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)

<ul><li>Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.</li><li>This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.</li><li>The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.</li></ul>

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.

Automotive - Auto Production Fell 18% YoY in 1Q24

<ul><li>Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.</li><li>This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.</li><li>We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. </li></ul>

Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. 

Automotive. - Auto Output Remained Weak in February 2024

<ul><li>The domestic auto market has sustained its decline, primarily driven by a sharp contraction in the pickup truck segment owing to stringent lending procedures at financial institutions.</li><li>Consequently, auto production in January 2024 witnessed a YoY decrease of 12.5%. We anticipate that as economic conditions recover, particularly with the acceleration of government expenditures, domestic demand will gradually rebound.</li><li>However, we maintain our Neutral rating on the auto sector as the earnings growth prospects have remained moderate. </li></ul>

The domestic auto market has sustained its decline, primarily driven by a sharp contraction in the pickup truck segment owing to stringent lending procedures at financial institutions.Consequently, auto production in January 2024 witnessed a YoY decrease of 12.5%. We anticipate that as economic conditions recover, particularly with the acceleration of government expenditures, domestic demand will gradually rebound.However, we maintain our Neutral rating on the auto sector as the earnings growth prospects have remained moderate. 

Equity Bottom-Up

Somboon Advance Technology P / Equity Bottom-Up

<ul><li>We reaffirm our “Neutral” rating as our valuation matrix still reflects that the share price has remained undervalued, but both tactical and long-term views are neutral.</li><li>Our fair value has been raised to Bt22.17 vs. Bt21.60 previously following the downward revision of the required return to 10.2% vs. 10.8% previously.</li><li>The risk premium is assessed through the multiple regression with macroeconomic factors and specific factors of the company.</li></ul>

We reaffirm our “Neutral” rating as our valuation matrix still reflects that the share price has remained undervalued, but both tactical and long-term views are neutral.Our fair value has been raised to Bt22.17 vs. Bt21.60 previously following the downward revision of the required return to 10.2% vs. 10.8% previously.The risk premium is assessed through the multiple regression with macroeconomic factors and specific factors of the company.

Somboon Advance Technology - Wait for Potential Earnings Recovery in 2H23E

<ul><li>We downgrade our rating to Neutral from Outperform.</li><li>While the valuation matrix suggests that the current valuation is undervalued, we have a neutral view on both the tactical and long-term growth outlooks.</li><li>We have derived a fair value of Bt21.60, based on a required rate of return of 10.8% and the equity risk premium (ERP) assessed through the multiple regression model, in which the economic parameters and the specific factors of the stock (auto output) were used.</li></ul>

We downgrade our rating to Neutral from Outperform.While the valuation matrix suggests that the current valuation is undervalued, we have a neutral view on both the tactical and long-term growth outlooks.We have derived a fair value of Bt21.60, based on a required rate of return of 10.8% and the equity risk premium (ERP) assessed through the multiple regression model, in which the economic parameters and the specific factors of the stock (auto output) were used.

Somboon Advance Technology - Solid Fundamentals but No Excitement

Thailand

Thai Steel Cable PCL manufactures automobile parts.  The Company produces control cables and window regulators for automobile manufacturers.

Aapico Hitech Public Company Limited manufactures car assembly jigs and stamping dies used for manufacturing automobiles in assembly plants. The Company also manufactures OEM automotive parts and operates automobile dealership business.

Hwafong Rubber Thailand Public Company Limited manufactures and distributes of tire and tube of bicycle, motorcycle and industrial vehicle such as trolley, forklift and cart under brand Duro and Dunlop.

Fortune Parts Industry PCL manufactures automotive replacement ( R.E.M) parts. The Company's main product lines are for Japanese pick-up , truck , and passenger car , covering all major Japanese brands.

P.C.S. Machine Group Holding PCL is a holding company. The Company, through its subsidiaries, manufactures and sells automotive parts.

Inoue Rubber (Thailand) Public Company Limited manufactures motorcycle tubes and tires and industrial rubber goods.  Its products are supplied as OEM parts to domestic motorcycle manufacturers.

Thai Rung Union Car Public Company Limited manufactures metal and plastic parts for automotive and industrial machinery manufacturers. The Company also makes dies and jigs and is a full-facility auto assembler providing services from R&D to producing a range of vehicles.

Thai Rung Union Car Public Company Limited (TRU TB)

Thai Rung Union Car Public Company Limited

Goodyear (Thailand) Public Company Limited manufactures tires and tubes for automobiles, trucks, tractors, and commercial aircraft under Goodyear brand name.

Yuasa Battery (Thailand) Public Company Limited manufactures batteries for automobiles and motorcycles under Yuasa, Thunder Lite, and Yucon brands. Its products are sold domestically and exported to Asian, Middle East, African, European, and Latin American countries.

Interhides PCL manufactures leather automobile upholstery.  The Company markets its leather products to automobile manufacturers.

Gordon Auto Body Parts Co., Ltd. manufactures auto body parts such as hoods, fenders, doors, and side panels.  The Company also produces stamping molds. Gordon Auto Body Parts sells its products in Taiwan and exports to the United States, Canada, Europe, the Middle East, Australia, and Africa.

PT Indospring Tbk manufactures leaf and coil springs for motor vehicles under license of Mitsubishi Steel Manufacturing, Japan.  The Company also manufactures valve springs with license agreement with Murata Spring Co. Ltd., Japan. Through its subsidiaries, the Company also operates in the rolling mill industry.

Motonic Corporation manufactures automotive fuel injection system products. The Company's products include carburetors, throttle bodies, exhausting systems, LPG kits, rocker arms, oil filters, fuel pumps, and die casting parts.

AHRESTY CORPORATION manufactures light alloy diecasts mainly for auto industry. The Company makes recycled aluminum ingots and aluminum diecasts.  Ahresty also sells steel floorings and electric mowers.

T. RAD Co., Ltd. manufactures heat exchangers for automobiles, motorcycles, construction machinery, and boats.  The Company's products include radiators, oil coolers, and inter coolers for turbo engines.  T. RAD has its production facilities in the US, Thailand, China, India, and Taiwan.

DAE-IL Corporation(DIC) manufactures automotive parts and agricultural equipment such as gear and shaft used in vehicles for transmitting power.  DAE-IL supplies its products to automobile and auto-parts companies such as Hyundai, KIA, GM Daewoo, etc.

St-Gobain Sekurit India Ltd manufactures automotive safety glass. The Company's products include laminated safety glass, flat toughened glasses and bend tempered glasses.

SANDEN HOLDINGS CORPORATION manufactures air conditioning and its parts for automobiles. The Company's products include evaporators, inter coolers, and compressors. Sanden also produces refrigerating showcases for grocery stores and vending machines.

Wuling Motors Holdings Limited manufactures motor vehicle engines, parts and special vehicles in China. The Company's activities also include securities dealing, margin financing, money lending and property investment.

MS Autotech Co., Ltd. manufactures and markets automotive parts and equipments. The company products include front side member module, rear floor, center floor, and door module for automobile platform.

Somboon Advance Technology PCL manufactures and sells automotive parts for sale to automobile manufacturers. The Company's products include axle shafts, leaf springs, disk and drum brakes, manifold exhaust, fly wheels, stabilizer bars, and coil springs.

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Somboon Advance Technology P (SAT TB)

Automotive - Auto Production Fell 18% YoY in 1Q24

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.

Krungthai XSpring

Automotive. - Auto Output Remained Weak in February 2024

We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand.

Krungthai XSpring

Automotive - A Weak Start in 2024

We choose AH (Buy; FV at Bt43.2) as our top pick because the firm will potentially benefit further from the transition to electric vehicle (EV)...

Krungthai XSpring

Somboon Advance Technology - Wait for Potential Earnings Recovery in 2H23E

We reaffirm our “Neutral” rating as our valuation matrix still reflects that the share price has remained undervalued, but both tactical and long...

Krungthai XSpring

Somboon Advance Technology - Solid Fundamentals but No Excitement

While the valuation matrix suggests that the current valuation is undervalued, we have a neutral view on both the tactical and long-term growth...

Krungthai XSpring

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