We expect PTTEP to post a solid 4Q21 net profit of Bt9.7bn (+283% YoY, +2% QoQ).
Excluding the impairment loss of US$200m (Mozambique, Yetagun projects), and US$100m gain from reversal of decommissioning expense of Bongkot project, the recurring profit is expected to be Bt13.2bn (+162% YoY)
The YoY surge will be from 10% and 27% growth in sales volume and average product selling price (ASP) respectively.
Numerous New Year developments suggest markets are heading towards a world where the worst of the Covid might be behind us and a better growth trajectory awaits
Yields have moved higher, airlines & transport have performed well, Oil is up, and some Asian markets have started to rebound or breakout – Australia, Vietnam & India as examples
This brings Thailand in focus as one of the major tourist destinations. The charts below show the breakouts and potential trends at work
We maintain BUY rating and roll over target price to Bt56 (+8% from previous TP) based on 25xPE’22E, a 15% discount from Thai health care peers.
We expect MEGA revenue growth rate to slow down to 4%YoY in 2022 caused by relieved customers concern over COVID-19 pandemic and high base effect.
Looking forward to 2023, We foresee MEGA revenue to continues to grow at moderate level at 9%CAGR in 2023-2025E, close to the global dietary supplements market growth at 8.6%CAGR(2021-2028)
We expect BBL’s net profit to surge 165% YoY to Bt6.3bn in 4Q21, driven by lower provisions and higher net interest income. But, the profit will likely decline 8% QoQ
Thai economy is on the path to recovery given higher private consumptions and continued government spending. BBL will likely gain benefits from an improvement in economic activities to shore up
Given its resilient balance sheet, credit costs will likely continue to decline, which will sustain long-term growth and increase ROE.
Originally, Krung Thai Bank Pub (KTB TB) struck us as interesting. A solid PH Score™, reasonable franchise valuation and P/Book, and a low RSI.
However, further due-diligence shows a somewhat stagnant and eroding operation.
Headline profitability improvement is unrelated to efficiency or to operational advances.
Cost growth is fast outpacing a declining top-line.
Interest income has actually fallen for each of the last 3 years.
The bank is being squeezed on margin despite keeping interest expenses unchanged.
Non-interest expenses soared by 26% YoY.
The bottom line (and profitability) was flattered by varied low quality items as well as much lower loan loss provisions, but still remained well above comprehensive income.
Asset Quality is also concerning (despite lower loan loss provisions) given the sharp rise in loss (especially) and substandard loans as well as the amount of Special Mention Loans on the Balance Sheet. This means provisioning of problem loans may not be sufficient.
Liquidity: Deposits are also declining, pushing up the LDR.
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Originally, Krung Thai Bank Pub (KTB TB) struck us as interesting. A solid PH Score™, reasonable franchise valuation and P/Book, and a low RSI.
However, further due-diligence shows a somewhat stagnant and eroding operation.
Headline profitability improvement is unrelated to efficiency or to operational advances.
Cost growth is fast outpacing a declining top-line.
Interest income has actually fallen for each of the last 3 years.
The bank is being squeezed on margin despite keeping interest expenses unchanged.
Non-interest expenses soared by 26% YoY.
The bottom line (and profitability) was flattered by varied low quality items as well as much lower loan loss provisions, but still remained well above comprehensive income.
Asset Quality is also concerning (despite lower loan loss provisions) given the sharp rise in loss (especially) and substandard loans as well as the amount of Special Mention Loans on the Balance Sheet. This means provisioning of problem loans may not be sufficient.
Liquidity: Deposits are also declining, pushing up the LDR.
We maintain our positive view toward its long-term outlook on the backs of potential growth from its location and secured contract with government agency. Maintain a BUY rating with a new target price of Bt16.8 (SOTP).
The story:
We cut our 2019-2021 earnings forecast by 12-13% to factor in rising depreciation expenses caused by its shortening depreciated years of PTW’s assets.
Our new target price of Bt16.8 is derived from Some-of-the-parts (SOTP) which comprises (1) Bt13.8 from core business (tap water supply under both TTW and PTW) based on DCF(6.7%WACC, 0%TG) and (2) Bt3.0 from CKP based on IFA report.
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Originally, Krung Thai Bank Pub (KTB TB) struck us as interesting. A solid PH Score™, reasonable franchise valuation and P/Book, and a low RSI.
However, further due-diligence shows a somewhat stagnant and eroding operation.
Headline profitability improvement is unrelated to efficiency or to operational advances.
Cost growth is fast outpacing a declining top-line.
Interest income has actually fallen for each of the last 3 years.
The bank is being squeezed on margin despite keeping interest expenses unchanged.
Non-interest expenses soared by 26% YoY.
The bottom line (and profitability) was flattered by varied low quality items as well as much lower loan loss provisions, but still remained well above comprehensive income.
Asset Quality is also concerning (despite lower loan loss provisions) given the sharp rise in loss (especially) and substandard loans as well as the amount of Special Mention Loans on the Balance Sheet. This means provisioning of problem loans may not be sufficient.
Liquidity: Deposits are also declining, pushing up the LDR.
We maintain our positive view toward its long-term outlook on the backs of potential growth from its location and secured contract with government agency. Maintain a BUY rating with a new target price of Bt16.8 (SOTP).
The story:
We cut our 2019-2021 earnings forecast by 12-13% to factor in rising depreciation expenses caused by its shortening depreciated years of PTW’s assets.
Our new target price of Bt16.8 is derived from Some-of-the-parts (SOTP) which comprises (1) Bt13.8 from core business (tap water supply under both TTW and PTW) based on DCF(6.7%WACC, 0%TG) and (2) Bt3.0 from CKP based on IFA report.
Of the five interesting trends/events/developments we heard this month, we highlighted five and how they could impact Thai equities in the near term:
Thai Raksa Chart Party dissolution. The dissolution of the TRC, the second largest Thaksinite party, poses some political risks but could affect sentiments for companies founded by Thaksin, such as Intuch and AIS.
Thai Air Asia says no to Nok Air. After the briefest considerations, the larger airline came to the conclusion that they wouldn’t acquire a stake in struggling Nok Air.
Capital Gains Taxes are currently under consideration by the government for the first time. If implemented, they are likely to have negative impact on overall equities but the brokers in particular.
From LINE to BEC. LINE (Thailand)’s Country Manager Ariya Phanomyong has agreed to move to BEC. Though mildly positive, we believe improvements will revolve around distribution rather than the more key issue of content.
True Move’s Request for 5G delay may sound odd at first glance, but we see it as a rational, if not very tactful, way of delaying a new round of capex.
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In this two part series, we apply some of the thoughts of UK-based industry expert Morrel to the Thai airlines industry and try to figure if even the best-in-class ones like AAV is worth a shot. In the first part, some of the key points include:
Heightened attention. The industry has regained spotlight with recent news flow of: 1) failed M&A between Air Asia and Nok Air; 2) demand and logistic shocks from India and the Phuket incident; and 3) the Boeing 737 recalls sparked in Ethiopia.
Governance and foreign ownership. Certain issues that might have come up had the Air Asia-Nok deal gone forward include foreign ownership given Air Asia’s Malaysian roots. On the governance side, Thai Airways probably has more serious issues than other rivals in the industry.
Leased vs. owned fleets. The typical Thai carrier owns most of its fleet compared to only half for most Asian airlines. These cost savings, though tying down capital, are possible for a number of reasons, from state support to strong financials and smaller size.
Impact of a strong Baht. The Baht’s appreciation tends to affect the sector negatively, because it makes tourism more expensive. For Thai Airways, however, its large Japanese debts means it is a net beneficiary of the recent trend.
We initiate coverage of CHG with a BUY rating and a 2019E target price of Bt2.53, derived from a discounted cash flow valuation (WACC of 6.2% and terminal growth of 2.0%). This is equivalent to 44.5 PE’19E, which is near its five-year trading average of 43.7x.
The story:
Competitive player in a key strategic location
Pressures from launch of new greenfield hospitals should be short term
Recent share price retreat opens an investment opportunity
Expected flat earnings in 2019E and growth at a 19% CAGR in 2020-21E
We maintain PLANB with a BUY rating with the target price of Bt8.30 derived from 1.5xPEG’2019E of Thai consumer discretionary sector, which implies to 36xPE’19E.
The story:
Collaboration among the leaders in OOH industry
Revising down EPS in 2019-21E by 9-11% due to dilution effect
Risks: Obstacles for renewing concession contracts with state-owned enterprises along with falling consumer spending and a share-price dilution effect on the back of then generally mandated raise in capital.
China’s current efforts to gain prominence in the semiconductor market targets memory chips – large commodities. This three-part series of insights examines how China determined its strategy and explains which companies are the most threatened by it.
This second part of the series explains how China chose commodity semiconductors (DRAM and NAND flash memory chips) as the best technology to pursue.
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We maintain our positive view toward its long-term outlook on the backs of potential growth from its location and secured contract with government agency. Maintain a BUY rating with a new target price of Bt16.8 (SOTP).
The story:
We cut our 2019-2021 earnings forecast by 12-13% to factor in rising depreciation expenses caused by its shortening depreciated years of PTW’s assets.
Our new target price of Bt16.8 is derived from Some-of-the-parts (SOTP) which comprises (1) Bt13.8 from core business (tap water supply under both TTW and PTW) based on DCF(6.7%WACC, 0%TG) and (2) Bt3.0 from CKP based on IFA report.
Of the five interesting trends/events/developments we heard this month, we highlighted five and how they could impact Thai equities in the near term:
Thai Raksa Chart Party dissolution. The dissolution of the TRC, the second largest Thaksinite party, poses some political risks but could affect sentiments for companies founded by Thaksin, such as Intuch and AIS.
Thai Air Asia says no to Nok Air. After the briefest considerations, the larger airline came to the conclusion that they wouldn’t acquire a stake in struggling Nok Air.
Capital Gains Taxes are currently under consideration by the government for the first time. If implemented, they are likely to have negative impact on overall equities but the brokers in particular.
From LINE to BEC. LINE (Thailand)’s Country Manager Ariya Phanomyong has agreed to move to BEC. Though mildly positive, we believe improvements will revolve around distribution rather than the more key issue of content.
True Move’s Request for 5G delay may sound odd at first glance, but we see it as a rational, if not very tactful, way of delaying a new round of capex.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
We initiate coverage of CHG with a BUY rating and a 2019E target price of Bt2.53, derived from a discounted cash flow valuation (WACC of 6.2% and terminal growth of 2.0%). This is equivalent to 44.5 PE’19E, which is near its five-year trading average of 43.7x.
The story:
Competitive player in a key strategic location
Pressures from launch of new greenfield hospitals should be short term
Recent share price retreat opens an investment opportunity
Expected flat earnings in 2019E and growth at a 19% CAGR in 2020-21E
We maintain PLANB with a BUY rating with the target price of Bt8.30 derived from 1.5xPEG’2019E of Thai consumer discretionary sector, which implies to 36xPE’19E.
The story:
Collaboration among the leaders in OOH industry
Revising down EPS in 2019-21E by 9-11% due to dilution effect
Risks: Obstacles for renewing concession contracts with state-owned enterprises along with falling consumer spending and a share-price dilution effect on the back of then generally mandated raise in capital.
China’s current efforts to gain prominence in the semiconductor market targets memory chips – large commodities. This three-part series of insights examines how China determined its strategy and explains which companies are the most threatened by it.
This second part of the series explains how China chose commodity semiconductors (DRAM and NAND flash memory chips) as the best technology to pursue.
Global Emerging Market funds made a strong start to 2019, with just over two-thirds of funds outperforming the benchmark, generating an average alpha above the IShares MSCI Emerging Markets Indx (ETF) (EEM US) of 1.3%.
In this report, we look at the performance of 180 global emerging market strategies over the first quarter of 2019 and analyse the countries, sectors and stocks that helped generate that outperformance. We also take a look at the longer-dated outperformance of active GEM funds.
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Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
We maintain PLANB with a BUY rating with the target price of Bt8.30 derived from 1.5xPEG’2019E of Thai consumer discretionary sector, which implies to 36xPE’19E.
The story:
Collaboration among the leaders in OOH industry
Revising down EPS in 2019-21E by 9-11% due to dilution effect
Risks: Obstacles for renewing concession contracts with state-owned enterprises along with falling consumer spending and a share-price dilution effect on the back of then generally mandated raise in capital.
China’s current efforts to gain prominence in the semiconductor market targets memory chips – large commodities. This three-part series of insights examines how China determined its strategy and explains which companies are the most threatened by it.
This second part of the series explains how China chose commodity semiconductors (DRAM and NAND flash memory chips) as the best technology to pursue.
Global Emerging Market funds made a strong start to 2019, with just over two-thirds of funds outperforming the benchmark, generating an average alpha above the IShares MSCI Emerging Markets Indx (ETF) (EEM US) of 1.3%.
In this report, we look at the performance of 180 global emerging market strategies over the first quarter of 2019 and analyse the countries, sectors and stocks that helped generate that outperformance. We also take a look at the longer-dated outperformance of active GEM funds.
This week’s offering of Insights across ASEAN@Smartkarmais filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up pieces. Please find a brief summary below, with a fuller write up in the detailed section.
In the sixth company visit Insight in an ongoing series, Indonesia Property – In Search of the End of the Rainbow – Part 6 – Intiland Development (DILD IJ), CrossASEAN Insight Provider Jessica Irene takes a deep dive into this high-rise and office focused developer. The company is a property developer that focuses on landed residential, industrial estates, high-end condominiums, and offices in Jakarta and Surabaya. DILD has a good track record in building and operating high-end condominiums and offices.
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.