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

<p><strong>Last week analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2Q-2H21 on the back of resumption of gasoline, jet oil, and  diesel demand.</strong></p><div>• Expect 2Q21 recurring net profit to remain healthy (flat QoQ, improving YoY). The GIM should remain stable in 2Q21 and improve in 2H21 as product demand improve after lockdown measures eases in EU &amp; Asia..</div><div></div><div>• Stable oil price outlook and healthy contribution from Aromatics, LAB and Lube base oil would support the earnings momentum in 2H21.</div><div></div><div><strong>We maintain the BUY rating based on a target price of Bt65.0, pegged to 1.1xPBV,21E, which is in line with its world peers and a 10% discount to its Thailand peers.</strong></div>

Last week analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2Q-2H21 on the back of resumption of gasoline, jet oil, and  diesel demand.• Expect 2Q21 recurring net profit to remain healthy (flat QoQ, improving YoY). The GIM should remain stable in 2Q21 and improve in 2H21 as product demand improve after lockdown measures eases in EU &amp; Asia..• Stable oil price outlook and healthy contribution from Aromatics, LAB and Lube base oil would support the earnings momentum in 2H21.We maintain the BUY rating based on a target price of Bt65.0, pegged to 1.1xPBV,21E, which is in line with its world peers and a 10% discount to its Thailand peers.

TOP: Refinery Operations to Gain Momentum in 2H21

<p><strong>Yesterday analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2021 on the back of resumption of gasoline and diesel demand. Moreover, huge stock gain in expected in 1Q21 from crude price surge.</strong></p><div>• Expect 1Q21 earnings to improve  both YoY and QoQ on the back of recovering GRM and higher stock gain.</div><div></div><div>• Expect TOP to book huge stock gain of Bt9.0bn (+US$12.0/BBL) in 1Q21, as the reference Dubai crude price inched up to US62.0/BBL, compared to US$50/BBL in beginning of 1Q21.</div><div></div><div>• We expect a significant upswing on TOP’s accounting GIM to reach  US$16.6/BBL in 1Q21 (from US$5.8/BBL in 4Q20, backed by recovering GRM, healthy contribution from Aromatics &amp; LAB, and higher stock gain.</div><p></p><p><strong>We maintain the BUY rating based on a target price of Bt65.0, pegged to 1.1xPBV,21E, which is in line with its world peers and a 10% discount to its Thailand peers.</strong></p>

Yesterday analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2021 on the back of resumption of gasoline and diesel demand. Moreover, huge stock gain in expected in 1Q21 from crude price surge.• Expect 1Q21 earnings to improve  both YoY and QoQ on the back of recovering GRM and higher stock gain.• Expect TOP to book huge stock gain of Bt9.0bn (+US$12.0/BBL) in 1Q21, as the reference Dubai crude price inched up to US62.0/BBL, compared to US$50/BBL in beginning of 1Q21.• We expect a significant upswing on TOP’s accounting GIM to reach  US$16.6/BBL in 1Q21 (from US$5.8/BBL in 4Q20, backed by recovering GRM, healthy contribution from Aromatics &amp; LAB, and higher stock gain.We maintain the BUY rating based on a target price of Bt65.0, pegged to 1.1xPBV,21E, which is in line with its world peers and a 10% discount to its Thailand peers.

TOP: Recovering GRM and Stock Gain to Drive 1Q21 Earnings

Thematic (Sector/Industry)

<p><strong>Crude: Bright E&amp;P business performance from recovering crude price</strong></p><ul><li>We expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021. <strong> PTTEP is our top pick</strong>, the E&amp;P business will most benefit from recovering crude price.</li></ul><p><strong>Refinery: Improving product demand to drive GRM</strong></p><ul><li>Thai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). <strong>TOP is our top pick </strong>among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).</li></ul><p><strong>Petrochemicals: Benefit from global recovery</strong></p><ul><li>We foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). <strong>PTTGC is our top pick</strong> as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.</li></ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/642/original/SMK1.png?1611645077" class="editor-image img-responsive" data-smartkarma-image-id="184642"></figure><p style="text-align: center;"><strong>Valuation Summary*</strong></p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/643/original/Picture1.jpg?1611645252" class="editor-image img-responsive" data-smartkarma-image-id="184643"></figure></section><p style="text-align: center;"><em>Source: CGS Research, Company data, SET</em></p></section>

Crude: Bright E&amp;P business performance from recovering crude priceWe expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021.  PTTEP is our top pick, the E&amp;P business will most benefit from recovering crude price.Refinery: Improving product demand to drive GRMThai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). TOP is our top pick among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).Petrochemicals: Benefit from global recoveryWe foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). PTTGC is our top pick as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.Valuation Summary*
Source: CGS Research, Company data, SET

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

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

MSCI Emerging Markets Index / Technical Analysis

<p>As we highlighted in last week’s <em>Int’l Compass</em>, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global <strong>Materials </strong>remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted <strong>Energy </strong>to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.</p>

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

<p>The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.</p>

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities (Bloomberg Commodity index) also display a bullish reversal topside a 12.5-year downtrend. This type of evidence helps affirm our bullish outlook and suggests higher prices are ahead. Continue to add exposure on pullbacks.

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

Thailand

Thai Oil Public Company Limited is an oil refinery company. The Company imports crude oil and refines it into gasoline.  It also produces oil related products including liquefied petroleum gas (LPG), kerosene, fuel oil and chemicals. Thai oil supplies its products to domestic market where its major customers include Shell, Caltex Oil and the Petroleum Authority of Thailand.

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Thai Oil (TOP-R TB)

TOP: Refinery Operations to Gain Momentum in 2H21

Last week analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2Q-2H21 on the...

Pi Securities PCL, Thailand

TOP: Recovering GRM and Stock Gain to Drive 1Q21 Earnings

Yesterday analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2021 on the back...

Pi Securities PCL, Thailand

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Energy Sector : Overweight- Oil demand recovery to drive 2021 earnings. We expect bright E&P business performance from recovering crude price, and...

Pi Securities PCL, Thailand

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities also breaking a 12.5-year downtrend....

Vermilion Research

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TOP: Refinery Operations to Gain Momentum in 2H21

Last week analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2Q-2H21 on the...

Pi Securities PCL, Thailand

TOP: Recovering GRM and Stock Gain to Drive 1Q21 Earnings

Yesterday analyst meeting came out with a positive outlook for refinery business. GRM tends to gradually recover each quarter in 2021 on the back...

Pi Securities PCL, Thailand

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Energy Sector : Overweight- Oil demand recovery to drive 2021 earnings. We expect bright E&P business performance from recovering crude price, and...

Pi Securities PCL, Thailand

Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

Long-Term Bullish Inflections For Hang Seng, DAX, MSCI EM, & Bloomberg Commodity Index

The number of major country indexes showing major bullish inflections continues to grow. Broad commodities also breaking a 12.5-year downtrend....

Vermilion Research