Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Equity Bottom-Up

Five interesting news/trends we detected recently include:<ul>
<li>
Pa Daeng sells 7 power plants to BAFS for Bt1.7bn but then turns around to buy two hotels worth Bt5-10bn. Looks like they are moving from the defensive to recovery theme.</li>
<li>
GPSC, PTT's power arm and acquirer of Glow, announces it will increase the Group's renewable footprint from 11% to 30% in 5 years at a cost of Bt70bn.</li>
<li>
JKN diversifies outside media and targets almost doubling since 2019 to Bt3bn in 2021. Hospitals, hair clinic, drinks....nothing seems off-limits.</li>
<li>
CAT Telecom is currently looking to lease towers from private operators, poising AIS against the allies (True Corp and DTAC). We believe the allies have a slight leg up in this face-off, with DTAC enjoying the highest 4% upside.</li>
<li>
Market movements. Call this a snippet within a snippet for lack of a better word. We summarize some of the smaller movements on insider selling and IPO implications.</li>
</ul>

Five interesting news/trends we detected recently include:

Pa Daeng sells 7 power plants to BAFS for Bt1.7bn but then turns around to buy two hotels worth Bt5-10bn. Looks like they are moving from the defensive to recovery theme.

GPSC, PTT's power arm and acquirer of Glow, announces it will increase the Group's renewable footprint from 11% to 30% in 5 years at a cost of Bt70bn.

JKN diversifies outside media and targets almost doubling since 2019 to Bt3bn in 2021. Hospitals, hair clinic, drinks....nothing seems off-limits.

CAT Telecom is currently looking to lease towers from private operators, poising AIS against the allies (True Corp and DTAC). We believe the allies have a slight leg up in this face-off, with DTAC enjoying the highest 4% upside.

Market movements. Call this a snippet within a snippet for lack of a better word. We summarize some of the smaller movements on insider selling and IPO implications.


Snippets #47: Pa Daeng's Trades, Battle for CAT's 5G Network

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.

Bualuang Office Leasehold Real Estate Investment Trust / Equity Bottom-Up

Bualuang Office Leasehold Real Estate Investment Trust

We keep our BUY recommendation on B-WORK and slightly decrease the target price to Bt13.60 from Bt13.90, implying an upside of 21% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.0% and no terminal period.
Investment thesis:
<ul>
<li>Group affiliation assures a high occupancy rate and stable revenue</li>
<li>Impact from COVID-19 should be limited</li>
<li>Addition of new assets offer upside to our target price</li>
<li>Pays higher dividend yield than Thai peers, expect 7% in 2021-2022E</li>
</ul>
Interim: The 3Q20 results were slightly better than we expected as revenue grew QoQ . The high occupancy rate ensures stable revenue for the REIT.
Risks: Conflict of interest risk due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

We keep our BUY recommendation on B-WORK and slightly decrease the target price to Bt13.60 from Bt13.90, implying an upside of 21% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.0% and no terminal period.
Investment thesis:

Group affiliation assures a high occupancy rate and stable revenue
Impact from COVID-19 should be limited
Addition of new assets offer upside to our target price
Pays higher dividend yield than Thai peers, expect 7% in 2021-2022E

Interim: The 3Q20 results were slightly better than we expected as revenue grew QoQ . The high occupancy rate ensures stable revenue for the REIT.
Risks: Conflict of interest risk due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

B-WORK: Stable Tenants and Good Dividend Yield Give Low Risk

We have a BUY recommendation on B-WORK and slightly increase the target price to Bt13.90 from Bt12.80, implying an upside of 20% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.1% and no terminal period.
Investment thesis:
<ul>
<li>Group affiliation assures a high occupancy rate and stable revenue</li>
<li>Impact from COVID-19 should be limited</li>
<li>Addition of new assets offer upside to our target price</li>
<li>Pays higher dividend yield than Thai peers</li>
</ul>
Interim: The 2Q20 results were in line with our expectations. The high occupancy rate ensures a fast recovery as soon as rental rates are back to normal.
Risks: Conflict of interest risk due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

We have a BUY recommendation on B-WORK and slightly increase the target price to Bt13.90 from Bt12.80, implying an upside of 20% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.1% and no terminal period.
Investment thesis:

Group affiliation assures a high occupancy rate and stable revenue
Impact from COVID-19 should be limited
Addition of new assets offer upside to our target price
Pays higher dividend yield than Thai peers

Interim: The 2Q20 results were in line with our expectations. The high occupancy rate ensures a fast recovery as soon as rental rates are back to normal.
Risks: Conflict of interest risk due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

B-WORK: Good Dividend Yield Makes an Attractive Investment

We initiate coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80, implying an upside of 13% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.1% and no terminal period.
Investment thesis:
<ul>
<li>Group affiliation assures a high occupancy rate and stable revenue</li>
<li>Impact from COVID-19 should be limited</li>
<li>Addition of new assets offer upside to our target price</li>
<li>Pays higher dividend yield than Thai peers</li>
</ul>
Risks: Conflict of interest due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

We initiate coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80, implying an upside of 13% from the current share price. We derive our target price from a DCF-based valuation using a WACC of 7.1% and no terminal period.
Investment thesis:

Group affiliation assures a high occupancy rate and stable revenue
Impact from COVID-19 should be limited
Addition of new assets offer upside to our target price
Pays higher dividend yield than Thai peers

Risks: Conflict of interest due to the largest unitholder and tenant being within the same conglomerate, rising bond yields, falling occupancy rate, and higher-than-expected renovation and overhaul costs.

B-WORK: Offers Price Upside and a Good Dividend Yield

Thematic (Sector/Industry)

Thai cinemas reopened in June, but the pipeline no longer looks strong, being largely dominated by movie delays. The unfortunate problems of the cinema business is an opening for both free TV broadcasters and streaming services such as Netflix.<ul>
<li>Even then, Q4'20 could be a period for the pendulum to swing back in Major's (cinema) favor. Streaming services could run out of new content by September. New Thai dramas could run out even sooner. AIS Play and True ID will have even weaker pipelines than Netflix, but bear in mind that they are also much cheaper.</li>
<li>Consumer and business sentiments hit an all-time low during the pandemic, so recovery in H2'20 is inevitable for the whole sector. Media ad spend dropped 15% during the prior period.</li>
<li>The length of the lock-down affects Major more than other stocks. Basically, an entire quarter of revenues could disappear, since the lock-down lasted from late March to end of June. The second quarter, traditionally a high point for Thai cinemas, basically makes no money for 2020.</li>
</ul>

Thai cinemas reopened in June, but the pipeline no longer looks strong, being largely dominated by movie delays. The unfortunate problems of the cinema business is an opening for both free TV broadcasters and streaming services such as Netflix.
Even then, Q4'20 could be a period for the pendulum to swing back in Major's (cinema) favor. Streaming services could run out of new content by September. New Thai dramas could run out even sooner. AIS Play and True ID will have even weaker pipelines than Netflix, but bear in mind that they are also much cheaper.
Consumer and business sentiments hit an all-time low during the pandemic, so recovery in H2'20 is inevitable for the whole sector. Media ad spend dropped 15% during the prior period.
The length of the lock-down affects Major more than other stocks. Basically, an entire quarter of revenues could disappear, since the lock-down lasted from late March to end of June. The second quarter, traditionally a high point for Thai cinemas, basically makes no money for 2020.


Thai Media Spotlight: The Long Road to Sector Recovery

Thailand

True Corporation PCL is an integrated telecommunications provider. The Company offers a wide range of voice, video, and data services, including dial-up and broadband Internet services, pay television, fixed-line phone, online games, and mobile phone services.

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True Corp Pcl (TRUE TB)

Snippets #47: Pa Daeng's Trades, Battle for CAT's 5G Network

Country Group gets busy: Selling power, buying hotels, issuing warrants, while AIS and the other two telcos duke it out to supply towers to CAT's...

Athaporn Arayasantiparb, CFA

B-WORK: Stable Tenants and Good Dividend Yield Give Low Risk

We keep our BUY recommendation on B-WORK and slightly decrease the target price to Bt13.60, implying an upside of 21%. We derive our target price...

A. Stotz Investment Research

B-WORK: Good Dividend Yield Makes an Attractive Investment

The 2Q20 results were in line with our expectations. The high occupancy rate ensures a fast recovery as soon as rental rates are back to normal.

A. Stotz Investment Research

B-WORK: Offers Price Upside and a Good Dividend Yield

We initiate coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80, implying an upside of 13% from the current share...

A. Stotz Investment Research

Thai Media Spotlight: The Long Road to Sector Recovery

Thai cinemas reopened in June, but the pipeline no longer looks strong, being largely dominated by movie delays. The unfortunate problems of the...

Athaporn Arayasantiparb, CFA

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