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.

Equity Bottom-Up

<ul><li>The stock price is exposed to limited downside risk and already priced in the weak GRM and core profit in 2Q24E to a certain degree.</li><li>The current market price is trading at an equity risk premium (ERP) higher than the 90-day moving average, which is in line with the current valuation indicating that the stock is attractive, with upside of approximately 15% from the 12M FV of Bt61.65, based on a required return of 13.1%.</li><li>Meanwhile, the commercial kick-off of the Clean Fuel Project (CFP) in 2025E, which is expected to generate an incremental GRM, reaffirms our view of a strong long-term earnings outlook (expected 2024-26E EPS growth at a 15% CAGR). </li></ul>

The stock price is exposed to limited downside risk and already priced in the weak GRM and core profit in 2Q24E to a certain degree.The current market price is trading at an equity risk premium (ERP) higher than the 90-day moving average, which is in line with the current valuation indicating that the stock is attractive, with upside of approximately 15% from the 12M FV of Bt61.65, based on a required return of 13.1%.Meanwhile, the commercial kick-off of the Clean Fuel Project (CFP) in 2025E, which is expected to generate an incremental GRM, reaffirms our view of a strong long-term earnings outlook (expected 2024-26E EPS growth at a 15% CAGR). 

Thai Oil - Weak 2Q24E Core Profit but Cushioned by Stock Gains and Extra Gains

<ul><li>The share price decline has largely priced in the outlook of a weak GRM QoQ in 2Q24E, in line with the Singapore GRM.</li><li>The normalization of the 2024E GRM (weaker YoY) has been incorporated into our earnings projections.</li><li>Meanwhile, the commercial commencement of the Clean Fuel Project (CFP) in 2025E, which will generate an incremental GRM, should reaffirm our view of strong long-term earnings prospects, with projected 2024-26E EPS growth at a 23% CAGR.</li></ul>

The share price decline has largely priced in the outlook of a weak GRM QoQ in 2Q24E, in line with the Singapore GRM.The normalization of the 2024E GRM (weaker YoY) has been incorporated into our earnings projections.Meanwhile, the commercial commencement of the Clean Fuel Project (CFP) in 2025E, which will generate an incremental GRM, should reaffirm our view of strong long-term earnings prospects, with projected 2024-26E EPS growth at a 23% CAGR.

Thai Oil -Upbeat 1Q24 Earnings; CFP Project to Drive LT Earnings

<ul><li>TOP is expected to make a good start to the year with strong 1Q24E NP of Bt5.05bn in 1Q24E (+72% QoQ, +11% YoY).</li><li>We believe the firm will be able to achieve our 2024E NP estimate, with the potential normalization of the GRM to be offset by a lower crude premium YoY.</li><li>Meanwhile, the commercial commencement of the Clean Fuel Project (CFP) in 2025E, which will generate an incremental GRM, should reaffirm our view of strong long-term earnings prospects, with projected 2024-26E EPS growth at a 23% CAGR. </li></ul>

TOP is expected to make a good start to the year with strong 1Q24E NP of Bt5.05bn in 1Q24E (+72% QoQ, +11% YoY).We believe the firm will be able to achieve our 2024E NP estimate, with the potential normalization of the GRM to be offset by a lower crude premium YoY.Meanwhile, the commercial commencement of the Clean Fuel Project (CFP) in 2025E, which will generate an incremental GRM, should reaffirm our view of strong long-term earnings prospects, with projected 2024-26E EPS growth at a 23% CAGR. 

Thai Oil - Strong 1Q24E Earnings; Good LT Earnings Momentum

<ul><li>We retain our positive view on the gross refining margin (GRM) in 2024E, driven by sustained high crack spreads of middle distillates (TOP’s yield for this product is around 55%).</li><li>The GRM momentum is expected to continue in 2025E given lower new refining capacity, which will align with the planned commercial commencement of TOP’s Clean Fuel Project (CFP) in the same year.</li><li>This is expected to foster LT EPS growth at a 23% CAGR during 2024-26E. We maintain an Outperform rating and the 12M FV of Bt62.4.</li></ul>

We retain our positive view on the gross refining margin (GRM) in 2024E, driven by sustained high crack spreads of middle distillates (TOP’s yield for this product is around 55%).The GRM momentum is expected to continue in 2025E given lower new refining capacity, which will align with the planned commercial commencement of TOP’s Clean Fuel Project (CFP) in the same year.This is expected to foster LT EPS growth at a 23% CAGR during 2024-26E. We maintain an Outperform rating and the 12M FV of Bt62.4.

Thai Oil - 4Q23 and 2023 Earnings in Line; Solid GRM Outlook

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The June 2024 index changes for Thailand's SET 50 index were announced after market close yesterday (17th June 2024).</li>
<li>Initially we <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-set50-jun-24-3-changes-likely-banpu-still-not-safe-from-deletion" target="_blank" rel="noopener">expected only three changes</a> but after the index methodology was revised in May 2024, we <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-set50-jun-24-banpu-vs-sawad-has-to-be-monitored-closely" target="_blank" rel="noopener">revised our expectations</a> and we had 4 expected ADDs/DELs.</li>
<li>All 4 expected ADDs/DELs turned out to correct. In this insight, we take a look at our estimation of expected flows and potential trade ideas based on the flow dynamics.</li>
</ul>


The June 2024 index changes for Thailand's SET 50 index were announced after market close yesterday (17th June 2024).
Initially we expected only three changes but after the index methodology was revised in May 2024, we revised our expectations and we had 4 expected ADDs/DELs.
All 4 expected ADDs/DELs turned out to correct. In this insight, we take a look at our estimation of expected flows and potential trade ideas based on the flow dynamics.


Quiddity SET 50 Jun 24 Rebal: 4 Changes Confirmed; LONGs up 5.2% Vs SHORTs in a Month

Thailand

Banpu Public Company Limited mines for coal and other minerals. The Company produces thermal coal and coking coal, and have expertise in open-pit and underground coal mining operations, as well as coal-fired power generation.  Banpu PCL has business bases in Thailand, Laos, Indonesia, China, Australia and Mongolia.

Bangchak Corporation Public Company Limited operates as an energy company. The Company offers petroleum exploration and production, biomass, crude oil, and solar energy. Bangchak markets its products in Thailand.

Esso Thailand PCL is a fully integrated oil business, including oil refinery and production. The Company provides liquefied petroleum gas (LPG), gasoline, aviation fuel, diesel, marine fuel, lubricants, aromatic products and other related products such as purified terephthalic acid (PTA), solvents, plasticizers, and benzene concentrate stream.

IRPC PCL produces a variety of petrochemical products including polypropylene, high density polyethylene and expandable polystyrene primarily used in packaging materials. Through its subsidiaries, the Company produces and distributes gasoline, liquefied petroleumgas (LPG), asphalt, as well as electricity and construction materials.

Energy Absolute Public Company Limited engages in the research, development, and production of biodiesel products in Thailand.

Prima Marine Public Company Limited operates as a marine vessel management firm. The Company offers oil-tanker, crude oil, liquefied petrochemicals, and petroleum products transportation services. Prima Marine also provides shipbuilding, shipping, and storage services. Prima Marine serves customers in the Asia Pacific region.

Siamgas & Petrochemicals PCL distributes liquefied petroleum gas (LPG). The Company provides LPG, ammonia and other related petrochemical products such as propane, butane and propellant. Siamgas is also involved in the logistics services for LPG and petrochemical products.

The Lanna Resources Public Company Limited mines and distributes lignite and granite products in Thailand.  The Company produces two types of granite products, polished granite slab and granite block.  Its lignite is supplied to power generation, cement, paper, and food industries.  Additionally, Lanna imports coal for domestic distribution.

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.

Asian Insulators Public Company Limited manufactures electrical porcelain insulators for use in low, medium and high voltage applications such as underground power lines, overhead power lines, and power distribution systems and sub-stations.

Shanxi Meijin Energy Co., Ltd. produces coal and related products.

Shanxi Meijin Energy Co, Ltd. (000723 CH)

New Hope Corporation Limited is a thermal coal production company based in Australia. The Company also has interests in logistics and infrastructure operations in Australia as well.

Kosmos Energy Ltd. provides oil and gas exploration and production services. The Company focuses on discovering new petroleum systems and to grow and mature discovered hydrocarbon basins, as well as development and production projects. Kosmos Energy serves customers worldwide.

Peabody Energy Corporation mines and markets low sulfur coal, primarily for use by electric utilities. The Company also trades coal and emission allowances. Peabody owns and operates mines in Arizona, Colorado, New Mexico and Wyoming, Illinois, Indiana, and Australia.

Paladin Energy Ltd operates as a mining company. The Company explores and mines uranium. Paladin Energy serves customers worldwide.

Pingdingshan Tianan Coal Mining Co., Ltd. operates underground coal mining, coal washing and processing. The company also provides ground transportation services.

Jizhong Energy Resources Co., Ltd. produces and markets coal products, generates electric power, and manufactures cement.

CVR Energy, Inc. is an independent refiner and marketer of transportation fuels. The Company, also through a limited partnership produces ammonia and urea ammonia nitrate, or UAN, fertilizers.

Gulfport Energy Corporation operates as an energy exploration and production company. The Company focuses on oil and natural gas exploration and production services. Gulfport Energy serves clients in the United States.

PT Golden Energy Mines Tbk, (GEMS) operates as a holding company. Through its  s ubsidiaries, the Company mines for coal. GEMS' supplies paper mills and export energy markets including China, India, Thailand, Vietnam, and Bangladesh.

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 Pcl (TOP TB)

Thai Oil - Weak 2Q24E Core Profit but Cushioned by Stock Gains and Extra Gains

The stock price is exposed to limited downside risk and already priced in the weak GRM and core profit in 2Q24E to a certain degree.

Krungthai XSpring

Thai Oil -Upbeat 1Q24 Earnings; CFP Project to Drive LT Earnings

Meanwhile, the commercial commencement of the Clean Fuel Project (CFP) in 2025E, which will generate an incremental GRM, should reaffirm our view...

Krungthai XSpring

Thai Oil - Strong 1Q24E Earnings; Good LT Earnings Momentum

We believe the firm will be able to achieve our 2024E NP estimate, with the potential normalization of the GRM to be offset by a lower crude...

Krungthai XSpring

Thai Oil - 4Q23 and 2023 Earnings in Line; Solid GRM Outlook

We retain our positive view on the gross refining margin (GRM) in 2024E, driven by sustained high crack spreads of middle distillates (TOP’s yield...

Krungthai XSpring

Quiddity SET 50 Jun 24 Rebal: 4 Changes Confirmed; LONGs up 5.2% Vs SHORTs in a Month

Our sector-neutral trade ideas have generated a long-short return of 5.2% in a month which was significantly better than being LONG 4 Expected ADDs...

Janaghan Jeyakumar, CFA

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