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

Thematic (Sector/Industry)

<h2>Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical</h2>
<h3>Crude: Solid OPEC+ supply curbs to push crude price up</h3>
<div>• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,</div>
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<h3>Refinery: Low pace GRM recovery due to dragged economic growth</h3>
<p>• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.</p>
<h3>Petrochemicals: Back to pre-Covid oversupply</h3>
<div>• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.</div>
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<div class="content-caption">Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,</div>
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Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical
Crude: Solid OPEC+ supply curbs to push crude price up
• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,

Refinery: Low pace GRM recovery due to dragged economic growth
• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.
Petrochemicals: Back to pre-Covid oversupply
• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.










Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,




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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of 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> with the changes taking effect after the close of trading on 30 June.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>, <a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">KCE Electronics PCL (KCE TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a> have been added to the index, replacing <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a>, <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a>, <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>.</p><p><a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> are deletes on liquidity. We had <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> just about passing the liquidity test, while the SET sees it as failing the test.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a> was included in the index at the same review and has lost 11.4% since then.</p><p>One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.</p><p>With <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> shareholders meeting for their EGM on 25 June, the tender offer for <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> should be approved. <a href="https://www.smartkarma.com/entities/banpu-public-co-ltd" target="_blank" data-smartkarma-citation="entities:15363:1" rel="noopener">Banpu Public (BANPU TB)</a> is the frontrunner to join 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> once the <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> tender offer is complete and the free float drops below 20%.</p>

Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) with the changes taking effect after the close of trading on 30 June.IRPC PCL (IRPC TB), KCE Electronics PCL (KCE TB), Sri Trang Agro Industry (STA TB) and Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) have been added to the index, replacing Asset World Corporation (AWC TB), Bangkok Commercial Asset Management (BAM TB), TOA Paint (Thailand) (TOA TB) and VGI PCL (VGI TB).Asset World Corporation (AWC TB) and TOA Paint (Thailand) (TOA TB) are deletes on liquidity. We had Asset World Corporation (AWC TB) just about passing the liquidity test, while the SET sees it as failing the test.IRPC PCL (IRPC TB) was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while Bangkok Commercial Asset Management (BAM TB) was included in the index at the same review and has lost 11.4% since then.One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.With Gulf Energy Development Public Company (GULF TB) shareholders meeting for their EGM on 25 June, the tender offer for Intouch Holdings (INTUCH TB) should be approved. Banpu Public (BANPU TB) is the frontrunner to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) once the Intouch Holdings (INTUCH TB) tender offer is complete and the free float drops below 20%.

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>We highlight several positive developments that have occurred since last week’s <em>Int’l Compass </em>report, all of which continue to support our overall constructive outlook. Last week we noted Europe’s STOXX 500 was on the cusp of a breakout above 4040; we got the breakout. WTI and Brent crude oil also broke above key multi-year resistance at $67 and $70, respectively. The MSCI ACWI, ACWI ex-US, and EAFE indexes each hit new all-time highs and remain in uptrends. The MSCI Emerging Markets index (EEM-US) bullishly inflected above short-term resistance at $55.35 and RS is reversing the downtrend. These are all bullish signals for global equities, and our constructive outlook remains appropriate.</p>

We highlight several positive developments that have occurred since last week’s Int’l Compass report, all of which continue to support our overall constructive outlook. Last week we noted Europe’s STOXX 500 was on the cusp of a breakout above 4040; we got the breakout. WTI and Brent crude oil also broke above key multi-year resistance at $67 and $70, respectively. The MSCI ACWI, ACWI ex-US, and EAFE indexes each hit new all-time highs and remain in uptrends. The MSCI Emerging Markets index (EEM-US) bullishly inflected above short-term resistance at $55.35 and RS is reversing the downtrend. These are all bullish signals for global equities, and our constructive outlook remains appropriate.

Major Breakouts For WTI and Brent Crude Oil. Actionable Themes: Energy, Manufacturing, Autos/Parts

Sri Trang Gloves Thailand  / Event-Driven

<p>Today is the last day of the review period for the June rebalance of 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>. The Stock Exchange of Thailand (SET) should announce the list of changes in the next few weeks and the changes will be effective after the close of trading on 30 June.</p><p>With no changes made to the index methodology post the market consultation, we see three potential inclusions and exclusions for 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>.</p><p><a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a> and <a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> are high probability inclusions while <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> and <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a> are high probability deletions from the index.</p><p><a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> is a lower probability inclusion and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> is the corresponding deletion.</p><p><a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">KCE Electronics PCL (KCE TB)</a> at rank 51 will just miss out on index inclusion at the June review despite the surge in the stock price due to the averaging process.</p>

Today is the last day of the review period for the June rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX). The Stock Exchange of Thailand (SET) should announce the list of changes in the next few weeks and the changes will be effective after the close of trading on 30 June.With no changes made to the index methodology post the market consultation, we see three potential inclusions and exclusions for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX).Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) and IRPC PCL (IRPC TB) are high probability inclusions while VGI PCL (VGI TB) and Bangkok Commercial Asset Management (BAM TB) are high probability deletions from the index.Sri Trang Agro Industry (STA TB) is a lower probability inclusion and TOA Paint (Thailand) (TOA TB) is the corresponding deletion.KCE Electronics PCL (KCE TB) at rank 51 will just miss out on index inclusion at the June review despite the surge in the stock price due to the averaging process.

SET50 June Index Rebalance Preview: Review Period Ends Today

Equity Bottom-Up

Star Petroleum Refining / Equity Bottom-Up

<p><strong>Analyst meeting comes out with a slight positive tone. We expect refinery margin to continue improving from 2Q21 onwards, led by gasoline consumption.</strong></p><div>• SPRC reported a 1Q21 net profit at Bt2bn (flipped from a loss YoY, +132%QoQ). Core EBITDA was Bt562m (flipped from a loss YoY, -34%QoQ).</div><div></div><div>• A YoY recovery was mainly due to an increase in refinery margin. In contrast, a slight drop in sales volume and rising crude premium caused a QoQ weakness.</div><div></div><div>• We expect SPRC’s core earnings to grow QoQ, driven by solid gasoline demand and expectation on international flight resumption in 2H21.</div><div></div><div>• We revise up our earnings forecast in 2021-22E to reflect an upward GRM momentum.</div><div></div><div><strong>We maintain a HOLD rating but revise up our target to Bt9.7 (from Bt8.0), by revising PBV up to 1.5xPBV’21E, which equal to +1SD to its 5-years average on the back of quick gasoline spread recovery.</strong></div>

Analyst meeting comes out with a slight positive tone. We expect refinery margin to continue improving from 2Q21 onwards, led by gasoline consumption.• SPRC reported a 1Q21 net profit at Bt2bn (flipped from a loss YoY, +132%QoQ). Core EBITDA was Bt562m (flipped from a loss YoY, -34%QoQ).• A YoY recovery was mainly due to an increase in refinery margin. In contrast, a slight drop in sales volume and rising crude premium caused a QoQ weakness.• We expect SPRC’s core earnings to grow QoQ, driven by solid gasoline demand and expectation on international flight resumption in 2H21.• We revise up our earnings forecast in 2021-22E to reflect an upward GRM momentum.We maintain a HOLD rating but revise up our target to Bt9.7 (from Bt8.0), by revising PBV up to 1.5xPBV’21E, which equal to +1SD to its 5-years average on the back of quick gasoline spread recovery.

SPRC: On Track of Recovery from 2Q21 Onwards

Thailand

Star Petroleum Refining PCL offers  petroleum products both for domestic consumption and for export and operates a crude oil refinery. Star Petroleum Refining operates in Thailand.

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Star Petroleum Refining (SPRC TB)

Energy Sector Outlook 3Q21

We maintain the BUY recommendation based on a target price of Bt146, derived using DCF methodology (WACC 9.4%, TG 2%). Our valuation implies 11x...

Pi Securities PCL, Thailand

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

There are 4 changes to the SET50 index with IRPC, KCE, STA & STGT replacing AWC, BAM, TOA & VGI. BANPU could be included in the next couple of...

Brian Freitas

Major Breakouts For WTI and Brent Crude Oil. Actionable Themes: Energy, Manufacturing, Autos/Parts

Today we highlight several positive developments that have occurred since last week’s Int’l Compass report, all of which continue to support our...

Vermilion Research

SET50 June Index Rebalance Preview: Review Period Ends Today

Today is the last day of the review period for the June rebal. We see STGT, IRPC and STA as adds and VGI, BAM and TOA as deletes. KCE could be...

Brian Freitas

SPRC: On Track of Recovery from 2Q21 Onwards

Analyst meeting comes out with a slight positive tone. We expect refinery margin to continue improving from 2Q21 onwards, led by gasoline consumption.

Pi Securities PCL, Thailand

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