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>We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to the negative financial position of the Oil Fuel Fund, which stands at nearly -Bt100bn, and the need for excise tax collection by the Ministry of Finance to meet the target.</li><li>While an upward adjustment to the retail diesel price ceiling could yield short-term benefits for oil retailers in the form of one-time stock gains, challenges persist for marketing margins, including i) the incremental costs associated with the Euro 5 standard for refined oil products; and ii) the management efficiency of the Oil Fuel Fund.</li><li>Therefore, we maintain our conservative view on marketing margins in 2024E. For the downstream sector, we prefer refinery operators to oil retailers, with TOP as the top pick (Outperform; FV: Bt62.4). </li></ul>

We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to the negative financial position of the Oil Fuel Fund, which stands at nearly -Bt100bn, and the need for excise tax collection by the Ministry of Finance to meet the target.While an upward adjustment to the retail diesel price ceiling could yield short-term benefits for oil retailers in the form of one-time stock gains, challenges persist for marketing margins, including i) the incremental costs associated with the Euro 5 standard for refined oil products; and ii) the management efficiency of the Oil Fuel Fund.Therefore, we maintain our conservative view on marketing margins in 2024E. For the downstream sector, we prefer refinery operators to oil retailers, with TOP as the top pick (Outperform; FV: Bt62.4). 

Energy (Oil Retailers) - Scenarios for a Diesel Price Lift

<ul><li>The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.</li><li>The financial position of the Oil Fund is at a manageable level.</li><li>The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). </li></ul>

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.The financial position of the Oil Fund is at a manageable level.The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). 

Industry Update – Energy (Oil Retailers)

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

PTT Oil & Retail Business  / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a>/PTTOR is the flagship company for the oil and retail business of <a href="https://www.smartkarma.com/entities/ptt-pcl" target="_blank" data-smartkarma-citation="entities:197:1" rel="noopener">PTT PCL (PTT TB)</a> in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market. PTTOR priced its IPO at THB18.00 per share, at the upper end of its IPO price range of THB16.00-18.00 per share. The shares are set to start trading on Thursday, 11 February. </p></div><div>
<p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-initiation-octane-ratings" target="_blank" data-smartkarma-citation="insights:46230" rel="noopener">PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings</a>, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence.</p>
<div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:47147" rel="noopener">PTT Oil and Retail (PTTOR) IPO: Valuation Insights</a>, we opined that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. Our base-case DCF derived price target of THB22.20 per share. Our valuation analysis shows that the IPO price remains attractive.</p></div>
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PTT Oil and Retail (OR TB)/PTTOR is the flagship company for the oil and retail business of PTT PCL (PTT TB) in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market. PTTOR priced its IPO at THB18.00 per share, at the upper end of its IPO price range of THB16.00-18.00 per share. The shares are set to start trading on Thursday, 11 February. 
In PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence.
In PTT Oil and Retail (PTTOR) IPO: Valuation Insights, we opined that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. Our base-case DCF derived price target of THB22.20 per share. Our valuation analysis shows that the IPO price remains attractive.


PTT Oil and Retail (PTTOR) IPO: Trading Debut

<div><p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a>/PTTOR is the flagship company for the oil and retail business of <a href="https://www.smartkarma.com/entities/ptt-pcl" target="_blank" data-smartkarma-citation="entities:197:1" rel="noopener">PTT PCL (PTT TB)</a> in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.</p></div><div><p>PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-initiation-octane-ratings" target="_blank" data-smartkarma-citation="insights:46230" rel="noopener">PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings</a>, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. </p></div></div></div>

PTT Oil and Retail (OR TB)/PTTOR is the flagship company for the oil and retail business of PTT PCL (PTT TB) in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. In PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. 

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul><li>Strong stock price momentum and low correlation to the Thai market relative to its sector</li><li>Plans to boost its direct income through expanding to 300 gas stations by 2019 from its current 220 outlets</li><li>Positive industry outlook with low oil prices, higher car ownership and switching from LPG to gasoline, retail oil consumption up from 5% per annum in 2011-14 to 10% in 2015</li><li>SUSCO has heavily reduced its cash conversion cycle and offers a solid balance sheet</li><li>Risks: Rise in global oil prices</li></ul>

Strong stock price momentum and low correlation to the Thai market relative to its sectorPlans to boost its direct income through expanding to 300 gas stations by 2019 from its current 220 outletsPositive industry outlook with low oil prices, higher car ownership and switching from LPG to gasoline, retail oil consumption up from 5% per annum in 2011-14 to 10% in 2015SUSCO has heavily reduced its cash conversion cycle and offers a solid balance sheetRisks: Rise in global oil prices

SUSCO: Gassing up with 80 More Fuel Stations by 2019

Thailand

SUSCO Pcl distributes petroleum products including unleaded and regular gasoline and diesel oil through its gasoline filling stations and directly to large end-users.  Through its subsidiaries, the Company acts as an oil agent and offers marine freight transportation services.

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Susco Public Company (SUSCO TB)

Energy (Oil Retailers) - Scenarios for a Diesel Price Lift

We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to...

Krungthai XSpring

Industry Update – Energy (Oil Retailers)

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which...

Krungthai XSpring

PTT Oil and Retail (PTTOR) IPO: Trading Debut

PTTOR priced its IPO at THB18.00 per share and the shares are set to start trading on 11 February. Our valuation analysis shows that the IPO price...

Arun George

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

PTTOR has launched its IPO to raise as much as THB47.0 billion ($1.6 billion). A reasonable P/E valuation and solid cornerstone support make PTTOR...

Arun George

SUSCO: Gassing up with 80 More Fuel Stations by 2019

Strong stock price momentum and low correlation to the Thai market relative to its sector Plans to boost its direct income through expanding to...

A. Stotz Investment Research

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