In today’s briefing:
- TRUE: Merger Still Progressing but Large Losses Expected in 22E
- ASIAN: Pet Food Unit Continue to Be Key Growth Driver
- MINT: Hotel Segment’s Recovery Will Boost 2022 Growth
- SAPPE: Targets to Hit Revenue at Bt10bn by 2026
- GPSC: Improving Earnings Performance from Tariff Adjustment
- WHA: Positive Outlook for Three Key Businesses in 2022
TRUE: Merger Still Progressing but Large Losses Expected in 22E
- Conference meeting on Wednesday came with negative news on 22E earnings prospects. We maintain our BUY rating with TP of Bt5.09, based on the tender offer price.
- Management expects no pushback in terms of creditor approval.We believe that the merger will also receive regulatory approval,but with several regulations to also protect consumers, which could impact NewCo’s potential.
- We revise 22E earnings down to Bt2.9bn loss from Bt736m loss, previously, to reflect higher D&A costs and ARPU decline due to harsh competition in 2022.
ASIAN: Pet Food Unit Continue to Be Key Growth Driver
- Maintain BUY rating with TP of B23.00 derived from 16xPE’22E, which is close to +1SD of 5-years trading average. Our rating reflects strong pet food growth outlook, attractive 3.8% yield
- We foresee earnings momentum to improve QoQ in 2Q22, supported by better pet food business unit from new capacity, and further strengthen by Baht downtrend.
- In our view, the new pet food capacity should gather pace in 2H22, upon better demand in light of favorable macro dynamics. Moreover
MINT: Hotel Segment’s Recovery Will Boost 2022 Growth
- Analyst meeting came out with a positive tone regarding 2022 outlook.We maintain BUY rating with a target price of Bt38.0,based DCF method (WACC of 8% and terminal growth of 2%)
- Positive 2022outlook as we expect the hotel industry to make a strong come back in 2022due to vaccine roll outs and easing of international travel restrictions,making the earnings positive for2022
- Since 1Q is typically the lowest travel seasonality,we expect the revenue from hotels to grow for next 3 quarters (around 50% by 4Q22), contributing around 75% of the total revenue.
SAPPE: Targets to Hit Revenue at Bt10bn by 2026
- Yesterday analyst meeting came out with a positive tone.We reiterate our BUY rating for SAPPE with a target price of Bt35.25 (+10% from previous TP)based on 24xPE’22E, close to +1SD
- Management targeted revenue at Bt10bn by 2026 or +22%CAGR(2022-26). •In our view, SAPPE target is quite challenging amid concern over rising inflation situation.
- We expect 2Q22 earnings to continue to grow YoY and QoQ supported by (1) higher oversea market penetration, (2) distribution channel expansion, (3) more effective marketing activities
GPSC: Improving Earnings Performance from Tariff Adjustment
- We maintain the HOLD rating based on a target price of Bt69.0,derived using DCF methodology (WACC 5.7% and TG 1%),implying 32x PE’23E.Our valuation reflects weak SPP operations outlook in 2022
- Expect the 2Q22 earnings to improve QoQ,from 1) better SPP margin backed by upward Ft adjustment 2) Full quarter profit recognition from GE phase 5 after maintenance shut down (3Q21-1Q22)
- Full year 2022 outlook remains weak, as we expect the EPS to shrink by 37%.YoY due to continued pressure on SPP margins from high fuel cost. We are more positive
WHA: Positive Outlook for Three Key Businesses in 2022
- We maintain the BUY call and a target price of Bt3.80 derived from 18.0xPE’22 (5-year average) or implies 10% discount to Thai real estate sector. BUY rating reflects positive outlook
- Expect Industrial estate business’s revenue (15% of total revenue in 2021) to grow 50% in 2022E supported by 1.) higher land transfer along with increasing investor traffic at site-visit, and,
- Maintain positive outlook for utility business under WHAUP(BUY: Bt4.60)in 2022E driven by an increase in water sales volume, solar roof portfolio expansion (target to hit 300MW by 2023 from 60MW
Before it’s here, it’s on Smartkarma
