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 risks associated with the CFP are higher than previously expected (e.g., significant cost overruns, COD delayed by three years, risks regarding remaining construction, and the funding plan).</li><li>TOP’s share price is trading at a higher-than-usual ERP to compensate for these risks.</li><li>We have revised down our 2025-26E profit forecasts by 24-28% due to higher interest expenses from a bond issuance and/or borrowings, resulting in negative 2-year core EPS growth (-20% CAGR) that underperforms the sector. </li></ul>

The risks associated with the CFP are higher than previously expected (e.g., significant cost overruns, COD delayed by three years, risks regarding remaining construction, and the funding plan).TOP’s share price is trading at a higher-than-usual ERP to compensate for these risks.We have revised down our 2025-26E profit forecasts by 24-28% due to higher interest expenses from a bond issuance and/or borrowings, resulting in negative 2-year core EPS growth (-20% CAGR) that underperforms the sector. 

Thai Oil - The CFP Entails Higher than Previously Expected Risks

<ul><li>The decline in refining margins YoY (weak in 2Q-3Q24 and beginning to recover in 4Q24 QTD) and the risk of a delay in the COD of the Clean Fuel Project (CFP) have pressured the stock price to fall by 24% over the past three months and around 17% in the past month, primarily due to the latter factor.</li><li>We have revised down our 2025- 26E earnings estimates to reflect the risk of the CFP’s COD being delayed to beyond 2026E (COD previously expected in 2H25E), resulting in a new fair value (FV) of Bt44.0 (vs. Bt54.82 earlier).</li><li>We have also downgraded our rating to Neutral (from Outperform). </li></ul>

The decline in refining margins YoY (weak in 2Q-3Q24 and beginning to recover in 4Q24 QTD) and the risk of a delay in the COD of the Clean Fuel Project (CFP) have pressured the stock price to fall by 24% over the past three months and around 17% in the past month, primarily due to the latter factor.We have revised down our 2025- 26E earnings estimates to reflect the risk of the CFP’s COD being delayed to beyond 2026E (COD previously expected in 2H25E), resulting in a new fair value (FV) of Bt44.0 (vs. Bt54.82 earlier).We have also downgraded our rating to Neutral (from Outperform). 

Thai Oil - Earnings and FV Revised Down to Reflect Risks of Delayed COD of CFP

<ul><li>The stock price has declined further by 20% YTD and is trading at an equity risk premium (ERP) higher than the 90-day average, largely reflecting the risk from delays in the Clean Fuel Project (CFP) and the downward adjustment in the base of the refining margin (which was very weak in 2Q-3Q24).</li><li>Therefore, the current market price, trading at a discount to the fair value (FV) of Bt54.82, makes the current valuation attractive.</li><li>The 3Q24 earnings turned to a loss, as expected (due to sustained low refining margins and stock losses).</li></ul>

The stock price has declined further by 20% YTD and is trading at an equity risk premium (ERP) higher than the 90-day average, largely reflecting the risk from delays in the Clean Fuel Project (CFP) and the downward adjustment in the base of the refining margin (which was very weak in 2Q-3Q24).Therefore, the current market price, trading at a discount to the fair value (FV) of Bt54.82, makes the current valuation attractive.The 3Q24 earnings turned to a loss, as expected (due to sustained low refining margins and stock losses).

Thai Oil - 3Q24 Turned to a Loss as Expected; Negatives Largely Priced In

<ul><li>We expect the 3Q24E earnings to turn to a loss, primarily due to sustained low gross refining margins (GRM) and stock losses.</li><li>We have revised down our GRM assumptions and profit forecasts for 2024-26E.</li><li>The 2024E profit is anticipated to decline YoY, but we expect an upward trend in 2025-26E, with a projected 28% CAGR driven by new contributions from the Clean Fuel Project (CFP), which is expected to reach full commercial production in 2H25E based on our conservative assumptions. </li></ul>

We expect the 3Q24E earnings to turn to a loss, primarily due to sustained low gross refining margins (GRM) and stock losses.We have revised down our GRM assumptions and profit forecasts for 2024-26E.The 2024E profit is anticipated to decline YoY, but we expect an upward trend in 2025-26E, with a projected 28% CAGR driven by new contributions from the Clean Fuel Project (CFP), which is expected to reach full commercial production in 2H25E based on our conservative assumptions. 

Thai Oil - 3Q24E Earnings to Turn to a Loss; Revise Down GRM/Earnings

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of Stock Exchange of Thailand as of Dec 20th.We estimate that they had an aggregated short interest worth USD2.0bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in PTT, CP AXTRA NON-VOTING DR, Bangchak, Kasikornbank, Gulf Energy Development.</li>
</ul>


We analyzed the changes in short interest of Stock Exchange of Thailand as of Dec 20th.We estimate that they had an aggregated short interest worth USD2.0bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in PTT, CP AXTRA NON-VOTING DR, Bangchak, Kasikornbank, Gulf Energy Development.


Thailand Short Interest Weekly (Dec 20th): PTT, CP AXTRA NON-VOTING DR, Bangchak, Kasikornbank

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 Pcl (TOP TB)

Thai Oil - The CFP Entails Higher than Previously Expected Risks

The risks associated with the CFP are higher than previously expected (e.g., significant cost overruns, COD delayed by three years, risks regarding...

Krungthai XSpring

Thai Oil - Earnings and FV Revised Down to Reflect Risks of Delayed COD of CFP

While the market price appears cheap relative to the FV, we do not anticipate any positive catalysts for the stock until there is a clear...

Krungthai XSpring

Thai Oil - 3Q24 Turned to a Loss as Expected; Negatives Largely Priced In

The stock price has declined further by 20% YTD and is trading at an equity risk premium (ERP) higher than the 90-day average, largely reflecting...

Krungthai XSpring

Thai Oil - 3Q24E Earnings to Turn to a Loss; Revise Down GRM/Earnings

We expect the 3Q24E earnings to turn to a loss, primarily due to sustained low gross refining margins (GRM) and stock losses.

Krungthai XSpring

Thailand Short Interest Weekly (Dec 20th): PTT, CP AXTRA NON-VOTING DR, Bangchak, Kasikornbank

We analyzed SET short interest report for the past week and highlighted short interest changes in PTT, CP AXTRA NON-VOTING DR, Bangchak,...

Ke Yan, CFA, FRM

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