Materials Price Index (CMI) was flat MoM and increased 8.6%YoY in September 2021 mainly driven by steel products, which increased 37%YoY. Moreover, TPSO anticipate CMI to continue to increase YoY in 4Q21.

GLOBAL: Expect 3Q21 Earnings to Continue to Grow YoY

<p><strong>GLOBAL share price surged 38%YTD as we believe it has already priced in near-term positive factors. So, we reiterate our HOLD rating with a target price of Bt21.4 based on 35xPE’21E, close to the average of the Thailand home-improvement subsector.</strong></p><div>• We expect GLOBAL to report 2Q21 net profit of Bt734m (+45%YoY, -24%QoQ). The YoY growth will be supported by gross profit margin expansion from a higher revenue contribution of house brand products and increasing margin of steel products, while QoQ drop in earnings will be due to seasonal factor (high season quarter in Q1).</div><div></div><div>• In 2H21, we expect GLOBAL earnings to drop HoH caused by (1) low season quarter in Q3 (rainy season), (2) lower gross profit margin from steel products, and, (3) slowdown in construction activities impacted from the 3rd wave of COVID-19.</div><div></div><div>• Construction Materials Price Index (CMI) remain flat MoM while +10%YoY in June 2021 mainly driven by steel products which increased 44%YoY in June 2021.</div>

GLOBAL share price surged 38%YTD as we believe it has already priced in near-term positive factors. So, we reiterate our HOLD rating with a target price of Bt21.4 based on 35xPE’21E, close to the average of the Thailand home-improvement subsector.• We expect GLOBAL to report 2Q21 net profit of Bt734m (+45%YoY, -24%QoQ). The YoY growth will be supported by gross profit margin expansion from a higher revenue contribution of house brand products and increasing margin of steel products, while QoQ drop in earnings will be due to seasonal factor (high season quarter in Q1).• In 2H21, we expect GLOBAL earnings to drop HoH caused by (1) low season quarter in Q3 (rainy season), (2) lower gross profit margin from steel products, and, (3) slowdown in construction activities impacted from the 3rd wave of COVID-19.• Construction Materials Price Index (CMI) remain flat MoM while +10%YoY in June 2021 mainly driven by steel products which increased 44%YoY in June 2021.

GLOBAL: Expect Solid 2Q21 Earnings Has Already Priced In

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Stock Exchange of Thailand (SET) has commenced a market consultation on changing 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>, SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.</p><p>The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.</p><p>The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.</p><p>Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.</p><p>In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.</p>

The Stock Exchange of Thailand (SET) has commenced a market consultation on changing the Stock Exchange of Thailand SET 50 Index (SET50 INDEX), SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

<p><strong>GLOBAL’s 4Q20 net profit was at Bt378m (-36%YoY, -17%QoQ), the lowest level in the past twelve quarter. The company reports 2020 net profit of Bt2bn (-6%YoY), which is lower than our expectation and consensus.</strong></p><div>• YoY drop in 4Q20 earnings was primarily pressured by an increase in SG&amp;A expenses at 7.4%YoY from higher salary expenses of five new stores and renovation stores expenses. Meanwhile, revenue grew 2%YoY at Bt6.9bn.</div><div></div><div>• We expect 1Q21 earnings to recover 5%QoQ driven by sales growth and gross profit margin expansion from continuing demand recovery in construction materials (Construction Materials Price Index (CMI) grew 3.3%MoM and 3.7%YoY in Jan 2021 mainly driven by steel products which increased 15%YoY in Jan 2021).</div><p></p><p><strong>GLOBAL share price surged 21%YTD as we believe it has already priced in near-term positive factors. So, we maintain HOLD rating with a target price of Bt20.5, which is derived from 33xPE’21E, close to the average of the Thailand home-improvement subsector.</strong></p>

GLOBAL’s 4Q20 net profit was at Bt378m (-36%YoY, -17%QoQ), the lowest level in the past twelve quarter. The company reports 2020 net profit of Bt2bn (-6%YoY), which is lower than our expectation and consensus.• YoY drop in 4Q20 earnings was primarily pressured by an increase in SG&amp;A expenses at 7.4%YoY from higher salary expenses of five new stores and renovation stores expenses. Meanwhile, revenue grew 2%YoY at Bt6.9bn.• We expect 1Q21 earnings to recover 5%QoQ driven by sales growth and gross profit margin expansion from continuing demand recovery in construction materials (Construction Materials Price Index (CMI) grew 3.3%MoM and 3.7%YoY in Jan 2021 mainly driven by steel products which increased 15%YoY in Jan 2021).GLOBAL share price surged 21%YTD as we believe it has already priced in near-term positive factors. So, we maintain HOLD rating with a target price of Bt20.5, which is derived from 33xPE’21E, close to the average of the Thailand home-improvement subsector.

GLOBAL: 4Q20 Earnings Came Out Below Expectation

Thailand

Siam Global House PCL is a retailer of home related products for construction, repair, decoration, and renovation. The Company sells construction materials, hand tools, furniture, and garden tools.

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Siam Global House (GLOBAL TB)

GLOBAL: Expect 4Q21 Earnings Grow Both QoQ and YoY

We reiterate our BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement...

Pi Securities PCL, Thailand

GLOBAL: Expect 3Q21 Earnings to Continue to Grow YoY

We reiterate BUY rating for GLOBAL with a target price of Bt29.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.

Pi Securities PCL, Thailand

GLOBAL: Expect Solid 2Q21 Earnings Has Already Priced In

GLOBAL share price surged 38%YTD as we believe it has already priced in near-term positive factors. So, we reiterate our HOLD rating with a target...

Pi Securities PCL, Thailand

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

The SET has commenced a market consultation on the proposed changes to make its indices free float market cap weighted. We look at the impact on...

Brian Freitas

GLOBAL: 4Q20 Earnings Came Out Below Expectation

GLOBAL’s 4Q20 net profit was at Bt378m (-36%YoY, -17%QoQ), the lowest level in the past twelve quarter. The company reports 2020 net profit of...

Pi Securities PCL, Thailand

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