THAILANDs TOP LOCAL KNOWLEDGE

Current Market

Thanacharts Morning Note

Market data

Thursday, December 11, 2014

Net trade
Close

Net trade (Bt bn)

SET Index vs MSCI Asia x JP

Prev.

-1M

YTD

SET Index

1,559.6

-1.0%

Foreign

-3.5

+9.2

-6.4

Turnover (Bt m)

55,408

-9.7%

Retail

+3.6

-13.7

-57.6

Mkt Cap (Bt bn)

14,364

-1.0%

Institutes

+1.2

+0.8

+49.2

Stock Gainers

297

stocks

Proprietary

-1.2

+3.6

+14.8

Stock Losers

523

stocks

SET index (LHS)

(index)
(index)
MSCI Asia x JP ( RHS)
1,700
650
1,600
600
1,500
1,400
550
1,300
1,200
500
1,100
1,000
450
Jan-13 Jun-13 Nov-13 Apr-14 Oct-14

Market Valuation

TOP STORY

Market data

Siam Senses | Thailands next wave

The SET has performed well throughout the political turmoil and the

coup, running up by 20% YTD. At 1,560 SET level, there is only 12%
potential upside to our 2015 year-end target of 1,750 and a lot of
stocks are already at high valuations. Siam Senses identifies newwave stocks in this report, thus leading to major adjustments to our
portfolio.

Ad Hoc | SAMART (BUY) | Second earnings breakthrough

We recently met with management (President) and came away with

greater conviction in SAMARTs ability to post a second earnings
breakthrough to the Bt3bn profit mark in 2017, after reaching Bt1bn in
2012. We see this driven by the governments digital economy policy
and SAMARTs entry into the utility business. We lift our DCF-based
TP to Bt45.0; BUY.

Ad Hoc | SIM (SELL) | Lackluster growth

Rising

smartphone market competition and higher MVNO business

losses lead us to cut SIMs earnings by 11-24% for 2014-16F. We
believe 3G migration benefits are over, with MVNO business not yet a
new core business to boost SIMs earnings. With EPS growth of 6% in
2015F and 1% decline in 2016F, we downgrade SIM to SELL with a
new TP of Bt3.0.

SAWAD (BUY)

Cabinet approves nano-financing policy

Lending limit is up to 120,000 baht while interest ceiling is 36%.

This policy is to become effective from January 2015.
SAWAD should be a prime beneficiary but this may take time.
We see SAWAD as a super-growth stock with high ROE. BUY.

P.5

2014F 2015F 2016F

PE (x)
Norm EPS growth (%)
EV/EBITDA (x)
P/BV (x)

17.3

14.7

13.1
11.8

1.5

16.4

10.6

9.3

8.6

2.3

2.1

1.9

Yield (%)

2.9

3.3

3.8

ROE (%)

14.6

15.8

16.3

0.7

0.6

0.6

Net D/E (x)

Major Indices
Dow Jones
NASDAQ
FTSE

Close

17,533

-268.0

-1.5%

4,684

-82.4

-1.7%

6,500

-29.4

-0.5%

SHCOMP (China)
Hang Seng

2,940
23,525

83.7
38.7

2.9%
0.2%

FTSSI (Singapore)

3,326

6.0

0.2%

KOSPI

1,946

-25.4

-1.3%

JCI (Indonesia)

5,165

43.1

0.8%

MSCI Asia

124

-1.2

-1.0%

MSCI Asia x JP

564

-0.4

-0.1%

Currency /Bond data

Dollar index
Bt/US$

Close

88.3

-0.4

-0.5%

32.8

-0.1

-0.4%

119.3

-0.6

-0.5%

10Y bond yield (TH)

2.9

0.0

-0.7%

10Y treasury yield (US)

2.2

0.0

-2.2%

100JPY/US$

Commodities
NYMEX (US$/bbl)

Close

60.9

-2.9

-4.5%

BRENT (ICE) (US$/bbl)

64.2

-2.6

-3.9%

DUBAI (US$/bbl)

63.3

-0.1

-0.2%

Baltic Dry Index

911.0

-22.0

-2.4%

GRM (US$/bbl)

7.7

-0.2

-1.9%

1,229.4

-2.6

-0.2%

Gold (US$/oz)
Coal (BJI)*

63.3
-1.4 -2.2%
(US$/tonne)* (US$ cent/lb)**

HDPE-Naphtha

815.0

-10.0

-1.2%

Ethylene-Naphtha

555.0

-5.0

-0.9%

PX-Naphtha

365.0

30.0

9.0%

BZ-Naphtha

290.0

-12.5

-4.1%

Steel-HRC

470.0

-5.0

-1.1%

Rubber SICOM TSR20

1,433

-26.0

-1.8%

Rubber TOCOM
Raw Sugar**

1,623
15.4

-39.3
0.1

-2.4%
0.8%

White Sugar**

18.1

0.1

0.4%

Source: Thanachart , Bloomberg, Datastream, Banpu

Note: * Weekly data

Please note that due to the interest of timeliness, this product was not edited.

THAILAND

STRATEGY NOTE

11 DECEMBER 2014

Siam Senses
Thailands next wave
The SET has performed well throughout the political turmoil and the
coup, running up by 20% YTD. At 1,560 SET level, there is only 12%
potential upside to our 2015 year-end target of 1,750 and a lot of stocks
are already at high valuations. Siam Senses identifies new-wave stocks
in this report, thus leading to major adjustments to our portfolio.

Despite slower-than-expected economic pump-priming by the

government, Siam Senses remains a bull on the Thai market seeing
only a delayed rather than a failed recovery. We dont think the big
picture has changed and we still see a new Thai era involving: 1) a
stable political period for many years to come, 2) a kick-starting of a
period of economic sustainability with eventual implementation of the
countrys economic roadmap, including infrastructure spending and the
identification of new focus industries, and 3) a sharp drop in the risk of a
financial crisis induced by unsustainable, extreme populism that has led
to jumps in both public and household debt.

Head of Research
662 617 4900
pimpaka.nic@thanachartsec.co.th

Top Picks
EPS growth

PE

Yield

14F

15F

14F

15F

15F

(%)

(%)

(x)

(x)

(%)

BGH

19.6

17.1

38.7

33.1

1.5

CENTEL

(3.7)

41.2

38.2

27.0

1.5

CK

42.6

8.8

35.4

32.5

1.5

KBANK

10.6

22.8

12.5

10.2

2.0

MAJOR *

20.3

19.6

23.1

19.3

4.7

RS *

11.1

98.7

38.7

19.5

3.6

SAMART *

12.0

20.9

22.1

18.3

3.0

SAWAD *

31.0

37.6

30.3

22.0

1.8

Hefty self-funding for multi-year economic cycle

STEC

11.5

7.6

24.5

22.7

1.8

TISCO *

(3.9)

9.7

8.5

7.8

5.1

As opposed to many emerging economies that rely on foreign money to

a large degree to fund their growth, we believe Thailand is in a far less
risky position regarding capital outflows during the Feds policy rate
reversal period. The country is heavily self-funded with only ~15% in
foreign bond holdings while having as much as 22% of GDP as excess
liquidity in the form of BOT bonds that can be released into the system
if there are capital outflows. Together with an end to the extreme
populist period which used to cost the country 4-4.5% of GDP p.a., we
dont expect Thailand to have any problem in funding its multi-year
infrastructure-driven economic cycle. At the corporate level, Thai
companies are in a cycle of very strong cash flows and low debt.

Stocks taken out

21.1

20.9

33.8

28.0

1.4

3.5

14.3

10.2

8.9

3.8

BTS

13.4

1.7

53.8

52.9

6.7

EA

588.5

101.0

58.5

29.1

1.0

KBS

(16.1)

19.6

11.7

9.7

5.1

Source: Thanachart estimates

Note: * New addition
For BTS, financial year ends in March.
Based on 8 December 2014 closing prices

Market Earnings Growth

(%)
34.9
40

Market earnings growth

Sources: SET, Thanachart estimates

Next wave of stocks to invest in

Market ROE

16.4

11.2
2.7

(%)

2016F

2013

2012

2011

0
2010

11.8

1.5
2014F

10

ROE

20
16.3
15

Sources: SET, Thanachart estimates

2016F

2013

2012

2011

2010

2009

2005F

10

2008

The SET surged 20% YTD with many stocks up sharply, so we make
major changes to our portfolio. We remove AOT, BTS and EA because
of their significant outperformances over the past two years. The two
underperformers in our portfolio in 2014 have been BBL and KBS and
they are out on slower-than-expected business recoveries. We add
MAJOR and RS given their successful strategies to stand out despite
the still weak media sector. We also add SAMART on its new business
wave that we see shifting up its earnings base. We add TISCO on a
bottoming out of the auto hire-purchase market and SAWAD as play on
the markets untapped micro-financing demand.

19.9

20

2015F

30

We dont believe sector fundamentals and outlook have changed much

from our view in 2H14 when we liked infrastructure, tourism, healthcare,
bank and renewable energy. The problem is that prices of key stocks in
those sectors have already performed very well, leaving limited
potential upside. Our way to outperform the SET in 2015 is to reduce
exposure in those sectors while adding exposure in potential
turnaround sectors such as media and auto and bottom-up stock picks.

2014F

Our way to play the SET in 2015

AOT
BBL

2007

Thanachart Securities

Our top-down view remains a new Thai era

PIMPAKA NICHGAROON, CFA

Th
11 DECEMBER 2014

BUY

(Unchanged)

Change in Numbers

TP: Bt 45.00

anT
ahca
hna
rcth
Aadr
t

(From: Bt 36.50)

Upside: 22.4%

Samart Corporation Pcl

HAod
cHR
oec
seR
aers
ceha
rc
h

(SAMART TB)

Second earnings breakthrough

We recently met with management (President) and came away with greater
conviction in SAMARTs ability to post a second earnings breakthrough to
the Bt3bn profit mark in 2017, after reaching Bt1bn in 2012. We see this
driven by the governments digital economy policy and SAMARTs entry
into the utility business. We lift our DCF-based TP to Bt45.0; BUY.

SIRIPORN ARUNOTHAI
662 617 4900
siriporn.aru@thanachartsec.co.th

Another big upward-earnings base shift

SAMART has enjoyed a profit breakthrough to the Bt1bn mark from 2012
onward on the back of the smartphone boom and hefty turnkey construction
of 3G infrastructure for TOT. We now foresee another big upward shift in
SAMARTs earnings base to the Bt3bn mark in 2017, or 89% above the
current years base, despite the maturing smartphone market. The earnings
boost should be driven by more ICT infrastructure and solutions work as a
result of the governments digital economy policy, SAMARTs entry into the
utility business and its expansion of service-based air traffic management
(ATM). To us, it is not just a matter of higher earnings, but also one of
earnings quality with recurring profit contribution from utility and ATM rising to
34% of total profit in 2017F (vs 13% in 2014F).

Plans to invest in waste-to-energy power plants

Entering the utilities business hasnt come out of the blue for SAMART. With
its experience in building electrical substations and transmission lines in
Thailand, running a 23-MW power plant in Cambodia as well as strong
relationships with governments, SAMART plans to invest in waste-to-energy
(WTE) power plants via its 100%-owned Samart U-Trans. We see SAMART
investing in four WTE projects with capacity of 7-10MW each. By using
Refuse Derived Fuel (RDF) technology, SAMART expects an investment
cost at Bt150m/MW and plans to hold a 70-80% stake in each project. The
first project is due to be announced in 1Q15 with commencement scheduled
for 4Q16. For its next step into a far bigger league (and not yet in our model),
SAMART plans to invest in a 1,000-MW clean coal power plant in Cambodia.

Beneficiary of governments digital economy policy

SAMART is the countrys top ICT infrastructure and solutions company via its
70%-owned Samart Telecom (SAMTEL TB, not rated) and we therefore
expect it to be a beneficiary of the governments digital economy policy. We
estimate SAMARTs new project value of Bt5.4bn in 2014 (dropping from
Bt7.1bn in 2013 as a result of the political turmoil) to increase on pent-up
demand or delayed projects to Bt11.4bn in 2015 and Bt9.0bn in 2016, which
should boost SAMARTs earnings growth in both those years.

COMPANY VALUATION
Y/E Dec (Bt m)

2013A

2014F

2015F

2016F

Sales

22,315

26,008

27,866

29,319

1,468

1,650

1,996

2,264

1,758

2,099

2,439

Net profit
Consensus NP

(6.1)

(4.9)

(7.2)

1,468

1,650

1,996

2,264

Prev. Norm profit

1,741

2,156

2,418

Chg frm prev (%)

(5.2)

(7.4)

(6.4)

1.5

1.6

2.0

2.2

34.9

12.0

20.9

13.4
16.3

Diff frm cons (%)

Norm profit

Norm EPS (Bt)

Norm EPS grw (%)
Norm PE (x)

25.1

22.4

18.5

EV/EBITDA (x)

10.7

10.8

10.2

9.5

5.9

5.2

4.6

4.0

P/BV (x)
Div yield (%)

2.2

2.5

3.0

3.4

ROE (%)

25.1

24.6

26.2

26.1

Net D/E (%)

95.6

66.3

71.8

69.2

PRICE PERFORMANCE
SAMART
Rel to SET In dex

(Bt/shr)
40
30
20
10
0
Dec-13

Apr -14

Aug -14

(%)
120
100
80
60
40
20
0
(20)
Dec-14

COMPANY INFORMATION
Price as of 9-Dec-14 (Bt)

36.75

Market cap (US$ m)

1,122.6

Adding Bt9.0 from 4 WTE plants to our TP; reiterate BUY

Listed shares (m shares)

1,006.5

We revise up our earnings in 2017-25F by 20% on average to reflect 4 WTE

plants starting up from 4Q16F onward (average of Bt176m/plant in 2017F).
Despite the 5-7% cuts to our 2014-16F earnings on a weaker-than-expected
Samart i-Mobile (SIM TB) performance, we raise our DCF-based 12-month
TP to Bt45.0 from Bt36.50 to reflect its new utility business. We reiterate our
BUY on SAMART for its better quality and less volatile earnings that we also
forecast to offer a 3-year EPS CAGR of 24% in 2015-17. SAMART shares
are inexpensive, in our view, with a 2015F PE to 3-year EPS CAGR of 0.8x.

Free float (%)

Avg daily turnover (US$ m)
12M price H/L (Bt)
Sector
Major shareholder

55.5
8.0
36.25/14.00
ICT
Wilailuk family 26.1%

Sources: Bloomberg, Company data, Thanachart estimates

Please see the important notice on the back page.

Th
11 DECEMBER 2014

SELL

(From: HOLD)

Change in Recommendation

TP: Bt 3.00

(From: Bt 3.70)

Downside: -12.8%

Samart i-Mobile Pcl

anT
ahca
hna
rcth
Aadr
t HA
odc
HRo
ecs
eRae
rsce
har
ch

(SIM TB)

Lackluster growth
Rising smartphone market competition and higher MVNO business losses
lead us to cut SIMs earnings by 11-24% for 2014-16F. We believe 3G
migration benefits are over, with MVNO business not yet a new core
business to boost SIMs earnings. With EPS growth of 6% in 2015F and
1% decline in 2016F, we downgrade SIM to SELL with a new TP of Bt3.0.

SIRIPORN ARUNOTHAI
662 617 4900
siriporn.aru@thanachartsec.co.th

Earnings and TP cut; downgrade to SELL

We downgrade SIMs earnings by 11-24% for 2014-16F. Increasing
smartphone market competition leads us to cut our 2014-16 gross margin
assumptions by 0.3-2.2 ppts to 21.8%, 21.5% and 21.5%. Meanwhile, the
delay to 3G phase II and heavy sales promotions by the three mobile
operators have also made SIMs Mobile Virtual Network Operator (MVNO)
business weaker than our expectation (see Exhibit 1). We lower our 12month DCF-based TP for SIM to Bt3.0 from Bt3.7. With our expectation for
SIM to see flat earnings growth over the next two years, we view its 16.2x
trading PE in 2015F as rich, and thus downgrade SIM to SELL from Hold.

Growth to cool over the next two years

We believe SIMs very impressive EPS growth of 81% in 2012 and 464% in
2013 is behind us, and we forecast only 8%, 6% and -1% in 2014-16. We
expect intensifying competition from China mobile imports and from existing
brands such as Samsung in the low-end handset market, rising subsidization of
mobile operators and a higher sales mix of low-margin smartphone sales volume
due to wider 3G service coverage in the provinces leading to a downtrend in
gross margin that we see outweighing the benefit from higher smartphone sales
volumes. We estimate SIMs average gross margin for its handset business to
drop from 24.2% in 2013 to 20.7%, 20.2% and 19.6% in 2014-16. Given the
already-high 2G to 3G migration rate of 80% in 3Q14, we also project SIMs
growth rate for smartphone sales volumes to drop to 30% in 2015 and 5% in
2016 (from 222% in 2013 and 85% in 2014).

COMPANY VALUATION
Y/E Dec (Bt m)

2013A

2014F

2015F

2016F

Sales

10,239

12,822

13,520

13,016

Net profit

807

881

936

927

1,014

1,171

1,372
(32.4)

Consensus NP

(13.2)

(20.1)

807

881

936

927

986

1,145

1,225
(24.3)

Diff frm cons (%)

Norm profit
Prev. Norm profit

(10.7)

(18.3)

0.2

0.2

0.2

0.2

464.2

8.0

6.0

(0.9)

Chg frm prev (%)

Norm EPS (Bt)
Norm EPS grw (%)
Norm PE (x)

18.5

17.1

16.2

16.3

EV/EBITDA (x)

16.0

16.1

14.7

14.5

P/BV (x)

4.8

4.2

3.8

3.5

Div yield (%)

3.2

3.5

3.7

3.7

ROE (%)

28.3

26.2

24.9

22.4

Net D/E (%)

61.6

92.8

72.0

42.9

PRICE PERFORMANCE
(Bt/shr)

SIM

MVNO business not a yet a new earnings booster

4.0

We project an improved performance of SIMs MVNO service for TOTs 3G

business on rising subscribers via bundling of packages with i-mobile
handsets sales and better economies of scale. However, given the limited
coverage of TOTs 3G service network with only 5,300 base stations for the
phase 0 and phase I investments, the delay to TOTs 3G phase II and heavy
sales promotions by the three large mobile operators, we forecast continued
losses from this business (after a Bt86m loss in 2013) of Bt61m in 2014 and
Bt34m in 2015 before turning positive at Bt55m in 2016.

3.5
3.0
2.5
2.0
Dec-13

Apr -14

Aug -14

(%)

10
5
0
(5)
(10)
(15)
(20)
(25)
Dec-14

COMPANY INFORMATION
Price as of 9-Dec-14 (Bt)
Market cap (US$ m)

Strong 4Q14F earnings but below expectation

Listed shares (m shares)

We expect SIM to post 4Q14 earnings growth of 60% both y-y and q-q with
net profit of Bt243m, below its peak quarterly earnings in 2Q14. The growth
appears strong but is lower than our previous expectation given sluggish
domestic consumption which has not yet recovered in 4Q14. However, a bulk
sale of low-priced smartphones to Total Access Communication (DTAC TB)
amounting to 500,000 units, and sales of DTV set-top boxes and antenna
after DTV subsidy coupons were distributed to households from mid-October
this year should be the two core engines boosting earnings growth.

Free float (%)

Please see the important notice on the back page.

Rel to SET In dex

4.5

Avg daily turnover (US$ m)

12M price H/L (Bt)
Sector
Major shareholder

3.44
459.4
4,400.3
15.3
4.6
3.96/2.72
ICT
Samart Corp 70.0%

Sources: Bloomberg, Company data, Thanachart estimates

THAILANDs TOP LOCAL KNOWLEDGE

Srisawad Power 1979 Pcl

Thursday, December 11, 2014

(SAWAD TB)

- BUY

News Update

Sarachada Sornsong | Email: sarachada.sor@thanachartsec.co.th

Chalida Tantriyanont, Assistant Analyst | Email: chalida.tan@thanachartsec.co.th

Cabinet approves nano-financing policy

Key Valuations
Y/E Dec (Bt m)

Lending limit is up to 120,000 baht while interest ceiling is 36%.

This policy is to become effective from January 2015.

SAWAD should be a prime beneficiary but this may take time.

We see SAWAD as a super-growth stock with high ROE. BUY.

The cabinet recently approved six economic measures which are to become
effective from January 2015 onward.

One of the measures is to allow non-banks to conduct nano financing at

lending limits not exceeding 120,000 baht per borrower. Meanwhile, the
ceiling interest rate is set at 36% p.a.

The purpose is to reduce the role of unsystemetic, overcharging loan sharks.

As one of the leading micro-financing plays with the most extensive branch
coverage, we see SAWAD as poised to benefit from this policy.

The ceiling interest rate for nano financing of 36% p.a. is also higher than the

2013A

2014F

Pre Provision Profit

858

1,238

1,747

2,441

Net profit

575

789

1,135

1,609

Norm profit

575

789

1,135

1,609

Norm EPS (Bt)

2015F

2016F

0.6

0.8

1.1

1.6

Norm EPS grw (%)

42.1

31.0

37.6

41.7

Norm PE (x)

38.9

29.7

21.6

15.2

P/BV (x)

16.3

8.7

7.0

5.5

2.4

1.3

1.9

2.6

ROE (%)

66.1

40.0

35.9

40.4

ROA (%)

10.9

11.3

12.6

13.9

Div yield (%)

Source: Thanachart estimates

Stock Data
Closing price (Bt)

24.50

Target price (Bt)

33.00

Market cap (US$ m)

744

Avg daily turnover (US$ m)

16.4

12M H/L price (Bt)

25.00/10.20

15% ceiling for personal loans that SAWAD is currently subject to.

That being said, SAWAD would need time to study and find ways to start this
nano-financing business as loans would be non-collateralized. However, it

(Bt)

should represent good business potential for SAWAD in the future.

28
24
20
16
12
8
4
0
May-14

Also, with or without the nano-financing business, we remain bullish on

SAWAD. With plenty of untapped grassroots loan demand and the huge
interest gap versus loan sharks, we see SAWAD as a super-growth stock
with a sustainable high and rising ROE trend. We look for a five-year EPS
CAGR of 40% with ROE reaching 48% in 2019F.

Price Performance
SAWAD

Jun-14

Rel to SET Index

Aug-14

Oct-14

(%)

300
250
200
150
100
50
0
Dec-14

Source: Bloomberg

There is 35% potential upside to our Bt33.0 TP. Reiterate BUY on SAWAD.

THANACHART SECURITIES

THAILANDs TOP LOCAL KNOWLEDGE

Thursday, December 11, 2014

NEWS CLIPPING


Abhisit opposes directly elected PM, cabinet, warns they could be corrupted by power : Democrat

The Nation

Party leader Abhisit Vejjajiva yesterday expressed his opposition to the proposal for direct election of the
prime minister and cabinet, saying such an administration could easily be corrupted by power.


Loans to poor plan gets the nod : The cabinet has endorsed plans to set up "nano financing" operators to

Bangkok Post

provide loans to the poor and to issue state bonds worth 100 billion baht.


SET mulls next step for gold : Hopes for regional leadership in balance. Talks with major gold dealers over

Bangkok Post

management of a proposed physical gold exchange have failed so far, and the Stock Exchange of Thailand
is set to decide its next move early next year.


Traders getting more positive on gold price : The gold confidence index' rise by 4.95 points from last

The Nation

month to 51.72 reflects the first positive outlook in four months, supported by the weak baht, gold demand
during the Indian wedding season and the buying period at the beginning of a new year.


Energy price restructuring plan ready : The Energy Policy and Planning Office will, on December 15,

The Nation

propose the energy price restructuring plan, while the 2015 Power Development Plan (PDP) would focus on
more coal-fired power plants.


Narongchai defends small price cuts at the petrol pumps : Energy Minister Narongchai Akrasanee has

Bangkok Post

defended the decision not to cut retail oil prices in Thailand at the same pace as the decrease in global
crude prices.


Govt says hands are tied on rubber prices : The government said yesterday it is a difficult task to shore

Bangkok Post

up rubber prices to 80 baht per kilogramme as its hands are tied by market mechanisms.


Officials to meet on Dawei's initial phase : Officials from Myanmar and Thailand will meet next month to

Bangkok Post

approve the framework of the initial phase of the delayed Dawei development project.


Retail chains embrace digital revolution : Multi-channel strategies enhance efficiency, customer

The Nation

satisfaction. Top modern retailers have reshuffled their business strategies to cash in on the booming digital
economy in Thailand, which has not only facilitated their back-office operations, but also enhanced
communication with potential clients.


NBTC panel to look into the benefits of 4G : Auctions of 1,800mhz, 900mhz spectra planned for July. The

The Nation

National Broadcasting and Telecommunications Commission has set up a working panel to study the
benefits for the country from its plan to licence 1,800- and 900-megahertz spectra.


Krungthai Bank to target lending strategy at medium-sized businesses : Krungthai Bank will next year

The Nation

strongly go after medium-sized enterprises - those with annual turnover of up to Bt500 million - along with
smaller businesses upcountry through the bank's new "loan factory" credit-analysis system.


TMB Bank expects more Thais to chase higher returns in funds : Thailand's low level of investment in

The Nation

funds are providing an opportunity for fund managers to attract more individual investors by offering high
yields, said Kamolwan Imruthaicharoenchok, senior vice president for investment products at TMB Bank.


IVL upbeat about 2015 margins : Aloke Lohia, chief executive of SET-listed Indorama Ventures Plc (IVL),

Bangkok Post

one of the world's largest integrated polyester product makers, says the company is sustainable thanks to its
strong principles, as polymers is a cyclical business.


Gunkul earmarks Bt15 billion to boost capacity : Gunkul Engineering is setting aside Bt15 billion to fund

The Nation

a three-year (2015-2017) investment plan to raise production capacity to 350 megawatts and increase the
listed company's profit proportion accounted for by alternative energy to 60-70 per cent by 2017.


MCOT warns NBTC on Ch 3 concession : Broadcast on other systems "possible" only with its permission .

The Nation

MCOT has warned the National Broadcasting and Telecommunications Commission (NBTC) that its orders
must not affect the concession contract the state broadcaster granted to Bangkok Entertainment Co, an
MCOT source said.

THANACHART SECURITIES

THAILANDs TOP LOCAL KNOWLEDGE

Market data

Thursday, December 11, 2014

Close

SET Index

1,559.6

-16.0

-1.0%

SET50 Index

1,041.0

-14.8

-1.4%

SET100 Index

2,304.9

-30.2

-1.3%

729.9

3.0

0.4%

MAI Index
Economic data

Current

PRICE CHANGE - MOST ACTIVE

Change 1 Day (%)

Change 1 Week (%)

PAF

RS

RS

INTUCH

TRUE

ADVANC

-3M

KBANK

TRUE

0.50

SCB

DEMCO

-1M

Saving Rate (%)

0.50

0.50

Fixed Deposit - 3M (%)

1.13

1.13

1.13

CK

KBANK

Fixed Deposit - 1Y (%)

1.75

1.75

1.75

ADVANC

SCB

Govt Bond Yield 1Y (%)

1.99

2.09

2.11

PTTGC

PT T

Govt Bond Yield 10Y (%)

2.89

3.04

3.60

PTTEP

PT TEP

Treasury Yield 10Y (%)

2.16

2.32

2.59

PTT

PT TGC

Policy Rate (%)

VIX Index

2.00

2.00

2.00

18.53

13.31

14.12

0.21

0.23

0.22

TED Spread (%)

Source: Bloomberg, Datastream, Thai BMA

SET Forward PE Band

(index)

25x

2,500

10

20

30

Change 1Month (%)

(20) (10)

ITD

TRUE

TRUE

AOT

ADVANC

KBANK

SCB

KT B

KBANK

SCB

JAS

ADVANC

18x

MTLS

PTT

14x
10x

1,000

PTT

JAS

DEMCO

INTUCH

PTTEP

500

10

20

30

40

BBL

(20)

7x

Change Year-To-Date (%)

22x

2,000
1,500

(10)

(10)

10

20

30

20

40

60

80

100

SECTOR CHANGE

2016F

2012

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

2014F

Change 1 Day (%)

SET PE Discount to MSCI Asia x JP

(x)
10
8
6
4
2
0
(2)
(4)
(6)
(8)
Jan-03

+2 STD = 5.7x
+1 STD = 2.9x

Change 1 Week (%)

MEDIA

ICT

BANK

AUTO

ETRON

MEDIA

AUTO

ETRON

TRANS

FOOD

ICT

TRANS

PROP

CONMAT

COMM

SET

FOOD

PROP

CONMAT

HELTH

SET

BANK

HELTH

COMM

PET RO

ENERG
PET RO

ENERG

Average = 0.1x

(4)

-1 STD = -2.8x
-2 STD = -5.6x

(3)

(2)

(1)

Change 1 Month (%)

May-10

Jan-14

(4)

(2)

HELTH
TRANS

ICT

ETRON

CONMAT

BANK

FOOD

Source: Bloomberg

(6)

Change Year-To-Date (%)

TRANS
MEDIA

Sep-06

(8)

PROP

BANK

ICT

COMM

CONMAT

SET

SET

HELTH

MEDIA

PROP

FOOD

AUTO

COMM

ETRON

AUTO

PET RO

ENERG
PET RO

ENERG
(10)

(5)

10

(40)

(20)

20

40

60

Source: Bloomberg

THANACHART SECURITIES

THAILANDs TOP LOCAL KNOWLEDGE

Thursday, December 11, 2014

REGIONAL MARKET PERFORMANCE

REGIONAL FUND FLOWS

Change 1 Day (%)

Change 1 Day (-1D)

Change 1 Week (%)

(US$ m)
250
China

Malaysia

Singapore

Indonesia

Malaysia

50

Singapore

Hang Seng

Hang Seng

Indonesia

India

206

200

China

150
100
19

(50)
(100 )

(37)

Phil ip.

Indone sia

(54)
Asia-6

(103)
Taiwan

(135)

(145)

(150 )

MSCI Asia x JP

Kor ea
MSCI Asia x JP

(31)

India

(108)
Thailan d

Taiwan
Nasdaq

Philippines
Thailand

Dow Jones

Taiwan

Thailand

Change 1 Week (-1W)

(US$ m)

S.Kor ea

India

Dow Jones

Philippines

S&P500

S&P500

Nasdaq

Nikkei

Nikkei

S.Kor ea
(4)

(2)

(4)

(2)

1,200
1,000
800
600
400
200
0
(200 )
(400 )
(600 )

1,045

684

(34)

India

Change 1 Month (%)

905

Asia-6

Kor ea

Thailan d Indone sia

Phil ip.

(510)
Taiwan

Change 1 Month (-1M)

Change Year-To-Date (%)

(US$ m)
12,000
China

China

Indonesia

India

Nikkei

Philippines

11,182

10,000
8,000
6,000

4,034

4,000
Indonesia

Singapore
Nasdaq

Th ailand

Ta iwa n

Nasdaq

India

S&P500

Philippines

Nikkei

Dow Jon es

Singapore

S&P500

Ta iwa n

Hang Se ng

MSCI Asia x JP

MSCI Asia x JP

Hang Se ng

S.Korea

Asia-6

10

15

20

25

465

Indone sia

Phil ip.

334

India

Taiwan

Kor ea

Thailan d

Change Year-To-Date (YTD)

(US$ m)
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
(5,000)

Malaysia
(5 )

506

S.Korea

Malaysia

2,428

2,000

Dow Jon es

Th ailand

3,415

(1 0) 0

10

20

30

40

50

42,323

17,323
12,279
7,494

Asia-6

India

Taiwan

4,264

Kor ea Indone sia

1,246

Phil ip.

(282)
Thailan d

Source: Bloomberg
Source: Bloomberg

THANACHART SECURITIES

THAILANDs TOP LOCAL KNOWLEDGE

Thursday, December 11, 2014

General Disclaimers And Disclosures:

This report is prepared and issued by Thanachart Securities Public Company Limited (TNS) as a resource only for clients of TNS,
Thanachart Capital Public Company Limited (TCAP) and its group companies. Copyright Thanachart Securities Public Company
Limited. All rights reserved. The report may not be reproduced in whole or in part or delivered to other persons without our written
consent.

This report is prepared by analysts who are employed by the research department of TNS. While the information is from sources
believed to be reliable, neither the information nor the forecasts shall be taken as a representation or warranty for which TNS or
TCAP or its group companies or any of their employees incur any responsibility. This report is provided to you for informational
purposes only and it is not, and is not to be construed as, an offer or an invitation to make an offer to sell or buy any securities.
Neither TNS, TCAP nor its group companies accept any liability whatsoever for any direct or consequential loss arising from any use
of this report or its contents.

The information and opinions contained herein have been compiled or arrived at from sources believed reliable. However, TNS,
TCAP and its group companies make no representation or warranty, express or implied, as to their accuracy or completeness.
Expressions of opinion herein are subject to change without notice. The use of any information, forecasts and opinions contained in
this report shall be at the sole discretion and risk of the user.

TNS, TCAP and its group companies perform and seek to perform business with companies covered in this report. TNS, TCAP, its
group companies, their employees and directors may have positions and financial interest in securities mentioned in this report. TNS,
TCAP or its group companies may from time to time perform investment banking or other services for, or solicit investment banking or
other business from, any entity mentioned in this report. Therefore, investors should be aware of conflict of interest that may affect the
objectivity of this report.

THANACHART SECURITIES

THAILANDs TOP LOCAL KNOWLEDGE

Thursday, December 11, 2014

Recommendation Structure:

Recommendations are based on absolute upside or downside, which is the difference between the target price and the current
market price. If the upside is 10% or more, the recommendation is BUY. If the downside is 10% or more, the recommendation is
SELL. For stocks where the upside or downside is less than 10%, the recommendation is HOLD. Unless otherwise specified, these
recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a temporary mismatch
between upside/downside for a stock based on the market price and the formal recommendation.

For sectors, we look at two areas, ie, the sector outlook and the sector weighting. For the sector outlook, an arrow pointing up, or the
word Positive, is used when we see the industry trend improving. An arrow pointing down, or the word Negative, is used when we
see the industry trend deteriorating. A double-tipped horizontal arrow, or the word Unchanged, is used when the industry trend does
not look as if it will alter. The industry trend view is our top-down perspective on the industry rather than a bottom-up interpretation
from the stocks we cover. An Overweight sector weighting is used when we have BUYs on majority of the stocks under our
coverage by market cap. Underweight is used when we have SELLs on majority of the stocks we cover by market cap. Neutral is
used when there are relatively equal weightings of BUYs and SELLs.

Thanachart Securities Pcl.

Research Team
28 Floor, Siam Tower Unit A1
989 Rama 1, Pathumwan Road, Bangkok 10330
Tel: 662 - 617 4900
Supanna Suwankird
Energy, Utilities

Siriporn Arunothai
Ad Hoc Research, Healthcare

supanna.suw@thanachartsec.co.th

siriporn.aru@thanachartsec.co.th

Sarachada Sornsong
Banks, Telecom

Saksid Phadthananarak
Construction, Transportation

Noppadol Pririyawut
Senior Technical Analyst

sarachada.sor@thanachartsec.co.th

saksid.pha@thanachartsec.co.th

noppadol.pri@thanachartsec.co.th

Phannarai Tiyapittayarut
Property, Retail

Kalvalee Thongsomaung
Food, Media, Hotel

Adisak Phupiphathirungul, CFA

phannarai.von@thanachartsec.co.th

kalvalee.tho@thanachartsec.co.th

adisak.phu@thanachartsec.co.th

Pimpaka Nichgaroon, CFA

Head of Research
Economics & Strategy
pimpaka.nic@thanachartsec.co.th

THANACHART SECURITIES

Retail Market Strategy

10