(index) (relative) THAILAND Thailand...

Please refer to page 41 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures. Macquarie may be an Issuer of Derivative Warrants on securities mentioned in this report.

THAILAND

SET index performance

Source: MSCI, Macquarie Research, Nov 2016

Macquarie Thailand New Money Ideas

BBG Mkt cap 3M ADV Price Target TSR code Rec (US$ bn) (US$ m) (Bt) (Bt) (%)

Domestic plays SCB OP 13.6 42.5 141.50 177.00 29 KBANK OP 11.5 60.4 169.50 214.00 29 ADVANC OP 12.5 36.8 149.00 233.00 62 CPN OP 7.1 16.8 55.50 70.00 28 AP OP 0.6 2.7 7.00 9.00 34 SPALI OP 1.2 3.8 23.90 30.00 31 HMPRO OP 3.6 8.1 9.75 13.00 35 BDMS OP 10.0 25.7 22.80 25.00 11 MAJOR OP 0.8 2.1 30.50 35.00 19 External plays PTT OP 27.1 60.1 335.00 385.00 20 PTTGC OP 7.4 19.3 58.75 72.00 28 SPRC OP 1.5 5.1 12.40 13.50 16 CENTEL OP 1.4 2.5 37.75 44.00 18 New Money ideas Average 12M forecast TSR (%) 28 Average upside to target (%) 24 Average dividend yield (%) 4.0 SET index (11 November 2016) 1,495 12M index target (end 2017) 1,625 Upside to target (%) 9

Share prices as at close on 11 November 2016

Source: Bloomberg, Macquarie Research, Nov 2016

Analyst(s) Macquarie Securities (Thailand) Limited Alastair Macdonald, CFA +66 2 694 7753 [email protected] Karn Lertchaipattanakul +662 694 7774 [email protected] Macquarie Capital Limited Woei Chan +852 3922 1421 [email protected]

14 November 2016

Thailand strategy Three themes for 2017 Private sector headwinds remain

Elevated household debt/GDP and low capacity utilisation remain headwinds for

the private sector, leaving the onus on the government and external sectors to

support growth again in 2017. Our expectations for a steepening Thai yield curve

led by rising US rates (we forecast a 25bp hike in Fed Funds rate in December

2016, followed by two further 25bp hikes per annum in 2017 and 2018) imply

PER multiples are capped and could compress. Meanwhile, the SET index at

1,495 is only 4% below its 2016 high, and we view the market as fairly valued

(9% upside to our end-2017 SET index target of 1,625, projected 12-month TSR

of 12%). We recommend positioning a Thai portfolio for exposure to three

themes in 2017: global cyclicals, rising rates/steepening yield curves and quality

sustainable growth.

Grinding global recovery favours cyclicals…

We forecast only marginal acceleration in Thai real GDP growth in 2017 (to 3.3%

from 3.2% in 2016), while our macro team forecasts accelerating global growth

(to 2.7% from 2.2% in 2016) and an increase in average oil prices from $45/bbl

to $61/bbl (WTI crude). We therefore favour taking substantial exposure to global

cyclicals. The main investible options are the energy, petrochemicals and

construction materials sectors. Our top picks in this space are PTT, PTTGC and

SPRC, while we maintain a counter-consensus bearish view on SCC.

…and reversal of the yield compression theme

Developed-world quantitative easing has spilled over to Thailand via yield curve

compression over the past two years, driving outperformance from financials

reliant on capital market funding and high dividend yield plays such as the listed

property & infrastructure funds. While we believe dividends will remain an

important component of total returns from Thai equities going forward, our

outlook for rising US interest rates, leading an up-cycle in Thai rates, leaves us

cautious on chasing yield compression any further. Life insurers and the large

commercial banks should benefit from a steeper yield curve. SCB and KBANK

are our top picks, with strong deposit franchises and substantial life insurance

subsidiaries. In addition, we expect improving asset quality through 2017.

Domestic ‘quality sustainable growth’ still fully priced

Our roving strategist Viktor Shvets remains positive on the theme of ‘quality

sustainable growth’. In the Thai market, we believe this theme applies primarily

in the commerce (retail), foods/hotels and healthcare sectors. Overall, we view

valuations in these sectors as still very full. However, this is a powerful theme in

a low-growth world. We retain HMPRO, CENTEL, BDMS and CPN in our New

Money Ideas list and add recent re-initiation MAJOR.

We also retain ADVANC and residential developers AP and SPALI in our new

money ideas list. These do not necessarily fit any of the themes above, but offer

reasonable valuations including attractive dividend yields and, in our view,

catalysts for positive re-rating in 2017 (more rational industry competition for

ADVANC, recovery in new project launches for the residential developers).

80

85

90

95

100

105

1,200

1,300

1,400

1,500

1,600

1,700

Dec-14 Dec-15 Dec-16

(relative)(index)

SET, LS vs MSCI Asia XJ USD, RS

Macquarie Research Thailand strategy

14 November 2016 2

Index

Three themes for 2017 3

Thailand new money ideas 9

The short side 13

SET index target 14

Recommended sector weightings 16

SET index consensus forecasts 18

Thai market performance 21

Major sector performance 22

Major sector consensus forecasts 24

Market flows & foreign ownership 28

The quant corner 31

Thailand economy 33

Appendix 40

Macquarie Thailand research team

Name Coverage Telephone Email

Alastair Macdonald Strategy, hotels, healthcare +662 694 7753 [email protected] Azita Nazrene Transportation +603 2059 8980 [email protected] Chalinee Congmuang Consumer +662 694 7993 [email protected] Duke Suttikulpanich Energy +65 6601 0148 [email protected] Karn Lertchaipattanakul Associate analyst +662 694 7773 [email protected] Passakorn Linmaneechote Banks +662 694 7728 [email protected] Patti Tomaitrichitr Property +662 694 7774 [email protected] Prem Jearajasingam Telecoms +603 2059 8989 [email protected]

Source: Macquarie Research, November 2016


14 November 2016 3

Three themes for 2017 Private sector headwinds remain

Elevated household debt/GDP and low capacity utilisation remain headwinds for the private

sector, leaving the onus on the government and external sectors to support Thai GDP growth

again in 2017.

While household debt shows signs of stabilising relative to GDP, it has not yet started to

come down. Meanwhile, growth in bank loans to households has only just converged with

nominal GDP growth. Debt deleveraging is a slow process and we think this burden remains

a headwind for private consumption, in particular in the lower-income segment. Some small

business lending is included in the data for loans to households in Thailand, for example

small business owners who use mortgage debt secured on their property to fund their

businesses if they are unable to access business loans from the banks. However, the

conclusion from an inflated debt burden is the same—it is a constraint on growth in spending.

Fig 1 Loans to private sector vs nominal GDP Fig 2 Growth in private sector credit & nominal GDP

Source: BOT, NESDB, Macquarie Research, November 2016 Source: BOT, NESDB, Macquarie Research, November 2016

Meanwhile, growth in manufacturing production has been close to zero for the past two years.

Capacity utilisation has been flat at around 65% and with around one-third spare capacity in

aggregate, the private sector has had little incentive to invest. We think a pick-up in utilisation

is required in order for this to change.

Fig 3 Manufacturing production index Fig 4 Capacity utilisation & private investment index

Source: BOT, Macquarie Research, November 2016 Source: BOT, Macquarie Research, November 2016

0

10

20

30

40

50

60

70

80

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

(%)

Business loans/GDP Household loans/GDP

0

2

4

6

8

10

12

14

16

18

20


(YoY %)

Businesses Households Nominal GDP

180

190

200

210

220

230

240

-10

-5

0

5

10

15

20


(index)(YoY %)

MPI YoY, LS Manufacturing production index, RS

-20

-15

-10

-5

0

5

10

15

20

25

30

55

60

65

70

75

80


(YoY %)(YoY %)

Capacity utilisation sa, LS Private investment index, RS

Household debt vs

GDP stabilising but

remains a headwind

for consumption

Spare capacity a

headwind for

investment


14 November 2016 4

We therefore see limited scope for the domestic private sector to drive acceleration in GDP

growth in 2017, leaving the onus on the government and external sectors.

We are confident that the government will maintain a stimulative fiscal stance in 2017. In our

view, the government is willing to press ahead with stimulative spending and has the capacity

to increase borrowing, with government debt/GDP currently around 43%.

Fig 5 Growth in nominal GDP & public sector Fig 6 Nominal GDP & growth ex-public sector

Source: NESDB, Macquarie Research, November 2016 Source: NESDB, Macquarie Research, November 2016

Our global macro team forecasts acceleration in global industrial production and GDP growth

in 2017. We think this should have some positive impact on demand for Thailand’s exports,

which should help to lift utilisation levels for exporters. Given the large size of external trade

relative to the Thai economy (gross merchandise exports comprised 54% of nominal GDP in

2015, exports of goods and services comprised 69%), an increase in trade should have the

usual second-order positive impact on domestic demand via increased hours worked and

total incomes and increased demand down the supply chain.

However, there are two potential caveats to a scenario of accelerating exports lifting GDP.

First, Donald Trump’s victory in the recent US presidential election casts some uncertainty

over US trade policy, given his protectionist comments during the campaign. Anti-trade

policies such as imposition of import tariffs by the US during a Trump presidency could

negatively impact Thailand, given that 11.4% of Thai exports by value went to the US in the

12 months to September 2016, while 6.2% of Thai imports came from the US. However, we

think abolition of proposed multilateral trade deals such as the Trans Pacific Partnership

(TPP), a likely consequence of the election result in our view, would have little direct impact

on Thailand, which has not been party to the TPP negotiations. In our view, Thailand could be

relatively well placed amongst Asian economies in the face of a less trade-friendly US policy

stance, given its current collection of bilateral free-trade agreements.

Second, if an upswing in external trade volumes is accompanied by higher oil prices, this

would imply deterioration in Thailand’s terms of trade, which could either dampen, or even

outweigh the benefit of higher export volumes on the trade account. This would be the

converse of what has happened over the past couple of years as both exports and imports

declined but falling oil prices resulted in a larger trade surplus. Crude oil comprised 9% of

Thailand’s merchandise imports by value in the twelve months to September 2016, down

from 19% in the 12M period to March 2014. Crude oil and chemical products together

comprised 24% of imports in the 12M to September 2016, down from 35% in the 12M to

March 2014. On the export side, crude oil currently accounts for 0.2% of exports and oil &

chemical products 11%. Macquarie’s house forecasts for crude oil prices (WTI) are currently

$45, $61 and $68 per barrel (averages for 2016-2018, respectively).

Meanwhile, Thailand’s services account surplus has also been an important pillar of support

for GDP growth over the past couple of years as strong growth in tourist arrivals has driven

growth in non-resident consumption. While we expect some moderation in growth rates in

tourist arrivals going forward, in particular due to a period of adjustment in mainland Chinese

tourist arrivals following the recent regulatory crackdown on ‘zero-dollar’ tours, we expect

further growth in non-resident consumption in 2017.

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16

(YoY %)

Nominal GDP Government sector

0.0

1.0

2.0

3.0

4.0

5.0

6.0

4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16

(YoY %)

Nominal GDP Ex public sector

Looking to

government and

external sectors to

lead growth

Services account

surplus to continue

in 2017

Our macro team

forecasts

accelerating global

industrial

production and GDP

growth in 2017

The oil price

remains a critical

variable for Thailand

Higher oil could

limit, or even

outweigh the impact

of a recovery in

export volumes on

the trade balance

This should lead to

stronger global

trade however US

protectionism under

a Trump presidency

could have an

adverse impact


14 November 2016 5

Fig 7 Growth in merchandise trade & TB/GDP Fig 8 Exports, imports & trade balance as % GDP


Fig 9 Merchandise imports/GDP & crude oil price Fig 10 Growth in GDP & growth ex-trade balance


Fig 11 Trade balance: oil & chemicals vs others Fig 12 Tourist arrivals & non-resident consumption


-10

-5

0

5

10

15

-40

-30

-20

-10

0

10

20

30

40

50

60

4Q93 4Q95 4Q97 4Q99 4Q01 4Q03 4Q05 4Q07 4Q09 4Q11 4Q13 4Q15

(%)(YoY %)

Goods exports Goods imports Trade balance/GDP, RS

-10

0

10

20

30

40

50

60

70

4Q93 4Q95 4Q97 4Q99 4Q01 4Q03 4Q05 4Q07 4Q09 4Q11 4Q13 4Q15

(% GDP)

Goods exports Goods imports Trade balance

0

20

40

60

80

100

120

140

160

25

30

35

40

45

50

55

60

65

4Q93 4Q95 4Q97 4Q99 4Q01 4Q03 4Q05 4Q07 4Q09 4Q11 4Q13 4Q15

($/bbl)(%)

Goods imports/GDP, LS WTI crude oil, RS

-10

-5

0

5

10

15

20

25

4Q93 4Q95 4Q97 4Q99 4Q01 4Q03 4Q05 4Q07 4Q09 4Q11 4Q13 4Q15

(YoY %)

Nominal GDP Ex trade account

-60

-40

-20

0

20

40

60

80

Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15

(12M sum, US$ bn)

ex-oil & chemicals Oil & chemicals Trade balance

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-40

-20

0

20

40

60

80


(m)(YoY %)

Non-residents consumption index, LS Tourist arrivals, RS


14 November 2016 6

Our expectations for a steepening Thai yield curve led by rising US rates (we forecast a 25bp

hike in Fed Funds in December 2016, followed by two further 25bp hikes per annum in 2017

& 2018) imply little scope for further PER multiple expansion. In fact, PER multiples could

suffer some compression. We have maintained our risk-free rate assumption for valuing the

Thai market at 3.0% throughout 2016, despite the dip in 10Y Thai government bond yields

below this level. Our argument has been that an expected average bond yield over the

approximate duration of cash flows from the equity market is more appropriate than a spot

rate in discount rate and valuation estimates. Please see our 1 June 2016 report, ‘Thailand

strategy: Don’t forget the Fed’, for further discussion of bond yields and equity valuations.

Fig 13 10Y Thai Gov't yield & 12M Fwd SET PER Fig 14 10Y yields & average PERs since end 2007

Source: Bloomberg, Macquarie Research, November 2016 Source: Bloomberg, Macquarie Research, November 2016

Meanwhile, the SET index at 1,495 is only 4% below its 2016 high of 1,553 and we view the

market as fairly valued (9% upside to our end-2017 SET index target of 1,625, projected 12-

month TSR of 12%).

We recommend positioning a Thai portfolio for exposure to three themes in 2017.

1. Global cyclicals;

2. Rising rates/steepening yield curves; and

3. Quality sustainable growth.

Grinding global recovery favours cyclicals…

We forecast only marginal acceleration in Thai real GDP growth in 2017 (to 3.3% from 3.2%

in 2016) while our macro team forecasts accelerating global growth (to 2.7% from 2.2% in

2016) and an increase in average oil prices from $45/bbl to $61/bbl (WTI crude). We

therefore favour taking substantial exposure to global cyclicals.

The main investible options are the energy, petrochemicals and construction materials

sectors. Our top picks in this space are PTT, PTTGC and SPRC, while we maintain a

counter-consensus bearish view on SCC.

We have a favourable view on the Thai oil & gas/refining & selected areas of the

petrochemicals complex in for 2017. We see an improving demand/supply outlook for

downstream refining next year after a volatile 2016 which was characterised by large swings

in margins. This will translate to better margins, higher utilization rates and core earnings

improvement, in our view. In terms of petrochemicals, we see naphtha-based ethylene and its

derivative spreads peaking out in 2016 supported by capacity addition delays and high

frequency of planned and unplanned shutdowns during the year. We prefer longer carbon-

chain chemicals such as butadiene, which we think has limited supply-side risks. We also

favour exposure to aromatics-based chemicals, namely paraxylene (PX), given its improving

supply/demand fundamentals.

1.00

2.00

3.00

4.00

5.00

6.00

7.004

6

8

10

12

14

16

Dec-07 Dec-09 Dec-11 Dec-13 Dec-15

(%)(x)

SET 12M Fwd PER, LS 10Y Thai Gov't yield, inverted RS

Avg 10Y 2.8%Avg PER 13.9

Avg 10Y 3.6%Avg PER 11.8x

14.4714.18

13.15

11.58 11.72

10.9110.42

9.76 9.7410.09

6

7

8

9

10

11

12

13

14

15

16

1.5 -2.0

2.0 -2.5

2.5 -3.0

3.0 -3.5

3.5 -4.0

4.0 -4.5

4.5 -5.0

5.0 -5.5

5.5 -6.0

6.0 -6.5

(PER, x)

10Y Thai Gov't yield

Fed tightening cycle

and higher bond

yields to cap or

even compress PER

multiples

We forecast

accelerating global

growth and higher

oil prices in 2017

Top global cyclicals

picks are PTT,

PTTGC & SPRC

Three themes for

2017


14 November 2016 7

While our commodities team has a constructive view on the oil price in 2017, the dominance

of gas and reserve issues leave us Neutral on upstream play PTTEP despite its earnings

being highly leveraged to a rising oil price. If our commodity price forecast scenario plays out,

we think PTTGC offers the greatest upside leverage, in part due to lagging performance from

the share price in 2016 as plant outages have constrained performance. PTTGC also offers

specific leverage to rising oil prices as its feedstock is gas, rather than naphtha. SCC, in

contrast, is vulnerable to spread compression in its petrochems business if our expectations

for rising oil prices plays out. Please see Duke’s recent re-initiation report, ‘Siam Cement:

Earning momentum slows’, 28 September 2016, for a full discussion of his thesis.

Fig 15 SET Energy sector & oil price Fig 16 SET Petrochems index & oil price


SPRC offers quality exposure to refining, in our view, on more attractive valuations than TOP

(also rated Outperform but with lower projected upside) with a very attractive dividend yield.

Meanwhile, PTT should be a general beneficiary of an improving environment for both

upstream and refining and has the additional catalyst, in our view, of the listing of its retail

marketing business, expected in late 2017 or early 2018. Similar businesses with

independent listings command higher multiples and we believe this listing should pull up

valuation multiples for the PTT group overall.

…and reversal of the yield compression theme

Developed world quantitative easing has spilled over to Thailand via yield curve compression

over the past two years, driving outperformance from financials reliant on capital market

funding and high dividend yield plays such as the listed property & infrastructure funds. The

auto-hire purchase focused smaller banks, non-bank consumer financials and

property/infrastructure funds under our coverage have all outperformed the SET index over

the past one year and three years (for those which have been listed over that entire period).

Fig 17 Share price performance relative to SET index

(%) TCAP TISCO DIF JASIF CPNRF BTSGIF THANI KTC

1 year 18 28 11 8 6 10 52 25 3 years 18 21 N/A N/A 17 16 39 286

Data to 11 November 2016

Source: Bloomberg, Macquarie Research, November 2016

While we believe dividends will remain an important component of total returns from Thai

equities going forward, our outlook for steady hikes in US interest rates, leading an upcycle in

Thai rates starting in late 2017, leaves us cautious on chasing yield compression any further.

Life insurers and the large commercial banks should benefit from rising rates. SCB and

KBANK are our top picks, with strong deposit franchises and substantial life insurance

subsidiaries.

0

20

40

60

80

100

120

140

160

30

40

50

60

70

80

90

100

110

120


($/bbl)(index)

Energy, LS Oil price, RS

0

20

40

60

80

100

120

140

160

0

20

40

60

80

100

120

140

160

180

200


($/bbl)(index)

Petchems, LS Oil price, RS

We think the hunt

for yield has run its

course

Large banks to play

yield curve

steepening in 2017


14 November 2016 8

In addition, asset quality remains a critical theme for the larger banks, with considerable

uncertainty remaining over the state of loan books and the impact of impending tighter

reserve requirements under IFRS9, which is expected to impact in Thailand in 2019.

However, we expect improving asset quality through 2017 and believe the Thai banks are

well on their way to IFRS9 compliance. Please see our bank team’s recent report, ‘ASEAN &

multinational banks - IFRS 9: In the end…’ 8 November 2016 for details.

Fig 18 Thai 2Y & 10Y yields and yield curve steepness Fig 19 Yield curve steepness & banks vs SET


Domestic ‘quality sustainable growth’ still fully priced

Our roving strategist Viktor Shvets remains positive on the theme of ‘quality sustainable

growth’. In the Thai market, we believe this theme applies primarily in the commerce (retail),

foods/hotels and healthcare sectors. Overall, we view valuations in these sectors as still

rather high. However, this is a powerful theme in a lower-growth world, and we retain

HMPRO, CENTEL, BDMS and CPN (retail property) in our new money ideas list and add

recent re-initiation MAJOR.

Fig 20 SET Commerce, Health & Food performance Fig 21 BBG consensus 12M forward PERs


We also retain ADVANC and residential developers AP and SPALI in our new money ideas

list. These do not necessarily fit any of the themes above but offer reasonable valuations

including attractive dividend yields and, in our view, catalysts for positive re-rating in 2017

(more rational industry competition for ADVANC, recovery in new project launches for the

residential developers).

0.0

0.5

1.0

1.5

2.0

2.5

0

1

2

3

4

5

6

7


(ppts)(%)

10Y Gov't, LS 2Y Gov't, LS 10Y-2Y Gov't, RS

0.0

0.5

1.0

1.5

2.0

2.5

90

95

100

105

110

115

120

125

130


(%)(index)

Banks vs SET, LS 10Y-2Y Gov't, RS

0

100

200

300

400

500

600

700

800


(index)

Commerce Healthcare Food SET index

0

5

10

15

20

25

30

35

40

45


(x)

Commerce Health Food SET index

Quality sustainable

growth remains a

powerful theme, if

rather fully priced in

Thailand


14 November 2016 9

Thailand new money ideas Our New Money Ideas list targets 20-25% of the stocks under our coverage, which we believe

are currently the most attractive homes for new money to be invested in the Thai market at

the time of publication. The list generally comprises a selection of our analysts’ top picks but

is not a purely mechanistic selection of the stocks with highest upside to our target prices. For

example, we try to avoid excessive industry concentration and may try to adjust the average

risk profile depending on our outlook for the market.

Our NMI list has one change since our last publication—the addition of MAJOR. By theme,

we would classify our NMI list stocks as follows:

Global cyclicals: PTT, PTTGC, SPRC

Rising rates/yield curve steepening: SCB, KBANK

Quality sustainable growth: CPN, HMPRO, BDMS, MAJOR, CENTEL

Others (value with catalysts): ADVANC, AP, SPALI

Fig 22 New Money Ideas: the fundamental view

BBG code Sector Rec Beta Mkt cap

(US$ bn) 3M ADV (US$ m)

Price (Bt)

Target (Bt)

Upside (%)

2017E div yield (%)

Projected TSR (%)

Domestic plays SCB Banks OP 1.18 13.6 42.5 141.50 177.00 25 4.1 29 KBANK Banks OP 1.16 11.5 60.4 169.50 214.00 26 3.1 29 ADVANC Telcos OP 1.05 12.5 36.8 149.00 233.00 56 6.1 62 CPN Property (retail) OP 0.90 7.1 16.8 55.50 70.00 26 1.8 28 AP Property (resi) OP 0.90 0.6 2.7 7.00 9.00 29 5.0 34 SPALI Property (resi) OP 0.96 1.2 3.8 23.90 30.00 26 5.6 31 HMPRO Retail OP 0.91 3.6 8.1 9.75 13.00 33 1.8 35 BDMS* Healthcare OP 0.71 10.0 25.7 22.80 25.00 10 1.4 11 MAJOR Media OP 0.66 0.8 2.1 30.50 35.00 15 4.1 19 External plays PTT* Energy OP 1.53 27.1 60.1 335.00 385.00 15 4.6 20 PTTGC Petrochems OP 1.46 7.4 19.3 58.75 72.00 23 5.1 28 SPRC Energy OP 0.64 1.5 5.1 12.40 13.50 9 7.3 16 CENTEL* Hotels/food OP 1.02 1.4 2.5 37.75 44.00 17 1.8 18 Simple average 1.00 7.6 22.0 24 4.0 28

*Domestic & external demand/price drivers; share prices as at 11 November 2016


Fig 23 New Money Ideas: the quant view

Quant factor scores as at end October 2016


Value Gro wth M o mentum P ro fit A nalyst R isk

SCB Banks 0.49 -0.52 -0.35 0.06 -0.03 0.98

KBANK Banks 0.47 -0.36 -0.73 -0.09 -0.18 0.76

ADVANC Telcos 1.12 -0.48 -1.35 2.79 0.12 -0.51

CPN Property (retail) -0.71 -0.19 0.08 0.68 -0.45 1.37

AP Property (resi) 1.31 -0.60 0.04 -0.18 0.14 0.42

SPALI Property (resi) 0.93 -1.02 0.20 0.11 0.76 0.61

HM PRO Retail -0.59 1.78 0.19 0.14 0.33 0.41

BDM S Healthcare -0.99 -0.08 0.35 0.09 -0.42 1.30

M AJOR M edia 0.14 -0.60 -0.44 0.27 0.32 -0.27

PTT Energy 0.62 2.03 0.58 -0.82 0.40 -0.08

PTTGC Petrochems 0.96 -0.15 0.12 -0.66 -0.31 -0.39

SPRC Energy 0.99 -0.27 1.54 0.44 -0.40 -0.90

CENTEL Hotels/food -0.53 -0.14 0.01 0.39 0.09 0.29

D o mestic plays

External plays

T he Quant view

B B G co de Secto r

We add MAJOR to

our New Money

Ideas list

Other stocks

unchanged


14 November 2016 10

Changes to our New Money Ideas (NMI) list

We make one change to our NMI list, adding MAJOR. Chalinee recently re-initiated coverage

with an Outperform rating and Bt35 target price. We view MAJOR as the market leader in a

benign duopoly in the modern cinema market in Thailand, with scope for further growth in

screens upcountry. We believe this could also boost returns, as the investment costs per

screen upcountry are lower than in metropolitan Bangkok and revenue-sharing agreements

with ‘hosts’ such as hypermarkets tend to be more flexible. While we expect the business to

suffer a slow period in the near term due to the mourning for His Majesty the late King of

Thailand, we believe the share price is already discounting this. Please see Chalinee’s report,

‘Major Cineplex: Coming attraction’, 7 November 2016 for more details.

Maintained NMI list stocks

Global cyclicals

In the energy & petrochems sectors we retain PTT, PTTGC and SPRC, Duke

Suttikulpanich’s top picks in this space. Please see his recent notes ‘PTT: Positive sentiment

to continue’, 19 August 2016, ‘PTTGC: 2Q preview – earnings likely troughed’, 26 July 2016,

‘SPRC: In the shadow no more’, November 2016 and ‘Thai refining: Better outlook for

margins’, 31 August 2016 for details along with his initiation report on the PTT group, ‘Thai

Energy: Picking the triumvirate’, 18 April 2016 and our team’s recent report, ‘Global

petrochemicals: Expect more upside’, 28 September 2016.

Rising rates/yield curve steepening

We retain core large-cap names SCB and KBANK in the banks sector. We view these

stocks as well placed to benefit from rising rates and a steepening yield curve in 2017 with

their strong CASA deposit franchises and life insurance subsidiaries. Asset quality also

remains a key issue for the banks, in our view, and we believe the big banks have passed the

worst of the current cycle. However, KBANK’s guidance for another year of elevated credit

costs in 2017 despite management’s comment that NPLs have peaked in 3Q16 (issued with

the 3Q16 results on 14 October 2016) surprised the market and triggered sharp

underperformance over the past few weeks. Please see ‘Thai banks: A gradual decline in

NPL formation’, 22 August 2016 and ‘Thai banks: Higher NPL ratio but lower SML ratio’, 29

August 2016 for Passakorn’s latest analysis and our bank team’s analysis of impending

IFRS9 provisioning regulations in ‘ASEAN & multinational banks – IFRS: In the end…’, 8

November 2016.

We also flag our overweight call on Thai banks within the sector in ASEAN, as discussed in

‘ASEAN and multinational banks: Five themes for 2017 and beyond’, 5 September 2016, by

Thomas Stoegner and our other ASEAN banks analysts, and the substantial contribution to

consolidated value from life insurance subsidiaries at SCB & KBANK, as discussed by Scott

Russell & Passakorn in ‘Thailand financials: Why the banks look good to us’, 10 August 2016.

Quality sustainable growth

We retain HMPRO, which shows the highest upside to our target prices amongst the retailers.

Chalinee rates two Thai retailers as Outperform, CPALL (TP Bt67) and HMPRO (TP Bt13).

We believe convenience stores (CPALL) and home improvement (HMPRO) are better

positioned for earnings growth over the medium term than the mainstream supermarket and

department store formats. Please see ‘Thai retailers: Position in CVS & Home Improvement’,

15 August 2016 and ‘Thai retailers: Solid growth to continue in 3Q16’ by Chalinee

Congmuang for details.

We retain exposure to retail property via CPN, Thailand’s leading mall developer—please

see Patti’s note, ‘Central Pattana: New malls added; REIT conversion’, 24 August 2016 for

our latest forecasts and valuation following the company’s announcement of further new mall

expansion and confirmation of plans to convert its property fund into a REIT.

We retain CENTEL for exposure to tourism. We are positive on the outlook for further growth

in the hotel sector. While overall tourist arrivals are seeing the impact of the recent crack-

down on ‘zero-dollar’ tours in the near term, we believe this is largely irrelevant for the listed

hotel stocks under our coverage. Please see our report ‘Thailand hotels: Opportunity in

adversity’, 13 October 2016, for more details.

Adding MAJOR

Global cyclicals:

PTT, PTTGC, SPRC

Steepening yield

curve: SCB, KBANK

Quality growth:

HMPRO, CPN,

CENTEL, BDMS,

MAJOR


14 November 2016 11

We also retain Bangkok Dusit Medical Services (BDMS), following our recent move to a

more bullish stance on the Thai hospital sector, arguably the poster-child for ‘quality growth’

in Thailand. The hospitals have underperformed vs the SET index in 2016 YTD, making

relative valuations a bit more reasonable. We expect revenue growth to recover in 2H16 after

a slowdown in 1H16. And we believe the case for sustainable premium growth vs nominal

GDP remains intact. We like BDMS’s mix of exposure to middle and higher-end private health

care for both domestic and international markets. BDMS remains in expansion mode—please

see our recent notes on the ‘BDMS Wellness Center’ project and ‘Mayo Polyclinic’ acquisition

for details.

Others – value with catalysts

We retain ADVANC in the telecoms sector. The past 12 months have been a wild ride for

this sector, spanning new spectrum auctions and renewed uncertainty over competitive

dynamics. However, we think the end-game is growth from data services and more rational

competition between the operators. Please see our regional telecom team’s latest report,

‘Asia telecoms - Win-win-win: Changes in infrastructure development can add value’, 27

September 2016 and Prem’s notes, ‘Advanced Info Service: Mis-priced’, 9 May 2016 and

‘Advanced Info Service: Spectrum ON’, 9 June 2016 for more details.

We also retain AP and SPALI, Patti’s top two picks amongst the residential developers.

Please see ‘AP (Thailand): Power up the joint venture’, 7 September 2016 and ‘Supalai: All

stars aligned’, 16 September 2016 and ‘Thai property: Back to basics VIII – 2017 Outlook’, 2

November 2016 by Patti Tomaitrichitr for details.

New Money Ideas list performance

The table and chart below shows the stocks in our NMI list since 4Q15 and their average

performance, along with the performance of the SET index. Despite a rather painful past few

weeks in which our NMI list underperformed the SET index by 3ppts, primarily due to some

substantial declines in banks (KBANK’s surprise guidance for higher credit costs in 2017) and

telecoms (higher than expected marketing expenses at ADVANC in 3Q16), our rolling

selection from our analysts’ top picks has outperformed the SET index by 9ppts over the past

twelve months.

Fig 24 NMI average price performance vs SET index


80

85

90

95

100

105

110

115

120

125

Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16

(index)

NMI average SET index Relative

Others: ADVANC,

AP, SPALI

NMI performance hit

by banks & telcos

last month

But still showing

9ppts cumulative

outperformance

over past 12 months


14 November 2016 12

Fig 25 Thailand New Money Ideas

Price as at publication

(Bt) 6-Nov-15 8-Dec-15 8-Jan-16 5-Feb-16 7-Mar-16 19-Apr-16 31-May-16 29-Jul-16 6-Sep-16 5-Oct-16 11-Nov-16

SCB 137.00 127.50 116.00 132.50 143.50 133.50 134.00 158.50 148.50 151.00 141.50 KBANK 177.00 160.50 146.50 169.00 182.50 162.00 174.00 197.50 189.00 193.00 169.50 TISCO 38.50 41.25 41.00 42.00 46.25 KKP 35.50 34.75 36.50 INTUCH 75.50 66.25 50.75 DIF 12.30 12.50 12.40 12.50 13.50 14.90 JASIF 10.50 9.85 8.65 CPNRF 17.50 17.20 17.50 18.10 19.40 20.80 PS 26.75 25.00 25.00 26.25 26.75 AP 5.85 5.40 5.60 5.60 5.90 6.20 5.95 SPALI 18.90 17.20 18.50 18.40 17.60 20.10 20.40 24.90 23.50 24.30 23.90 AMATA 14.60 12.50 12.20 12.30 12.30 12.00 HANA 36.00 37.25 33.50 29.50 33.75 35.75 ADVANC 144.50 165.50 185.00 155.50 165.00 178.00 162.50 163.50 149.00 AOT 333.00 375.00 CPN 44.00 44.75 49.00 54.25 57.75 57.50 58.00 58.25 55.50 BA 24.30 24.50 27.00 24.50 22.70 24.20 25.25 LH 8.60 9.15 8.55 10.20 CENTEL 39.25 42.75 39.75 41.25 38.50 40.00 37.75 PTT 298.00 301.00 330.00 333.00 347.00 335.00 PTTEP 71.50 77.75 PTTGC 61.00 59.50 60.75 60.25 59.25 58.75 TISCO 43.00 54.00 JASIF 9.75 11.90 AP 7.40 7.50 7.35 7.00 KTC 122.50 135.00 AAV 6.70 7.40 HMPRO 10.10 10.30 9.75 SPRC 10.60 11.90 12.40 BDMS 22.50 22.80 MAJOR 30.50 Average change (%) -4.9 -3.8 4.5 6.2 3.3 0.2 11.4 -0.2 2.6 -4.0 SET index 1,415 1,307 1,244 1,306 1,396 1,416 1,424 1,524 1,497 1,510 1,495 Change (%) -7.6 -4.8 5.0 6.9 1.4 0.6 7.0 -1.8 0.9 -1.0 NMI average vs SET 2.9 1.1 -0.5 -0.6 1.8 -0.4 4.1 1.6 1.7 -3.1 Indexed NMI simple average 100 95 91 96 102 105 105 117 117 120 115 SET index 100 92 88 92 99 100 101 108 106 107 106 Relative 100 103 104 104 103 105 104 109 110 112 109

Relative performance shown is the difference in average change in prices of NMI list stocks vs the change in the SET index with no adjustment for differences in dividend payments and no allowance for transaction costs.



14 November 2016 13

The short side While our main focus in this publication is to showcase our analysts’ top ‘Outperform’ rated

ideas, the table below lists stocks under our coverage with negative projected 12-month TSR

(downside to target price plus projected 2017E gross dividend yield).

Fig 26 Stocks under coverage with negative projected 12M TSR

BBG code Sector Rec Beta Mkt cap

(US$ bn) 3M ADV (US$ m)

Price (Bt)

Target (Bt)

Upside (%)

2017E div yield (%)

Projected TSR (%)

MAKRO Retail N 0.74 4.8 0.2 35.00 33.00 (6) 2.6 (3) ROBINS Retail N 0.84 1.8 3.6 57.00 54.00 (5) 2.1 (3) TISCO Banks N 0.96 1.2 2.9 54.50 50.00 (8) 4.6 (4) THANI Other financials N 1.04 0.4 1.5 5.35 4.80 (10) 3.7 (7) BCH Healthcare N 0.74 0.9 4.4 13.30 12.20 (8) 1.1 (7) BIGC Retail U 0.55 4.8 0.1 207.00 188.00 (9) 1.4 (8) TCAP Banks N 0.81 1.4 5.8 43.25 37.00 (14) 4.0 (10) SCC Materials U 0.84 16.9 40.4 496.00 420.00 (15) 3.4 (12) LHBANK Banks U 0.95 0.7 1.6 1.79 1.50 (16) 2.0 (14) TICON Property U 0.68 0.5 0.9 15.90 13.00 (18) 1.7 (17) BLA Other financials N 0.95 2.5 4.3 52.50 42.50 (19) 1.4 (18) BAY Banks U 1.84 7.9 0.6 38.00 30.00 (21) 2.9 (18) KKP Banks N 0.96 1.4 9.3 59.00 43.50 (26) 4.3 (22) CIMBT Banks U 0.77 0.7 0.0 1.02 0.78 (24) 1.1 (22) BJC Retail U 0.93 5.9 19.4 52.00 37.00 (29) 1.4 (27) DTAC Telecoms U 1.25 2.5 15.4 37.50 26.00 (31) 0.9 (30) THAI Transport U 1.32 1.7 24.3 26.75 17.50 (35) 0.0 (35)

Share prices as at 11 November 2016


We note that this list includes two recent initiations of coverage.

Siam Cement (SCC TB, UP, TP Bt420) – please see ‘Siam Cement: Earning momentum

slows’, 28 September 2016 by Duke Suttikulpanich. Duke believes that chemical segment

earnings, which have been the growth driver for SCC over the past two years, have peaked in

2016 and will decline in 2017 and 2018. While he expects growth in domestic cement

demand led by government infrastructure spending, he thinks the benefits will be offset by the

price impact of new competition both domestically and regionally.

Ratchthani Leasing (THANI, N, TP Bt4.80) – please see ‘Ratchthani Leasing: Fully valued’, 3

November 2016 by Passakorn Linmaneechote. While Passakorn expects THANI to show

further growth in earnings in 2017 driven by ongoing reductions in funding costs, he views the

stock as fully valued after its spectacular rally over the past twelve months. Within the non-

bank consumer finance space he prefers Krungthai Card (KTC TB, N, TP Bt145) for its

superior ROE, better credit rating and stronger asset quality.

As discussed above, the non-bank financials, smaller banks such as TISCO, TCAP and KKP

(all included in the list above) and the listed funds have outperformed vs the market this year.

We think the unifying theme behind this outperformance is yield curve compression (driving

lower funding costs for financial institutions with more reliance on wholesale funding) and the

‘hunt for yield’ (funds with high near term running yields from mandatory high payout ratios).

While we think dividend yields will continue to provide an important component of total returns

from equities going forward, we are cautious about chasing the hunt for yield theme, given

our macro team’s forecasts for a gradual uptrend in US interest rates over the next couple of

years. Please see our macro team’s latest ‘Global Macro Outlook’ report from 18 October

2016 and ‘Macq-ro insights: Trump and the long durable expansion’, 9 November 2016 for

more details.

We recently re-

initiated coverage of

SCC with an

Underperform call

Ratchthani Leasing

rated Neutral on full

valuations

We are cautious on

the hunt for yield

theme

We have 17 stocks

with projected

negative 12M TSR


14 November 2016 14

SET index target We maintain our end-2017 SET index target at 1,625. This implies about 9% upside. Adding a

prospective dividend yield of 3% implies a projected 12-month TSR of about 12%, roughly in

line with our assumed cost of equity for the Thai market of 10%. We therefore view the

market as fairly valued. We derive our index target from a combination of a top-down estimate

for index ‘fair value’ and a ‘bottom-up’ market cap weighted average of the upside to target

prices for stocks under our coverage.

Top down

Using the simplified Gordon Growth Model formula for fair value PER = 1/(r-g) given a

constant cost of equity (r) and perpetuity growth rate (g), we assume a 12M forward fair value

PER of 14.3x. This is derived from our assumptions of a 10% cost of equity (comprising 3%

risk free rate and 7% equity risk premium) and 3% perpetuity growth. The sensitivity of fair

PERs to discount rates (cost of equity) and perpetuity growth rates is illustrated in the

following table.

Fig 27 Fair PER sensitivity to sustainable EPS growth and discount rate

EPS growth (%) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

5.0 20.0 22.2 25.0 28.6 33.3 40.0 50.0 66.7 100.0 200.0 nm 6.0 16.7 18.2 20.0 22.2 25.0 28.6 33.3 40.0 50.0 66.7 100.0 7.0 14.3 15.4 16.7 18.2 20.0 22.2 25.0 28.6 33.3 40.0 50.0 8.0 12.5 13.3 14.3 15.4 16.7 18.2 20.0 22.2 25.0 28.6 33.3 9.0 11.1 11.8 12.5 13.3 14.3 15.4 16.7 18.2 20.0 22.2 25.0 Discount rate (%) 10.0 10.0 10.5 11.1 11.8 12.5 13.3 14.3 15.4 16.7 18.2 20.0 11.0 9.1 9.5 10.0 10.5 11.1 11.8 12.5 13.3 14.3 15.4 16.7 12.0 8.3 8.7 9.1 9.5 10.0 10.5 11.1 11.8 12.5 13.3 14.3 13.0 7.7 8.0 8.3 8.7 9.1 9.5 10.0 10.5 11.1 11.8 12.5 14.0 7.1 7.4 7.7 8.0 8.3 8.7 9.1 9.5 10.0 10.5 11.1 15.0 6.7 6.9 7.1 7.4 7.7 8.0 8.3 8.7 9.1 9.5 10.0


Applying our assumed fair PER of 14.3x to current Bloomberg consensus SET EPS forecasts

generates an end-2016 fair value for the SET of 1,528 (close to its current level) and an end

2017 (approximately 12 months forward) fair value of 1,708.

Fig 28 Top-down 'fair value' SET index based on Bloomberg consensus EPS

2015 2016E 2017E 2018E

SET index EPS (BBG consensus) 73.9 96.5 106.9 119.4 Growth (%) 30.7 10.7 11.8 PER, current SET level (x) 20.2 15.5 14.0 12.5 Implied index level, 12M PER 14.3x* 1,381 1,528 1,708 nm

* End 2016E fair SET value = 14.3x projected 2017E EPS etc


If we replace consensus 2017E and 2018E EPS growth forecasts with 10%, the projected fair

value for the SET index at end-2017 would drop to 1,670.

Fig 29 Top down 'fair value' SET index with lower 2017/18E EPS growth

2015 2016E 2017E 2018E

SET index EPS 73.9 96.5 106.2 116.8 Growth (%) 30.7 10.0 10.0 PER, current SET level (x) 20.2 15.5 14.1 12.8 Implied index level, 12M PER 14.3x 1,381 1,519 1,670 nm


SET index target

maintained at 1,625

for end 2017

Top-down index

valuations suggest

an end-2017 SET

index target of

1,650-1,700


14 November 2016 15

The sensitivity of our top-down-derived mid-2017 SET index targets to different assumptions

for fair PER and 2017&18E EPS growth is illustrated in the following table.

Fig 30 Top-down fair end-2017 SET value sensitivity to 2017E and 2018E EPS growth and 'fair PER'

EPS growth (%) 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

9.0 869 904 940 976 1,013 1,051 1,090 1,129 1,169 1,210 1,251 10.0 965 1,004 1,044 1,085 1,126 1,168 1,211 1,255 1,299 1,344 1,390 11.0 1,062 1,105 1,149 1,193 1,239 1,285 1,332 1,380 1,429 1,479 1,529 12.0 1,158 1,205 1,253 1,302 1,351 1,402 1,453 1,506 1,559 1,613 1,668 13.0 1,255 1,306 1,357 1,410 1,464 1,519 1,574 1,631 1,689 1,747 1,807 Fair PER (x) 14.0 1,352 1,406 1,462 1,519 1,576 1,635 1,695 1,756 1,819 1,882 1,946 15.0 1,448 1,507 1,566 1,627 1,689 1,752 1,816 1,882 1,949 2,016 2,085 16.0 1,545 1,607 1,671 1,736 1,802 1,869 1,938 2,007 2,078 2,151 2,224 17.0 1,641 1,707 1,775 1,844 1,914 1,986 2,059 2,133 2,208 2,285 2,363 18.0 1,738 1,808 1,880 1,953 2,027 2,103 2,180 2,258 2,338 2,420 2,502 19.0 1,834 1,908 1,984 2,061 2,139 2,219 2,301 2,384 2,468 2,554 2,641


Bottom-up

A market-cap-weighted average of the upside to our analysts’ target prices (which are based

on a 12-month horizon) provides a bottom-up projection for upside. Given that our coverage

represents two-thirds of SET market cap and is skewed towards the larger and more liquid

stocks in the market, we think this is a meaningful proxy for projected upside for the market.

Based on our current forecasts, the bottom-up derived 12-month upside from our target prices

is 11%, which implies a SET index target of 1,656.

Blended SET index target

While a simple average of our top-down SET index target of 1,670 (assuming 10% EPS

growth in 2017 and 2018) and our bottom-up target of 1,656 is 1,663, we maintain our end-

2017 SET index target at 1,625. We see some potential near-term risks to earnings forecasts

(based on visibility of 3Q16 results thus far reported) and also risk of PER multiple

compression, if our forecast for rising rates plays out.

Our target implies about 9% annualised upside from the current index level or a projected

12M total shareholder return (TSR) of about 12% if we include the consensus prospective

dividend yield of just over 3%. This represents about fair value vs our assumed cost of equity

for Thailand of 10%.

An index level of 1,477 would imply 10% upside to our end-2017 target, 1,413 would imply

15% upside, and 1,354 would imply 20% upside. An index level of 1,805 would imply 10%

downside to our end-2017 target.

Applying aggregate

upside from our

own coverage

implies an index

target of 1,656

Sticking with our

index target of 1,625

implying 9%

projected upside,

12% TSR


14 November 2016 16

Recommended sector weightings Our recommended sector allocation for a Thailand benchmarked portfolio largely follows from

our analysts’ stock calls. Using the MSCI Thailand index as a benchmark, we recommend

overweights in banks, telecoms, commerce, property, healthcare and petrochemicals

balanced by underweights in materials, transport and foods.

Based on SET sector classifications, we are technically overweight petrochems and neutral

energy. However, if we combine these two sectors, we are overweight, with overweights on

PTT, PTTGC and TOP and underweight on PTTEP and IRPC.

As illustrated below, the small number of stocks in several sectors means that these sector

allocations are driven sometimes by our views on a single stock (e.g. property, materials). We

set recommended weightings in non-rated stocks in line with benchmark weights by default.

Our recommended allocation is little changed vs our previous report. We have generally

assigned overweight positions to stocks which our analysts rate as Outperform (OP) and

underweight positions to Underperform and Neutral rated stocks. However, we have a few

deviations from this general rule in order to balance overweights and underweights.

Fig 31 Recommended sector allocations

Stock weighting (%) Sector weighting (%)

Stock Code MSCI Rec vs MSCI Sector MSCI Rec vs MSCI Rating

PTT PTT 11.4 12.4 1.0 Energy 22.6 22.6 0.0 OP PTT Exploration & Prod’n PTTEP 3.8 2.8 (1.0) N Thai Oil TOP 1.9 2.4 0.5 OP Glow Energy GLOW 1.3 1.3 0.0 NR IRPC IRPC 1.6 1.1 (0.5) N Electricity Generating Co EGCO 0.8 0.8 0.0 NR Energy Absolute EA 1.0 1.0 0.0 NR Banpu BANPU 0.9 0.9 0.0 NR Kasikornbank KBANK 9.8 10.8 1.0 Banks 21.3 22.3 1.0 OP Siam Commercial Bank SCB 7.3 8.3 1.0 OP Krung Thai Bank KTB 2.0 2.0 0.0 OP Bangkok Bank BBL 1.3 0.8 (0.5) N TMB Bank TMB 0.9 0.4 (0.5) N Advanced Info Service ADVANC 5.2 6.2 1.0 Telcos 7.5 8.4 1.0 OP True Corp TRUE 2.2 2.2 0.0 OP CP All CPALL 10.0 10.5 0.5 Commerce 12.2 12.7 0.5 OP Home Product Center HMPRO 1.3 2.3 1.0 OP Robinsons Dept Store ROBINS 1.0 0.0 (1.0) N Central Pattana CPN 2.4 2.9 0.5 Property 2.4 2.9 0.5 OP Siam Cement SCC 6.7 4.7 (2.0) Materials 6.7 4.7 (2.0) UP Airports of Thailand AOT 5.3 4.3 (1.0) Transport 8.6 6.6 (2.0) N BTS Group Holdings BTS 1.6 0.6 (1.0) N BKK Expressway & Metro BEM 1.7 1.7 0.0 NR Charoen Pokphand Foods CPF 2.8 2.8 0.0 Food 6.7 6.2 (0.5) NR Minor International MINT 2.7 2.2 (0.5) N Thai Union Group TU 1.3 1.3 0.0 NR Bangkok Dusit Medical BDMS 2.7 3.7 1.0 Healthcare 4.7 5.2 0.5 OP Bumrungrad Hospital BH 2.0 1.5 (0.5) N PTT Global Chemical PTTGC 4.0 5.0 1.0 Petrochems 5.4 6.4 1.0 OP Indorama Ventures IVL 1.4 1.4 0.0 NR Delta Electronics (Thai) DELTA 1.3 1.3 0.0 Others 1.9 1.9 0.0 NR BEC World BEC 0.7 0.7 0.0 NR Total 100.0 100.0 0.0 100.0 100.0 0.0

MSCI Thailand weights as at 31 October 2016. Weightings for non-rated stocks are set equal to their index weights. Stocks which have separate index weights for both foreign and local shares are combined for simplicity.


Our recommended

sector weightings

follow from our

analysts’ stock calls

Overweight banks,

telcos, commerce,

property, healthcare

& petrochems

Underweight

materials, transport

& foods


14 November 2016 17

Fig 32 Active stock weights vs MSCI Thailand Fig 33 Active sector weights vs MSCI Thailand

Source: MSCI, Macquarie Research, November 2016 Source: MSCI, Macquarie Research, November 2016

The charts below illustrate the main differences in benchmark sector weights between the

MSCI Thailand index and the SET index. The weightings for energy, banks, commerce,

transport and petrochems are higher in MSCI Thailand vs the SET index, while the weightings

for property and ‘others’ are substantially lower. In the table of MSCI index stocks above, we

have labelled DELTA and BEC together as ‘others’, while ‘others’ in the SET index comprises

eighteen relatively small industry sectors, the largest of which (Thai property funds and

REITs) contributes less than 3% of SET index market cap.

Fig 34 MSCI Thailand benchmark sector weights Fig 35 SET index sector weights

Source: MSCI, Macquarie Research, November 2016 Source: SET, Macquarie Research, November 2016

(2.0

)

(1.0

)

(1.0

)

(1.0

)

(1.0

) (0.5

)

(0.5

)

(0.5

)

(0.5

)

(0.5

)

0.5

0.5

0.5

1.0

1.0

1.0

1.0

1.0

1.0

1.0

(4.0)

(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

SC

C

PT

TE

P

AO

T

BT

S

RO

BIN

S

IRP

C

BB

L

TM

B

MIN

T

BH

TO

P

CP

ALL

CP

N

AD

VA

NC

PT

T

KB

AN

K

SC

B

HM

PR

O

BD

MS

PT

TG

C

(ppts)

(2.0) (2.0)

(0.5)

0.0 0.0

0.5 0.5 0.5

1.0 1.0 1.0

(2.5)

(2.0)

(1.5)

(1.0)

(0.5)

0.0

0.5

1.0

1.5

Ma

teria

ls

Tra

nsp

ort

Foo

d

Ene

rgy

Oth

ers

Pro

pe

rty

He

alth

care

Co

mm

erc

e

Telc

os

Ban

ks

Petr

oche

ms

(ppts)

Energy23%

Banks21%

Telcos7%Commerce

12%

Property2%

Materials7%

Transport9%

Food7%

Healthcare5%

Petrochems5%

Others2%

Energy18%

Banks14%

Telcos9%

Commerce10%

Property6%

Materials6%

Transport7%

Food7%

Healthcare5%

Petrochems3%

Others15%


14 November 2016 18

SET index consensus forecasts Bloomberg consensus 2016E EPS forecasts for the SET index have moved up by about 3%

from a low in early July. However, since the beginning of the year, consensus EPS forecasts

for 2016 and 2017 are down 5% and 7%, respectively.

Implied EPS growth rates from consensus forecasts for future years beyond the current year

continue to look remarkably stable over time, suggesting that most of the movement in

consensus earnings forecasts is driven off current year forecasts.

We expect a substantial rebound in bottom line reported earnings for the SET in 2016, given

large negative items booked in 2015 such as oil price related inventory losses in the energy

sector and a large specific provision charge for the banks are expected to decline.

However, if 2016 earnings represent a more normalised measure of SET earnings, we think

the consensus forecast for 2017E EPS growth of 11% could be a challenge, given our macro

forecasts for the Thai economy to grow at 3.3% in 2017 vs 3.2% in 2016.

Fig 36 SET index consensus EPS Fig 37 SET index consensus EPS growth


Fig 38 SET index consensus EPS (from Jan-2015) Fig 39 SET index consensus EPS g (from Jan-2015)


0

200

400

600

800

1000

1200

1400

1600

1800

60

70

80

90

100

110

120

130

140

150


(index)(EPS)

2011 2012 2013 2014

2015 2016 2017 SET, RS

0

200

400

600

800

1000

1200

1400

1600

1800

(10)

(5)

0

5

10

15

20

25

30


(index)(%)

2011 2012 2013 2014

2015 2016 2017 SET, RS

1200

1300

1400

1500

1600

1700

1800

80

90

100

110

120

130

140

Dec-14 Jun-15 Dec-15 Jun-16 Dec-16

(index)(EPS)

2015 2016 2017 SET, RS

1200

1300

1400

1500

1600

1700

1800

(10)

(5)

0

5

10

15

20


(index)(%)

2015 2016 2017 SET, RS

Consensus 2016

EPS forecasts

turned up for the

first time this year in

July, but are still 5%

down since the start

of the year


14 November 2016 19

The two charts below illustrate the evolution of consensus 2016 EPS forecasts for the ten

largest SET sectors. These indicate that the main factors lifting consensus EPS for the

market since the low point in early July have been upgrades in energy & petrochems,

commerce, construction materials, transport and foods. Meanwhile, consensus forecasts for

banks, telecoms and property are unchanged over this period and consensus forecasts for

healthcare have declined.

Fig 40 Major sector 2016E consensus EPS (1) Fig 41 Major sector 2016E consensus EPS (2)


With consensus 2016 and 2017 EPS forecasts down 5% and 7%, respectively, from the start

of 2016, the 16% gain in the SET index in 2016 YTD (20% at its peak of 1,553) has been

driven by expansion in forward PER multiples. The Bloomberg consensus 12M forward PER

for the SET at 14.2x (as at 11 November 2016) is approximately one standard deviation

above its long-term average since 2010 of 12.7x.

Fig 42 SET index consensus 12M rolling forward PER (since 2010)


The dominant contribution of multiple expansion to total returns from the SET in 2016 YTD is

illustrated further in the returns attribution chart from our quant team below. However, this

also shows the improvement in consensus earnings expectations since mid-2016, which is

more pronounced for the MSCI index vs the SET index, due to the higher weightings of

energy and commerce in the MSCI Thailand index.

60

70

80

90

100

110

Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

(index)

Energy Banks Telcos

Commerce Property SET

80

90

100

110

120


(index)

ConMat Transport Food

Healthcare Petrochem SET

8

9

10

11

12

13

14

15

16

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

(x)

12M FWD PER Average -1SD -2SD +1SD +2SD

Forward 12M PER of

14.2x is 1SD above

its longer-term

average

PER multiple

expansion the main

driver of 2016 gains


14 November 2016 20

Fig 43 MSCI Thailand - Return Attribution (USD)

Source: MSCI, Macquarie Research, November 2016 (data to end October 2016)

The 10Y Thai government bond yield has dropped over the past couple of years. Using the

Gordon Growth Model and assuming a constant equity risk premium of 7% and sustainable

growth at 3% and using the 10Y bond yield as a risk-free rate generates a theoretical ‘fair’

PER for the market as illustrated below.

While we view the argument that a substantial drop in bond yields supports a higher PER for

the market as reasonable up to a point, our macro forecasts imply that bond yields will move

higher over the next couple of years. We believe equities should be valued using an expected

average future risk-free rate, rather than spot rates, hence our view that the market is

currently about fairly valued rather than cheap. Please see ‘Thailand strategy: Don’t forget the

Fed’, 1 June 2016, for further discussion of interest rates and SET valuations.

Fig 44 Thai 10Y government bond yield Fig 45 Consensus & 'fair' PER based on 10Y Gov't


-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Jan 14 Mar 14 Jun 14 Sep 14 Dec 14 Feb 15 May 15 Aug 15 Nov 15 Jan 16 Apr 16 Jul 16 Oct 16

Currency Dividend Change in Earnings Expectations Multiple Change Total Return (USD)

0

1

2

3

4

5

6

7


(%)

Thai Gov't 10Y Rolling 12M average

8

10

12

14

16

18


(x)

SET index PER, LS SET Fair PER, LS

Lower bond yields

have supported PER

expansion

We continue to

assume 3% risk-free

rate, based on our

macro forecasts


14 November 2016 21

Thai market performance Thailand underperformed vs MSCI Asia ex-Japan throughout 2015, falling around 14% in

local currency terms and 22% in USD terms—roughly double the decline in the MSCI Asia ex-

Japan index. However, Thailand has outperformed relative to MSCI Asia XJ in 2016 YTD. As

at 4 November 2016, the SET index showed a gain in local currency of 16% in 2016 YTD and

a USD adjusted gain of 18% vs a 7% gain in the MSCI Asia ex-Japan index.

Our overall outlook for Thailand relative to ASEAN is unchanged by the recent surprise

election of Donald Trump as the next US President. While a more protectionist US stance on

trade would be negative, we think this could be offset by higher commodity prices and

steepening yield curves, given the size of the energy and banks sectors in the Thai market.

Please see ‘ASEAN strategy: US election takes some shine off’, 10 November 2016 for our

ASEAN team’s initial thoughts on the impact of the election on ASEAN markets.

Fig 46 USD performance of ASEAN markets & MSCI Asia ex-Japan


Fig 47 ASEAN markets USD performance relative to MSCI Asia ex-Japan


50

100

150

200

250

300


(index)

SET STI JCI KLCI PCOMP MXASAJ

80

100

120

140

160

180

200

220

240

260


(index)

SET STI JCI KLCI PCOMP MXASAJ

Thailand has

outperformed Asia

ex-Japan in 2016


14 November 2016 22

Major sector performance The following four charts illustrate performance of the ten largest SET industry sectors by

market cap, first over a short-term horizon since the start of 2016 and then over a much

longer period since December 2007 (weekly data to 11 November 2016).

Relative outperformers in 2016 YTD are energy & petrochems, commerce and foods.

Relative outperformers over the longer-term period illustrated are commerce and healthcare

by a wide margin, also foods, property, construction materials and transportation. Banks and

telecoms are roughly flat, while the clear underperformers are energy & petrochems.

Fig 48 SET sector performance, 2016 YTD (1) Fig 49 SET sector performance, 2016 YTD (2)


Fig 50 SET sector performance since 2007 (1) Fig 51 SET sector performance since 2007 (2)


The following four charts illustrate consensus 12M forward PERs for the ten largest SET

industry sectors and their 12M forward PERs relative to the SET index since end 2007. The

consensus 12M forward PER for the SET index is 1.6 PER points above its historical average

since 2010, implying we might expect most sectors also to show 12M PERs above their own

longer-term average.

Relative to the expansion in SET 12M forward PER over this period, commerce,

transportation, food & healthcare show greater PER multiple expansion and other sectors

show relative PER de-rating.

90

100

110

120

130

140

150


(index)

Energy Banks Telecoms

Commerce Property SET index

90

95

100

105

110

115

120

125

130

135

140


(index)


Healthcare Petrochem SET index

0

100

200

300

400

500

600

700

800


(index)



0

100

200

300

400

500

600

700


(index)



Energy,

petrochems,

commerce & foods

have outperformed

in 2016 YTD

Commerce &

healthcare show

highest PER

multiple re-rating

since 2007


14 November 2016 23

Fig 52 12M forward consensus sector PERs

(x) Energy Banks Telcos Commerce Property ConMat Transport Food Healthcare Petchems SET

Current 12M PER 11.4 9.5 17.7 26.9 12.9 12.4 22.8 19.4 37.3 11.4 14.2 Average since 2010 10.1 10.3 16.6 23.3 12.8 13.2 19.4 15.1 27.0 10.7 12.7 Current vs average 1.4 (0.9) 1.2 3.6 0.1 (0.8) 3.3 4.3 10.3 0.8 1.6 Relative to SET (0.2) (2.4) (0.4) 2.0 (1.4) (2.3) 1.8 2.7 8.8 (0.8) nm


Fig 53 Consensus 12M sector PERs (1) Fig 54 Consensus 12M sector PERs (2)


Fig 55 Consensus 12M sector PERs vs SET (1) Fig 56 Consensus 12M sector PERs vs SET (2)


0

5

10

15

20

25

30

35


(x)



0

5

10

15

20

25

30

35

40

45


(x)



(10)

(5)

0

5

10

15

20


(PER pts)

Energy Banks Telecoms Commerce Property

(10)

(5)

0

5

10

15

20

25

30


(PER pts)

ConM Trans Food Health Petchem


14 November 2016 24

Major sector consensus forecasts Six of the ten largest-cap sectors show declines in 2016 consensus EPS forecasts in 2016

YTD. The exceptions are construction materials (+2%), transport (+10%), food (+3%) and

healthcare (+1%). However, 2016 EPS forecasts for energy & petrochems, commerce,

construction materials and food show some positive momentum over the past four months.

Fig 57 Change in Bloomberg consensus 2016E EPS during 2016 YTD

(%) Energy Banks Telcos Commerce Property ConMat Transport Food Healthcare Petrochem SET index

Change -1 -6 -28 -4 -14 2 10 3 1 -6 -5

Data to 28 October 2016


The following 20 charts illustrate changes in consensus EPS and EPS growth forecasts

during 2015 and 2016 YTD for the ten largest SET industry sectors, overlaid with sector index

performance (weekly data to 11 November 2016). We note that data for several sectors can

be heavily influenced by specific stocks, in cases where one or more stocks comprise a large

percentage of sector market cap and/or earnings, for example CPALL in commerce, SCC in

construction materials, AOT in transport and PTTGC in petrochemicals.

Fig 58 SET Energy index & consensus EPS forecasts Fig 59 SET Energy index & consensus EPS growth


Fig 60 SET Bank index & consensus EPS forecasts Fig 61 SET Bank index & consensus EPS growth


12,000

14,000

16,000

18,000

20,000

22,000

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200


(index)(EPS)

2015 2016 2017 Index, RS

12,000

14,000

16,000

18,000

20,000

22,000

(40)

(20)

0

20

40

60

80


(index)(%)

2015 2016 2017 Index, RS

400

450

500

550

600

650

700

750

40

45

50

55

60

65

70

75


(index)(EPS)

2015 2016 2017 Index, RS

400

450

500

550

600

650

700

750

(15)

(10)

(5)

0

5

10

15

20


(index)(%)

2015 2016 2017 Index, RS

Materials, transport,

food & health show

EPS upgrades YTD


14 November 2016 25

Fig 62 SET Comm’ns index & consensus EPS f’casts Fig 63 SET Commun’s index & cons EPS growth


Fig 64 SET Commerce index & cons EPS f’casts Fig 65 SET Commerce index & cons EPS growth


Fig 66 SET Property index & consensus EPS f’casts Fig 67 SET Property index & consensus EPS growth


100

120

140

160

180

200

220

240

260

280

7

8

9

10

11

12

13

14

15

16

17


(index)(EPS)

2015 2016 2017 Index, RS

130

150

170

190

210

230

250

(30)

(20)

(10)

0

10

20

30


(index)(%)

2015 2016 2017 Index, RS

26,000

28,000

30,000

32,000

34,000

36,000

38,000

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600


(index)(EPS)

2015 2016 2017 Index, RS

26,000

28,000

30,000

32,000

34,000

36,000

38,000

0

5

10

15

20

25

30


(index)(%)

2015 2016 2017 Index, RS

200

220

240

260

280

300

320

340

360

380

400

18

19

20

21

22

23

24

25

26

27

28


(index)(EPS)

2015 2016 2017 Index, RS

200

220

240

260

280

300

320

340

(15)

(10)

(5)

0

5

10

15

20


(index)(%)

2015 2016 2017 Index, RS


14 November 2016 26

Fig 68 SET Constr’n materials index & cons EPS f/c Fig 69 SET Constr’n materials index & cons EPS g


Fig 70 SET Transport index & consensus EPS f’casts Fig 71 SET Transport index & consensus EPS growth


Fig 72 SET Food index & consensus EPS forecasts Fig 73 SET Food index & consensus EPS growth


10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

14,000

14,500

15,000

700

750

800

850

900

950

1,000

1,050

1,100

1,150

1,200


(index)(EPS)

2015 2016 2017 Index, RS

10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

14,000

14,500

15,000

0

5

10

15

20

25

30

35


(index)(%)

2015 2016 2017 Index, RS

200

220

240

260

280

300

320

4

6

8

10

12

14

16


(index)(EPS)

2015 2016 2017 Index, RS

200

220

240

260

280

300

320

0

20

40

60

80

100

120

140

160

180

200


(index)(%)

2015 2016 2017 Index, RS

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

400

500

600

700

800

900

1,000


(index)(EPS)

2015 2016 2017 Index, RS

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

(30)

(20)

(10)

0

10

20

30

40

50


(index)(%)

2015 2016 2017 Index, RS


14 November 2016 27

Fig 74 SET Healthcare index & consensus EPS f’casts Fig 75 SET Healthcare index & cons EPS growth


Fig 76 SET Petrochem index & cons EPS f’casts Fig 77 SET Petrochem index & cons EPS growth


4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

100

110

120

130

140

150

160

170

180

190

200


(index)(EPS)

2015 2016 2017 Index, RS

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

5,600

5,800

6,000

0

5

10

15

20

25

Dec-14 Jun-15 Dec-15 Jun-16

(index)(%)

2015 2016 2017 Index, RS

650

700

750

800

850

900

950

1000

1050

60

65

70

75

80

85

90

95

100


(index)(EPS)

2015 2016 2017 Index, RS

650

700

750

800

850

900

950

1000

1050

0

5

10

15

20

25

30


(index)(%)

2015 2016 2017 Index, RS


14 November 2016 28

Market flows & foreign ownership Foreign net inflows slowed in September to Bt17bn vs Bt44bn in July and Bt34bn in August

and foreigners were net sellers in October and have been net sellers in November (month to

date). As a result, our estimated foreign ownership of the SET 100 index universe of stocks

has remained around 34%. This is on the borderline between the bottom quartile and the third

quartile of the range seen over the past ten years.

Local institutions were substantial net buyers in October. Both local institutions and retail

investors have been net buyers in November to date.

Fig 78 Net buy sell by investor type

Units: Bt m Local Institutions Proprietary Trading Foreign Investors Local Investors Net Buy/(Sell) Net Buy/(Sell) Net Buy/(Sell) Net Buy/(Sell)

11-Nov-16 (709) 320 (3,744) 4,133 10-Nov-16 2,700 141 (2,046) (795) 9-Nov-16 (657) 1,777 (2,630) 1,509 8-Nov-16 1,360 216 (130) (1,445) 7-Nov-16 693 82 (723) (52) 4-Nov-16 (999) 380 (1,435) 2,054 3-Nov-16 229 (192) (2,064) 2,028 2-Nov-16 (1,015) 417 (847) 1,444 1-Nov-16 2,315 (213) (1,478) (624) 31-Oct-16 929 72 (2,450) 1,449 2016 November (to date) 3,916 2,928 (15,097) 8,253 2016 October 22,019 (697) (18,089) (3,233) 2016 September (16,180) (3,270) 17,227 2,223 2016 August (19,320) 1,950 34,373 (17,003) 2016 July (11,607) 3,875 44,369 (36,636) 2016 June (6,225) 115 18,396 (12,286) 2016 May 5,665 2,134 4,735 (12,534) 2016 YTD (24,160) 21,282 99,294 (96,416) 2015 75,788 (7,256) (152,718) 84,194 2014 71,425 3,582 (36,575) (38,421) 2013 108,162 (1,734) (193,921) 87,470 2012 (24,302) 7,254 76,388 (59,343) 2011 (29,149) 1,307 (5,119) 32,962 2010 (15,200) (449) 81,724 (66,075)

Source: Stock Exchange of Thailand, Macquarie Research, November 2016

Fig 79 Monthly net buy/(sell) by investor group Fig 80 Cumulative net buy/(sell) & SET index

Source: SET, Macquarie Research, November 2016 Source: SET, Macquarie Research, November 2016

(50)

(40)

(30)

(20)

(10)

0

10

20

30

40

50


(Bt bn)

Local institutions Proprietary Foreign Retail

400

600

800

1,000

1,200

1,400

1,600

1,800

(400)

(300)

(200)

(100)

0

100

200

300

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

(index)(Bt bn)

Local institutions Foreign Retail SET, RS

Foreign net inflows

slowed in

September and

turned negative in

October and

November to date


14 November 2016 29

We draw the following conclusions from longer-term data on investor flows and SET index

performance.

1. Prior to 2012, it appears that foreign investors were the key marginal buyers or sellers

and effectively drove the market up or down.

2. However, a significant increase in regular inflows into the market from local institutions

from around the middle of 2012 onwards has changed this dynamic. While net selling by

foreigners can still drive the market down, the market can now rise if foreigners stop

selling (and as long as local institutional inflows continue).

3. We think this is a sustainable proposition, given the steady growth in the local institutional

investment market (comprising mutual funds, pension funds, insurance company assets

etc). We also view this as a healthy development for the Thai market, since it implies that

the market is no longer solely dependent on foreigners for performance.

Fig 81 Cumulative net buy/(sell) by investor group and SET index

Source: SET, Macquarie Research, November 2016

Fig 82 Foreign cumulative net buy/(sell) and SET index

Source: SET, Macquarie Research, November 2016

0

200

400

600

800

1000

1200

1400

1600

1800

(400)

(300)

(200)

(100)

0

100

200

300

400

500

Dec-93 Dec-96 Dec-99 Dec-02 Dec-05 Dec-08 Dec-11 Dec-14 Dec-17

(index)(Bt bn)

Local institutions Foreign Retail SET index, RS

0

200

400

600

800

1000

1200

1400

1600

1800

(100)

0

100

200

300

400

500

Dec-93 Dec-96 Dec-99 Dec-02 Dec-05 Dec-08 Dec-11 Dec-14 Dec-17

(index)(Bt bn)

Foreign SET index, RS

S S S SBBB

Growth in local

institutional

investment creates

a more balanced

market in terms of

investor groups


14 November 2016 30

The top five specific stocks showing substantial changes in foreign ownership over recent

periods are illustrated below.

The chart below of ‘Company insiders’ trading’ (net number of buy vs sell trades by company

owners and senior management) indicates that net buying by company insiders diminished as

the market rallied in 2016 but rebounded on the recent market correction. (This ratio is based

on the number of reported transactions and is not adjusted for the size of individual

transactions.)

Fig 83 Foreign ownership — top five gainers and losers

Change 1 wk (%) Change 4 wks (%) Change 3 months (%) Change YTD (%)

Top 5 Gainers

SIRI 0.2 SIRI 1.7 BA 5.0 TRUE 13.7 BJC 0.2 MAJOR 1.5 SIRI 4.4 TCAP 10.8 BBL 0.2 KKP 1.1 KKP 3.5 KKP 10.5 AAV 0.2 BA 1.0 MAJOR 2.5 QH 9.1 JASIF 0.1 QH 1.0 THCOM 2.5 SPALI 8.8 Top 5 Losers TU -0.6 KBANK -2.0 SAT -3.3 BIGC -56.0 THANI -0.5 TU -1.3 BCH -3.3 BCH -8.0 AMATA -0.5 BCH -1.2 TU -2.4 PSL -7.7 SAT -0.4 THANI -1.2 DTAC -1.9 JASIF -7.1 KBANK -0.4 SCCC -0.8 AAV -1.8 DTAC -6.7 List above includes stocks within MACQ coverage and SET100

Source: Stock Exchange of Thailand, Macquarie Research, November 2016

Fig 84 Foreign ownership of SET100 (estimated) Fig 85 ’Insider Trading’: Buy vs Sell transactions

Ratio = number of buy transactions/ total number of transactions; ratio >

0.5 indicates more buy transactions than sell by company insiders

Source: SET, Macquarie Research, November 2016 Source: Thailand SEC, Macquarie Research, November 2016

32

33

34

35

36

37

38

39

40

Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16

(%)

Foreign ownership, est

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1200

1250

1300

1350

1400

1450

1500

1550

1600

1650

1700

Jan-1

3

Mar-

13

May

-13

Jul-1

3

Sep-1

3

No

v-1

3

Jan-1

4

Ma

r-1

4

May

-14

Jul-1

4

Sep-1

4

Nov-1

4

Ja

n-1

5

Mar-

15

May

-15

Jul-1

5

Sep-1

5

No

v-1

5

Jan-1

6

Ma

r-1

6

May

-16

Jul-1

6

Sep-1

6

Nov-1

6

SET (LHS) Weekly Ratio (RHS) 0.5x

Company insiders

appear to buy low

and sell high


14 November 2016 31

The quant corner Our quant team’s update of factor performance data shows positive performance from growth

and momentum in October, while analyst sentiment, technical indicators, valuation,

profitability and quality were negative.

Growth showed the strongest factor performance.

Momentum also showed positive performance.

Analyst sentiment, technical indicators, valuation, profitability and quality showed negative

performance.

Overall on a longer horizon (5Y), quality (12%), analyst sentiment (7%), growth (6%),

Momentum (4%) and profitability (3%) are the best performers.

Fig 86 Thailand factor performance


Long-Short Factor Returns in MSCI ThailandPerformance to 31 Oct 2016 (returns annualised for periods > 12M)Factor 1M 1Y 5Y 10Y Factor 1M 1Y 5Y 10Y

Macquarie Alpha Model -7% -22% 10% 20% Average Profitability/Return on Capital Performance-2% -18% 3% 1%CFROI -6% -34% 4% 5%

Average Valuation Performance -2% 12% -11% 1% ROA - NTM 3% -3% 5% -3%Book Yield - NTM 2% 16% -10% -5% ROE - NTM -1% -13% 0% 6%Cash Yield - NTM 3% 24% -9% -2% ROIC - NTM -4% -21% 3% -5%Dividend Yield - NTM -3% 3% -2% 9%Earnings Yield - FY0 -10% -10% -20% 6% Average Quality Performance -1% -10% 12% -3%Earnings Yield - NTM -3% 13% -15% -1% Earnings Stability -3% -9% 5% -8%Sales Yield - NTM -1% 17% -10% 4% Macquarie Quality Indicator -3% -29% 13% 6%EBITDA / EV - NTM -1% 16% -11% 0% Operating Accruals * 1% -1% 28% -5%

Profit Margin - NTM 2% -2% 0% -5%Average Momentum Performance 3% 10% 4% -3%

Momentum - 12 Month 0% -2% 12% -11% Average Low Risk Performance 0% -4% -1% -3%Momentum - (12 Month - 1 Month) 0% 6% 8% -6% Altman Z-score -2% -22% -6% 2%Momentum - 3 Month 2% 21% -9% 0% Earnings Certainty -4% -4% 5% 3%Momentum - 6 Month 6% 13% 5% 3% Merton Model -4% -27% -3% -5%Macquarie Periodic Momentum 4% 11% 6% -2% Relative Volatil ity 2% -17% 0% 9%

Volatil ity 250 Day 4% 19% 10% -15%Average Analyst Sentiment Performance-1% 4% 7% -1% BETA 5% 26% -15% -10%

Consensus Recommendation -2% 27% 1% -5%DPS Revisions - 3 Month 2% 2% 3% -2% Average Capital & Funding Performance -2% -9% -9% -2%Earnings Revisions - 3 Month 0% -7% 14% -2% Buybacks to Shares -4% -6% -12% 3%Up-down Earnings Revision Ratio -3% 0% 17% 4% Captial Expenditure Growth 0% 12% 3% -3%Maquarie Sentiment Indicator -3% 11% 22% 2% Increase in the Number of Shares -1% -18% -3% 0%Recomm. Revisions - 3 Month -3% -15% 10% 3% External Financing -2% -24% -26% -6%Price Upside -2% 10% -15% -7%

Average Liquidity Performance -1% -1% -6% -4%Average Growth Performance 5% 10% 6% -5% Relative Turnover 1% -13% -8% 11%

5 Year EPS Trend 3% 5% 6% 0% Size -4% -2% -13% -12%EPS Growth - FY-1 to FY0 6% -5% 9% 6% Turnover (USD) 20 Day 0% -4% -12% -8%EPS Growth - FY0 to FY1 8% 16% 13% -10% Broker Coverage -2% -1% -4% -8%Margin Growth - FY0 to FY1 4% 0% -8% -9% Change in Number of Estimates 0% 17% 8% -3%ROA Growth - FY0 to FY1 5% 19% 14% -2%ROE Growth - FY0 to FY1 7% 25% 13% -8% Average Technical Indicators Performance-3% 2% 0% 7%Sales Growth Last Actual & FY1 3% 10% -8% -14% Momentum - 1 Month * -4% -13% -4% -5%

RSI 14 Day * -4% 0% -1% 8%Stochastic Oscillator * -1% 10% 3% 4%Williams %R * -4% 12% 3% 21%

* These signals are used in the contrarian sense and performance numbers have been negated in table

Growth and

momentum factors

outperformed in

October


14 November 2016 32

Our top and bottom ten Macquarie Alpha Model scores from the large-cap SET 50 index

stocks and from the market ex-SET 50 are illustrated below.

Stocks amongst the top ten SET 50 scores which our analysts also rate as Outperform

are KTB, CPALL, TOP and PS.

Stocks for which our quant scores are in opposition to our analysts’ ratings are SCC

(strong positive quant score but rated Underperform) and TRUE (strong negative quant

score but rated Outperform).

Fig 87 Thailand: Macquarie Alpha Model top & bottom scores

Source: Macquarie Research, November 2016 (scores as at end October 2016)

Ticker Name Industry Group Alp

ha

Anal

yst

Cap

ital

Gro

wth

Mom

entu

m

Profit

Qua

lity

Technic

al

Value

Liqui

dity

Ris

k

SCC TB SIAM CEMENT PCL.(THE) Materials 9.0% 1.3 0.4 -0.1 0.1 0.2 0.1 3.0 0.3 2.6 0.7

BBL TB BANGKOK BANK PCL. Banks 7.3% -0.5 0.3 -0.5 -0.3 -0.2 -0.2 0.3 0.8 2.6 1.2

TCAP TB THANACHART CAPITAL PCL. Banks 7.2% 0.2 0.8 -0.7 0.1 -0.3 -0.6 1.4 1.4 0.1 0.9

KCE TB KCE ELECTRONICS PCL. Technology Hardw are & Equipment 7.2% 0.9 -0.7 0.2 1.7 0.7 -0.7 1.5 -0.3 1.4 0.1

KTB TB KRUNG THAI BANK PCL. Banks 6.9% 0.2 0.5 -0.6 -0.1 -0.2 -0.4 0.6 1.0 1.0 1.1

CPALL TB CP ALL PCL. Food & Staples Retailing 6.8% 0.4 -0.1 -0.1 1.5 0.4 0.3 0.5 -0.6 1.6 0.9

TOP TB THAI OIL PCL. Energy 6.6% 0.2 0.3 1.1 1.2 -0.4 0.3 1.4 0.7 0.8 -0.6

BLA TB BANGKOK LIFE ASR.PCL. Insurance 6.5% 0.4 -0.1 0.0 1.4 0.0 -0.3 -0.7 0.5 0.0 0.1

BCP TB THE BANGCHAK PTL.PCL. Energy 6.4% -0.1 0.7 0.9 -0.3 -0.6 0.5 -0.4 1.9 0.8 -0.6

PS TB PRUKSA REAL ESTATE PCL. Real Estate 6.1% -0.2 0.7 0.1 -1.0 0.4 0.0 1.4 2.0 0.1 0.7


ha

Anal

yst

Cap

ital

Gro

wth

Mom

entu

m

Profit

Qua

lity

Technic

al

Value

Liqui

dity

Ris

k

MINT TB MINOR INTERNATIONAL PCL. Consumer Services -1.4% -0.2 -0.9 0.0 0.3 0.6 -0.6 0.4 -0.8 0.1 -0.3

TASCO TB TIPCO ASPHALT PCL. Materials -1.6% -2.6 1.4 2.6 -2.2 2.5 2.7 0.0 2.0 -1.2 -0.7

MTLS TB MUANGTHAI LEASING PCL. Diversif ied Financials -1.7% 0.2 -0.9 0.4 -0.1 -0.4 -0.5 -0.4 -0.6 -0.8 0.0

IVL TB INDORAMA VENTURES PCL. Materials -1.7% 0.8 -0.3 0.7 -1.2 -0.7 -0.2 0.4 0.0 0.0 -1.0

WHA TB WHA CORPORATION PCL. Real Estate -2.2% 0.0 -2.9 0.3 0.1 0.1 -2.3 -1.0 -0.8 0.8 -0.6

CK TB CH KARNCHANG PCL. Capital Goods -2.3% 0.8 -0.3 -0.8 -0.1 -1.1 -1.0 0.2 -1.1 -0.2 -0.3

BEC TB BEC WORLD PCL. Media -2.7% -1.8 0.5 -2.6 -1.8 2.0 -0.3 0.3 1.1 0.1 -0.2

BEM TB BGK.EXPWY.&.MEO.PCL. Transportation -3.9% 0.0 0.3 -0.2 0.0 -0.1 -0.3 -0.6 -0.9 -1.3 -0.5

TPIPL TB TPI POLENE PCL. Materials -8.5% -2.0 -0.3 -1.1 -0.1 -0.9 -0.7 2.3 -1.0 -0.2 -1.6

True TB TRUE CORPORATION PCL. Telecommunication Services -13.6% 0.3 -0.4 -2.7 -1.8 -0.8 -1.3 0.2 -1.9 -0.4 -2.6


ha

Anal

yst

Cap

ital

Gro

wth

Mom

entu

m

Profit

Qua

lity

Technic

al

Value

Liqui

dity

Ris

k

KKP TB KIATNAKIN BANK PCL. Banks 12.7% 0.7 0.3 0.5 1.4 -0.2 -0.4 0.9 0.8 3.0 0.4

MALEE TB MALEE GROUP PCL. Food Beverage & Tobacco 11.7% 3.0 -0.1 0.2 1.8 0.6 0.8 0.8 -0.3 2.3 -0.5

METCO TB MURAMOTO ETRN.THAI.PCL. Technology Hardw are & Equipment 10.9% 1.2 0.9 0.0 -0.3 0.9 -0.2 2.8 -0.1 0.5

TMT TB THAI METAL TRADE PCL. Materials 10.8% 3.0 0.9 1.8 1.0 -0.3 1.9 0.1 0.4 -0.5 0.5

TVO TB THAI VEGETABLE OIL PCL. Food Beverage & Tobacco 10.4% 2.0 1.2 1.0 1.1 1.0 3.0 -0.3 0.9 -1.1 0.3

SC TB SC ASSET CORP.PUB.CTD. Real Estate 10.1% 1.8 0.0 0.8 0.9 -0.1 -0.8 -0.7 1.4 -0.7 0.9

KGI TB KGI SECS.(THAI.)PCL. Diversif ied Financials 9.8% 1.2 0.3 1.0 0.0 -0.4 -0.8 1.0 0.0 2.0

SSF TB SURAPON FDS.PUB.CO.LTD. Food Beverage & Tobacco 9.5% 0.0 0.5 0.2 -0.3 0.3 1.3 1.4 2.3 0.3

MCS TB MCS STEEL PCL. Materials 9.3% -0.5 3.0 1.9 1.2 0.6 -1.8 0.4 0.4 0.6

THIP TB THANTAWAN INDUSTRY PCL. Materials 9.2% 0.8 1.1 2.3 0.7 2.5 -1.4 0.5 -0.6 0.4


ha

Anal

yst

Cap

ital

Gro

wth

Mom

entu

m

Profit

Qua

lity

Technic

al

Value

Liqui

dity

Ris

k

SOLAR TB SOLARTRON PCL. Capital Goods -13.3% -3.0 0.1 -2.6 -1.3 -2.0 0.1 -1.5 -0.4 -1.6

RICH TB RICH AI.CORP.PCL. Materials -13.4% -0.8 -0.5 -3.0 -1.7 -2.1 1.1 -1.2 -0.8 -1.7

POST TB POST PUBLISING PCL. Media -14.0% -0.7 -0.9 -2.7 -2.0 -1.5 1.3 -1.4 -0.9 -2.0

NOK TB NOK AIRLINES PCL. Transportation -14.6% -0.8 0.2 -0.4 -0.7 -2.3 1.5 -1.9 -2.6 -1.2 -2.5

MCOT TB MCOT PCL. Media -15.4% -2.4 0.0 -3.0 -1.1 -0.9 -1.1 0.5 -1.6 -0.9 -2.3

DEMCO TB DEMCO PCL. Capital Goods -16.0% -2.2 -1.1 1.3 -1.3 -1.8 0.3 -0.6 -2.1 -1.6 -1.9

BTC TB BANGPAKONG TERMINAL PCL. Transportation -16.7% -2.6 -2.1 -2.6 -2.9 -3.0 -0.2 -1.6 -0.7 -2.5

FER TB FERRUM PCL. Technology Hardw are & Equipment -17.0% -1.4 -0.3 -3.0 -2.6 0.5 -1.5 -2.6 -0.7 -1.7

PSL TB PRECIOUS SHIPPING PCL. Transportation -17.0% -1.0 -2.7 -0.5 -1.2 -2.6 -1.2 -0.5 -2.5 -1.4 -2.0

SIM TB SAMART I-MOBILE PCL. Technology Hardw are & Equipment -20.9% -2.7 0.6 -2.4 -2.1 -0.8 -0.5 -0.2 -1.9 -2.4 -2.7

SET 50 : Bottom Quant Picks

SET 50 : Top Quant Picks

SET (ex 50) : Top Quant Picks

SET (ex 50): Bottom Quant Picks

KTB, CPALL, TOP

and PS show both

positive analyst and

quant ratings


14 November 2016 33

Thailand economy Grinding export recovery

The Bank of Thailand reported stronger growth in the Thai economy in September vs August,

led by government spending and exports. For the third quarter, the BOT commented that

expansion was supported by government spending and steady growth in private

consumption, noting improvement in farm incomes after the drought, recovery in exports and

continued growth in tourism. Meanwhile, private investment and construction remained areas

of weakness. While the publication of 3Q16 GDP numbers from the NESDB will follow next

month, we view the data through September as broadly consistent with our forecast

assumption of 3.0% YoY real GDP growth for 3Q16.

We expect some softness in private consumption in 4Q16 due to the mourning period for the

late HM King Bhumibol Adulyadej. However, recovery in exports give us confidence that this

may not cause a shortfall in 2016 GDP growth vs our maintained 3.2% forecast (1H16 3.4%,

2H16E 3.0%).

We maintain our Thai macro forecasts following the recent surprise election of Donald Trump

as the next US President.

Fig 88 Thailand macroeconomic forecasts

(%) 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E

Real GDP, YoY 2.5 -2.3 7.8 0.1 7.3 2.8 0.9 2.8 3.2 3.3 3.5 CPI inflation, YoY 5.5 -0.9 3.3 3.8 3.0 2.2 1.9 -0.9 0.3 1.7 2.2 BOT policy rate, eop 2.75 1.25 2.00 3.25 2.75 2.25 2.00 1.50 1.50 1.75 2.25 Thai Gov’t 10Y, eop 2.66 4.18 3.73 3.29 3.51 3.90 2.73 2.50 2.25 2.90 3.30 THB/USD, eop 34.71 33.32 30.01 31.52 30.58 32.76 32.92 36.00 35.50 36.20 36.00

Source: BOT, Macquarie Research, November 2016

Stronger expansion MoM. The BOT reported that the Thai economy expanded faster in

September vs August. Further recovery in exports and strong government spending to close

out the fiscal year to September 2016 were the main drivers. However, private consumption

growth slowed MoM and private investment remained weak.

Private consumption grew 2.5% YoY in September vs 3.4% in August, based on the BOT’s

private consumption index. For 3Q16, growth at 3.1% was down from 3.9% in 2Q16, which

was boosted by several one-off factors.

Private investment remained weak, however the BOT’s private investment index shows an

improving trend to a decline of just 0.1% YoY in September vs a decline of 0.6% in August as

imports of capital goods in export-oriented manufacturing sectors increased. In contrast,

construction indicators continued to show substantial declines. Private sector credit growth

was unchanged at 4.0% YoY (loans to businesses +2.6%, households 4.9%).

External accounts showed further signs of a nascent recovery in merchandise exports, led

by electrical appliances and electronics (attributed to the production of new smartphone

models), with growth also in chemicals and food & beverages. The trade surplus increased

MoM, however the current account surplus declined due to a deficit on the services account

as the government’s tighter regulation of Chinese ‘zero-dollar’ tours started to impact. (Tourist

arrivals grew 18% YoY from a low base in September 2015.) The balance of payments

moved to deficit due to large intra-company loan repayment and overseas investment by Thai

foreign investment funds (FIFs).

Monetary policy was unchanged with the BOT policy rate at 1.50%. CPI inflation was 0.38%

and core inflation 0.75%.

Fiscal policy remained supportive with strong increases MoM in both government current

and capital expenditures to close out the fiscal year.

Tentative signs of a

nascent export

recovery in August

and September

Some softness in

consumption

expected in 4Q16


14 November 2016 34

Thai economy at a glance

Fig 89 BOT composite indices Fig 90 MPI & merchandise exports


Fig 91 Private consumption Fig 92 Tourist arrivals & non-resident consumption


Fig 93 Growth in merchandise exports & imports Fig 94 Trade balance


-10

-5

0

5

10

15


(YoY %)

Coincident index Leading index

180

190

200

210

220

230

240

15

16

17

18

19

20

21


(index)(USD bn)

Exports USD 3MMA, LS Manufacturing production index, RS

-4

-2

0

2

4

6

8

10

12


(YoY %)

Private consumption index Private consumption (Q nominal GDP)

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-40

-20

0

20

40

60

80


(m)(YoY %)

Non-residents consumption index, LS Tourist arrivals, RS

-20

-10

0

10

20

30

40


(YoY %)

Exports, 3mma Imports, 3mma

-5

0

5

10

15

20

25


(US$ bn)

Exports 3mma Imports 3mma Trade balance


14 November 2016 35

Fig 95 Balance of payments and Baht/US$ Fig 96 Central govt revenue & expenditure, 12mma


Fig 97 Private investment Fig 98 Private sector credit growth


Fig 99 CPI inflation & BOT policy rate Fig 100 Growth in private sector credit & nominal GDP


28

29

30

31

32

33

34

35

36

37

38-3

-2

-1

0

1

2

3

4

5

6

7


(Bt/US$)(US$ bn)

Current A/C 3mma, LS BOP 3mma, LS Baht/US$, RS

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

140

150

160

170

180

190

200

210

220

230

240


(Bt bn)(Bt bn)

Net revenue, LS Expenditure, LS Difference, RS

-15

-10

-5

0

5

10

15

20

25

30


(YoY %)

Private investment index Private GFCF (Q nominal GDP)

0

2

4

6

8

10

12

14

16

18

20


(YoY %)

Businesses Households Total private credits

-2

-1

0

1

2

3

4


(%)

Headline CPI Core CPI BOT policy rate

0

2

4

6

8

10

12

14

16

18

20


(YoY %)

Businesses Households Nominal GDP


14 November 2016 36

Fig 101 Thailand Macroeconomic Indicators

Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16

Private Consumption (s.a.) YoY (%) Private Consumption Index 3.1 2.0 3.5 3.9 1.2 2.0 3.5 3.8 5.2 2.6 3.5 3.4 2.5 Non-durables Index 2.1 2.1 4.9 4.4 3.1 5.1 1.8 3.6 3.7 0.7 -0.1 2.0 0.9 Semi-durables Index -0.8 -1.9 1.5 2.9 0.6 -0.7 3.7 2.1 1.6 1.3 2.1 1.4 1.5 Durables Index -8.7 -7.2 -1.4 2.2 -6.3 -11.5 -7.7 -3.1 7.8 6.9 3.8 6.5 6.4 Services Index 8.2 4.1 4.6 4.6 6.0 7.1 10.3 6.7 7.8 5.7 9.7 7.6 6.9 Non-residents expenditure Index 12.9 2.1 7.0 6.1 17.6 18.1 17.7 11.8 9.2 9.8 14.4 14.0 19.3 Private Investment (s.a., 3mma) YoY (%) Private Investment Index 1.2 1.9 1.3 1.6 1.9 0.2 1.1 0.7 1.3 0.6 -0.2 -0.6 -0.1 Construction Area In Municipal -3.9 -5.2 -4.0 -4.4 -4.8 -4.9 -5.9 -10.4 -11.1 -7.7 -10.7 -11.1 -9.5 Cement Sales -2.3 -3.9 -3.6 -1.9 -1.0 -0.1 -1.0 0.0 -0.6 -1.5 -3.8 -3.4 -2.7 Capital goods Imports -0.2 3.8 2.5 2.9 2.8 -4.0 -0.4 -2.4 0.8 -3.0 -1.4 -3.0 -2.3 Real Domestic Machinery Sales 10.6 9.0 5.2 2.7 3.8 4.7 5.8 6.6 4.7 5.2 2.1 3.8 4.7 Domestic Commercial Car Sales -5.8 -3.1 1.5 9.3 6.1 1.7 -3.6 1.4 9.5 10.7 7.3 1.5 -0.9 Financial data (Bt bn/%) Broad Money (Bt bn) 17,078 17,198 17,351 17,552 17,626 17,746 17,819 17,900 17,822 17,835 17,784 17,756 17,737 % YoY 5.4 5.4 4.8 4.4 4.0 3.7 3.7 4.3 3.7 4.3 4.2 4.3 3.9 Narrow Money (Bt bn) 1,618 1,663 1,696 1,778 1,749 1,750 1,749 1,764 1,773 1,742 1,728 1,711 1,721 % YoY 3.5 6.0 5.7 5.7 6.5 4.6 5.1 6.8 4.6 7.6 6.8 4.6 6.3 Quasi Money (Bt bn) 15,459 15,535 15,655 15,774 15,877 15,996 16,070 16,136 16,049 16,093 16,056 16,045 16,016 % YoY 5.6 5.4 4.7 4.3 3.8 3.6 3.5 4.0 3.6 3.9 3.9 4.3 3.6 Credits to Business (Bt bn) 5,725 5,713 5,812 5,862 5,860 5,863 5,811 5,799 5,886 5,876 5,829 5,846 5,869 % YoY 3.6 3.2 4.0 3.6 3.8 3.1 2.0 1.4 2.2 3.5 2.6 2.6 2.5 Credits to Household (Bt bn) 9,505 9,513 9,596 9,683 9,681 9,694 9,739 9,796 9,804 9,847 9,873 9,908 9,972 % YoY 6.6 5.9 6.1 6.1 6.1 5.9 5.6 5.8 5.4 5.1 5.0 4.8 4.9 Private Credits (Bt bn) 15,831 15,828 16,012 16,154 16,107 16,123 16,139 16,182 16,297 16,350 16,302 16,366 16,458 % YoY 5.7 5.1 5.6 5.5 5.3 4.9 4.3 4.2 4.4 4.5 4.0 4.0 4.0 Deposits (Bt bn) 16,746 16,892 17,044 17,200 17,298 17,427 17,533 17,594 17,527 17,516 17,448 17,410 17,365 %YoY 6.3 6.2 5.9 5.2 4.9 5.1 4.6 4.9 4.3 4.8 4.4 4.3 3.7 BOT Policy Rate, EOP (%) 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 10Y Thai Gov't Bond Yield, Avg (%) 2.88 2.65 2.70 2.61 2.53 2.15 1.88 1.72 1.98 2.13 2.04 2.12 2.19 Business Sentiment Index (50 = stable, >50 = improving) Current 47.3 50.2 49.1 49.9 48.5 48.2 51.5 49.8 49.7 50.4 49.4 47.8 50.3 3 Months forward 51.7 53.3 52.7 52.3 54.1 54.6 53.6 54.1 53.6 52.6 53.3 54.7 54.7 Balance of Payments US$ m Exports (f.o.b) 18,649 18,429 17,161 17,113 15,730 18,271 18,737 15,621 17,819 18,431 17,366 18,238 19,303 Imports (f.o.b) 15,320 14,751 15,713 14,502 13,636 12,688 14,574 13,701 14,887 14,977 14,850 15,502 15,582 Trade Balance 3,328 3,678 1,448 2,611 2,094 5,583 4,163 1,921 2,932 3,455 2,516 2,736 3,721 Current Account Balance 1,550 4,688 2,312 4,240 4,548 7,952 5,352 2,933 1,925 3,116 3,557 3,805 2,929 Overall Balance 550 2,441 -849 -661 4,544 6,071 3,159 1,626 432 1,860 12 1,874 -1,108 YoY (%) Exports (f.o.b) -5.4 -8.0 -6.6 -9.0 -9.4 6.0 -1.1 -7.6 -3.2 3.2 -5.0 2.7 3.5 Imports (f.o.b) -20.6 -20.5 -7.9 -8.1 -17.8 -17.0 -9.3 -13.7 0.3 -9.5 -8.5 -0.1 1.7



14 November 2016 37

Government spending

We believe that fiscal policy will continue to be an important driver of the Thai economy in the

next couple of years and we continue to monitor government revenues, expenditures and

budget disbursement. On the latter measure, the data suggests that the government’s

disbursement rate in fiscal 2016 was near the top end of the range seen in recent years with

95% of the fiscal 2016 budget disbursed.

Fig 102 Government revenue and expenditures

Units: Bt m Revenue YoY Expenditures YoY Budget balance

Sep-16 247,368 0.1% 215,855 8.0% 31,513 Aug-16 215,816 -7.8% 158,671 7.0% 57,145 Jul-16 186,516 24.7% 184,197 -17.0% 2,319 Jun-16 246,512 -7.2% 264,758 31.5% -18,246 May-16 316,396 36.3% 189,390 7.1% 127,006 Apr-16 179,168 -0.8% 223,626 16.8% -44,458 Mar-16 192,714 14.9% 259,451 3.2% -66,737 Feb-16 163,017 3.6% 160,598 6.8% 2,419 Jan-16 164,467 -2.5% 259,906 20.5% -95,439 Calendar YTD 1,911,974 6.1% 1,916,452 9.1% -4,478 2016 Fiscal Year 2,497,653 8.1% 2,807,374 7.9% -309,721 4QFY16 649,700 3.0% 558,723 -2.0% 90,977 3QFY16 742,076 9.4% 677,774 19.0% 64,302 2QFY16 520,198 5.4% 679,955 10.1% -159,757 1QFY16 585,679 15.4% 890,922 5.5% -305,243 4QFY15 630,692 10.1% 570,133 1.6% 60,559 3QFY15 678,302 7.0% 569,569 10.7% 108,733 2016 Fiscal year 2,497,653 8.1% 2,807,374 7.9% -309,721 2015 2,476,131 5.6% 2,975,622 5.2% -499,491 2014 2,171,700 -3.7% 2,459,992 2.4% -288,292 2013 2,255,569 27.4% 2,402,482 4.7% -146,912 2012 1,770,213 -10.0% 2,295,326 5.4% -525,113 2011 1,966,873 11.1% 2,177,895 22.1% -211,022

Source: Fiscal Policy Office, Macquarie Research, November 2016

Fig 103 Budget disbursement progress

Disbursement rate Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

2010 4.7% 14.5% 23.3% 31.2% 41.1% 48.8% 56.8% 63.8% 71.0% 78.9% 85.0% 95.8% 2011 9.4% 19.4% 26.7% 37.4% 44.1% 51.7% 55.6% 65.0% 73.4% 79.7% 86.0% 94.5% 2012 7.5% 13.9% 21.2% 27.8% 34.4% 49.2% 55.5% 61.2% 67.5% 74.7% 81.1% 90.3% 2013 12.4% 23.4% 29.2% 36.7% 42.1% 50.5% 57.6% 62.9% 69.3% 75.9% 81.4% 90.5% 2014 9.7% 18.9% 30.1% 37.5% 43.6% 49.2% 56.4% 62.0% 68.1% 75.6% 80.6% 89.0% 2015 13.4% 20.4% 29.8% 37.4% 42.6% 51.4% 58.4% 64.7% 72.0% 80.1% 85.5% 92.4% 2016 13.2% 20.9% 29.7% 38.6% 43.6% 51.9% 59.7% 66.2% 75.4% 81.9% 87.4% 94.8%

Accumulated revenue vs budget Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

2010 6.8% 14.4% 20.5% 27.3% 33.6% 41.0% 51.6% 68.1% 74.5% 81.7% 97.4% 104.1% 2011 6.0% 13.1% 19.1% 25.9% 32.5% 38.7% 45.3% 62.0% 67.4% 72.4% 86.6% 92.4% 2012 6.4% 13.1% 19.2% 25.8% 31.9% 38.0% 44.2% 57.4% 65.0% 70.6% 81.1% 90.1% 2013 6.3% 13.5% 21.3% 28.1% 34.6% 40.9% 47.6% 61.7% 69.6% 75.4% 84.7% 94.1% 2014 7.1% 13.7% 19.9% 26.5% 32.7% 38.2% 44.0% 55.4% 63.3% 68.8% 77.2% 86.0% 2015 6.7% 13.0% 19.7% 26.3% 32.4% 38.9% 45.9% 54.9% 65.3% 71.1% 80.2% 89.5% 2016 6.1% 12.8% 21.5% 27.6% 33.6% 40.7% 47.2% 58.9% 67.9% 74.7% 82.7% 91.8%

Source: Fiscal Policy Office, Macquarie Research, November 2016

FY9/16 budget

disbursement at the

high end vs recent

years

Pu

blis

her

Title

Pub

lica

tion

Date

38

Macquarie Thailand Coverage

Fig 104 Summary valuations, target prices & ratings (as at 11 November 2016)

Mkt cap 3m ADV Price TP Up/ PER PBV Div yield

Company Ticker Beta US$bn (US$m) (Bt) (Bt) down% Rec 15A 16E 17E 15A 16E 17E 15A 16E 17E

Bangkok Bank BBL 0.96 8.65 24.9 160.00 175.00 9 N 8.9 9.4 8.2 0.8 0.8 0.8 4.1 4.1 4.6 Kasikornbank KBANK 1.16 11.49 60.4 169.50 214.00 26 O 10.3 10.2 7.6 1.4 1.3 1.1 2.4 2.0 3.1 Siam Commercial Bank SCB 1.18 13.60 42.5 141.50 177.00 25 O 10.2 10.0 8.7 1.6 1.4 1.3 3.9 3.5 4.1 Krung Thai Bank KTB 0.95 6.73 32.8 17.00 21.00 24 O 8.3 7.3 6.5 1.0 0.9 0.8 5.3 5.1 5.6 Bank of Ayudhya BAY 1.84 7.91 0.6 38.00 30.00 -21 U 14.7 12.5 10.5 1.5 1.4 1.2 2.1 2.5 2.9 Thanachart Capital TCAP 0.81 1.43 5.8 43.25 37.00 -14 N 10.2 9.0 9.7 1.0 0.9 0.9 4.2 4.3 4.0 TMB Bank TMB 0.98 2.56 10.7 2.06 2.15 4 N 9.7 10.5 8.9 1.2 1.1 1.0 2.9 2.9 3.4 Tisco Financial Group TISCO 0.96 1.24 2.9 54.50 50.00 -8 N 10.3 8.8 9.7 1.6 1.5 1.3 4.4 4.5 4.6 Kiatnakin Bank KKP 0.96 1.41 9.3 59.00 43.50 -26 N 15.4 10.9 12.2 1.3 1.2 1.2 5.2 4.7 4.3 CIMB Thai Bank CIMBT 0.77 0.72 0.0 1.02 0.78 -24 U 21.2 22.9 14.8 0.9 0.9 0.9 0.7 0.7 1.1 LH Financial Group LHBANK 0.95 0.69 1.6 1.79 1.50 -16 U 14.7 11.0 14.8 1.4 1.0 1.0 1.8 2.7 2.0 Banks 1.17 56.41 191.6 11 10.7 10.1 8.7 1.3 1.2 1.1 3.5 3.3 3.9 PTT PTT 1.53 27.09 60.1 335.00 385.00 15 O 10.2 11.3 9.8 1.4 1.3 1.2 3.0 4.0 4.6 PTT Exploration PTTEP 1.76 9.08 21.0 80.75 85.00 5 N 23.8 20.7 16.3 0.8 0.8 0.8 3.7 1.3 2.4 PTT Global Chemicals PTTGC 1.46 7.42 19.3 58.75 72.00 23 O 13.0 11.7 8.8 1.1 1.1 1.0 4.8 4.2 5.1 Thai Oil TOP 1.12 4.26 14.0 73.75 78.00 6 O 11.2 11.1 9.4 1.6 1.5 1.4 4.2 4.3 4.8 IRPC IRPC 1.05 2.79 15.1 4.82 4.90 2 N 14.1 11.2 9.8 1.3 1.2 1.1 4.6 4.2 4.6 Star Petroleum SPRC 0.53 1.52 6.5 12.40 13.50 9 O 6.2 7.4 7.6 1.4 1.4 1.3 6.5 7.3 7.3 Energy 1.36 52.16 136.1 13 12.1 11.9 9.9 1.2 1.1 1.0 3.4 3.4 4.1 Siam Cement SCC 0.84 16.85 40.4 496.00 420.00 -15 U 11.7 12.4 13.2 2.5 2.2 2.1 3.5 3.4 3.2 Materials 0.84 16.85 40.4 -15 11.7 12.4 13.2 2.5 2.2 2.1 3.5 3.4 3.2 Advanced Info Service ADVANC 1.05 12.54 36.8 149.00 233.00 56 O 11.3 13.6 13.2 9.2 9.9 9.1 8.7 7.4 6.1 Intouch Holdings INTUCH 0.96 4.72 19.4 52.00 74.00 42 O 11.2 11.4 13.9 11.7 11.7 11.7 8.9 8.7 7.2 Total Access DTAC 1.25 2.51 15.4 37.50 26.00 -31 U 15.0 51.8 91.8 3.3 3.4 3.3 7.8 1.3 0.9 True Growth Infra. Fund DIF 0.54 2.42 2.9 14.70 14.00 -5 O 16.9 15.2 14.6 1.2 1.2 1.2 6.4 6.6 6.8 True Corporation TRUE 1.50 6.85 43.6 7.25 11.40 57 O 57.1 342.0 40.7 2.5 1.8 1.7 0.0 0.0 0.0 Jasmine Infrastructure Fund JASIF 0.48 1.84 3.8 11.80 11.90 1 N 15.9 13.1 12.1 1.2 1.2 1.2 6.2 7.9 8.2 Telecom 1.05 30.88 121.9 39 22.5 89.3 25.9 6.5 6.6 6.3 6.4 5.4 4.6 Bumrungrad Hospital BH 0.81 3.92 8.6 190.00 190.00 0 N 40.4 38.4 37.0 10.8 9.5 8.4 1.2 1.3 1.4 Bangkok Dusit Medical BDMS 0.71 10.00 25.7 22.80 25.00 10 O 45.8 41.5 37.0 6.6 6.0 5.5 1.0 1.1 1.4 Bangkok Chain Hospital BCH 0.74 0.94 4.4 13.30 12.20 -8 N 62.9 47.7 42.2 7.6 7.1 6.4 0.9 1.0 1.1 Healthcare 0.74 14.86 38.6 6 45.5 41.1 37.3 7.7 7.0 6.3 1.1 1.2 1.4 CP All PCL CPALL 0.94 15.64 44.7 61.50 67.00 9 O 54.2 40.4 34.9 18.0 14.9 12.5 0.4 0.4 1.6 Home Product Center HMPRO 0.91 3.63 8.1 9.75 13.00 33 O 43.0 34.8 29.4 8.2 7.1 6.3 0.2 0.7 1.6 Big C Supercenter BIGC 0.55 4.84 0.1 207.00 188.00 -9 U 23.2 24.8 23.2 4.1 3.7 3.3 1.3 1.2 1.3 Berli Jucker BJC 0.93 5.87 19.4 52.00 37.00 -29 U 51.7 49.1 48.5 5.2 4.1 2.0 0.2 1.0 1.0 Siam Makro MAKRO 0.74 4.76 0.2 35.00 33.00 -6 N 34.4 31.2 31.0 13.0 11.7 10.5 0.5 0.7 2.3 Robinson Dept Store ROBINS 0.84 1.79 3.6 57.00 54.00 -5 N 32.8 31.2 26.2 5.2 4.7 4.2 0.3 0.4 1.5 Retail 0.85 36.53 76.1 0 43.3 37.5 34.0 11.6 10.0 8.3 0.4 0.7 1.5 Land & Houses LH 1.07 3.00 7.8 9.00 11.00 22 O 15.7 14.6 12.3 2.3 2.3 2.2 6.6 6.0 6.5 Quality Houses QH 1.09 0.75 3.1 2.46 2.50 2 N 8.7 8.4 8.4 1.2 1.1 1.1 5.7 5.9 6.0 Asian Property AP 0.90 0.62 2.7 7.00 9.00 29 O 8.7 8.9 7.0 1.3 1.2 1.0 4.1 4.0 5.0 Pruksa Real Estate PS 0.97 1.39 3.3 22.00 25.00 14 O 6.4 8.2 7.6 1.4 1.3 1.2 8.0 3.7 4.0 LPN Development LPN 0.81 0.43 1.9 10.40 12.00 15 O 6.4 6.9 10.0 1.3 1.2 1.2 7.9 7.3 5.0

Pu

blis

her

Title

Pub

lica

tion

Date

39

Fig 104 Summary valuations, target prices & ratings (as at 11 November 2016)

Mkt cap 3m ADV Price TP Up/ PER PBV Div yield

Company Ticker Beta US$bn (US$m) (Bt) (Bt) down% Rec 15A 16E 17E 15A 16E 17E 15A 16E 17E

Sansiri PCL SIRI 1.01 0.68 3.2 1.69 1.70 1 N 7.1 8.1 7.3 0.9 0.8 0.8 7.2 5.3 5.8 Supalai PCL SPALI 0.96 1.16 3.8 23.90 30.00 26 O 9.4 8.2 7.3 2.1 1.8 1.5 4.2 4.9 5.6 Central Pattana CPN 0.90 7.05 16.8 55.50 70.00 26 O 31.6 25.5 22.6 5.4 4.8 4.2 1.3 1.6 1.8 CPN Retail Growth Fund CPNRF 0.49 1.26 0.6 20.10 23.00 14 O 16.6 16.4 15.8 1.5 1.6 1.6 5.0 5.4 5.7 Amata Corporation AMATA 1.26 0.35 1.4 11.70 16.00 37 O 23.5 12.6 11.6 1.2 1.1 1.1 4.0 4.0 4.0 WHA Corporation WHA 1.01 1.30 12.0 3.20 3.90 22 O 22.0 20.2 17.8 2.3 2.1 1.9 0.0 0.0 0.0 Ticon Industrial Connection TICON 0.68 0.49 0.9 15.90 13.00 -18 U 18.7 43.6 33.1 1.5 1.5 1.2 3.1 1.4 1.7 Property 0.93 18.50 57.5 20 20.3 18.2 16.2 3.2 2.9 2.6 3.7 3.4 3.6 BTS Group Holdings BTS 0.67 2.87 6.8 8.50 9.50 12 N 68.9 51.1 43.5 2.2 2.4 2.3 8.0 1.4 1.6 BTS Growth Infra. Fund BTSGIF 0.48 1.98 1.7 12.10 11.60 -4 N 17.4 15.7 14.0 1.0 1.0 1.0 5.7 6.4 7.2 Airports of Thailand AOT 0.93 14.92 38.7 369.00 385.00 4 N 33.4 26.6 22.5 4.9 4.3 3.9 1.8 2.1 2.4 Asia Aviation AAV 0.65 0.97 16.3 7.05 7.50 6 N 31.7 14.5 17.7 1.7 1.6 1.5 1.4 3.1 2.5 Thai Airways THAI 1.32 1.65 24.3 26.75 17.50 -35 U nmf 10.7 27.1 1.8 1.6 1.5 0.0 0.0 0.0 Bangkok Airways BA 1.46 8.8 24.60 35.00 42 O 25.9 18.4 18.1 1.7 1.6 1.5 2.0 2.4 2.4 Transport 23.86 96.6 4 33.5 26.6 24.2 3.7 3.4 3.1 2.7 2.3 2.6 Major Cineplex MAJOR 0.66 0.77 2.1 30.50 35.00 15 O 25.0 29.5 26.4 4.2 4.1 4.0 3.5 3.8 3.3 Media 0.66 0.77 2.1 15 25.0 29.5 26.4 4.2 4.1 4.0 3.5 3.8 3.3 Minor International MINT 1.06 4.56 11.5 36.50 36.00 -1 N 35.2 29.6 22.4 4.9 4.2 3.2 1.1 1.4 2.2 Central Plaza Hotel CENTEL 1.02 1.44 2.5 37.75 44.00 17 O 28.2 25.9 23.2 5.5 4.9 4.3 1.3 1.6 1.8 The Erawan Group ERW 0.78 0.33 1.0 4.60 4.75 3 O 57.7 37.7 33.1 2.4 2.3 2.2 0.9 1.1 1.5 Hotel 1.04 6.33 14.9 3 34.7 29.2 23.1 4.9 4.3 3.4 1.1 1.4 2.1 Bangkok Life Assurance BLA 0.95 2.54 4.3 52.50 42.50 -19 N 21.7 19.0 17.8 3.3 2.7 2.4 1.2 1.5 1.4 Ratchthani Leasing THANI 1.04 0.37 1.5 5.35 4.80 -10 N 16.1 14.7 13.1 2.9 2.8 2.5 3.3 3.3 3.7 Krungthai Card KTC 1.08 1.03 3.9 141.00 145.00 3 N 17.5 14.2 11.9 4.2 3.7 3.1 2.3 2.8 3.3 Other financials 0.99 3.93 9.7 -13 20.1 17.3 15.8 3.5 3.0 1.5 1.7 2.0 2.1



14 November 2016 40

Appendix

Fig 105 Thailand strategy & macroeconomic reports

Strategy

6-Oct-16 Style shift 12- Sept Squeezing through narrow doorways 7-Sep-16 Spotlight on the economy 8-Aug-16 Yes vote implication: same same 1-Aug-16 Increasing risk of a correction 1-Jun-16 Don't forget the Fed 21-Apr-16 Running to stand still 8-Mar-16 Ripe for rotation 9-Feb-16 No need to chase the New Year rally 13-Jan-16 First steps towards a brighter outlook 9-Dec-15 Roll on 2016 9-Nov-15 What’s going on Economy 31-Oct-16 Grinding export recovery 30-Sep-16 Back on track after July data scare 31-Aug-16 Exporters show drop in production 16-Aug-16 Never mind the quality, feel the growth 29-Jul-16 Sideways through 2Q16 26-Jul-16 G7 financial repression trickles down 4-Jul-16 On track for a better second half 15-Jun-16 Foreign help 31-May-16 Long & grinding recovery continues 16-May-16 A technical beat 29-Apr-16 Repeat the hymn again 31-Mar-16 Softly stable 24-Mar-16 Slower for longer 29-Feb-16 New Year Hangover 1-Feb-16 Stimulus & seasonality



14 November 2016 41

Important disclosures:

Recommendation definitions

Macquarie - Australia/New Zealand Outperform – return >3% in excess of benchmark return Neutral – return within 3% of benchmark return Underperform – return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield

Macquarie – Asia/Europe Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%

Macquarie – South Africa Outperform – expected return >+10% Neutral – expected return from -10% to +10% Underperform – expected return <-10%

Macquarie - Canada Outperform – return >5% in excess of benchmark return Neutral – return within 5% of benchmark return Underperform – return >5% below benchmark return

Macquarie - USA Outperform (Buy) – return >5% in excess of Russell 3000 index return Neutral (Hold) – return within 5% of Russell 3000 index return Underperform (Sell)– return >5% below Russell 3000 index return

Volatility index definition*

This is calculated from the volatility of historical price movements. Very high–highest risk – Stock should be expected to move up or down 60–100% in a year – investors should be aware this stock is highly speculative. High – stock should be expected to move up or down at least 40–60% in a year – investors should be aware this stock could be speculative. Medium – stock should be expected to move up or down at least 30–40% in a year. Low–medium – stock should be expected to move up or down at least 25–30% in a year. Low – stock should be expected to move up or down at least 15–25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only

Recommendations – 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations

Financial definitions

All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards).

Recommendation proportions – For quarter ending 30 September 2016

AU/NZ Asia RSA USA CA EUR Outperform 47.26% 55.50% 38.46% 45.47% 59.09% 48.21% (for US coverage by MCUSA, 8.20% of stocks followed are investment banking clients)

Neutral 38.01% 29.31% 42.86% 48.77% 37.88% 36.79% (for US coverage by MCUSA, 8.25% of stocks followed are investment banking clients)

Underperform 14.73% 15.19% 18.68% 5.76% 3.03% 15.00% (for US coverage by MCUSA, 8.00% of stocks followed are investment banking clients)

Company-specific disclosures: Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures.

Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Ltd total revenues, a portion of which are generated by Macquarie Group’s Investment Banking activities. General disclaimers: Macquarie Securities (Australia) Ltd; Macquarie Capital (Europe) Ltd; Macquarie Capital Markets Canada Ltd; Macquarie Capital Markets North America Ltd; Macquarie Capital (USA) Inc; Macquarie Capital Limited and Macquarie Capital Limited, Taiwan Securities Branch; Macquarie Capital Securities (Singapore) Pte Ltd; Macquarie Securities (NZ) Ltd; Macquarie Equities South Africa (Pty) Ltd; Macquarie Capital Securities (India) Pvt Ltd; Macquarie Capital Securities (Malaysia) Sdn Bhd; Macquarie Securities Korea Limited and Macquarie Securities (Thailand) Ltd are not authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL) or MGL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of any of the above mentioned entities. MGL provides a guarantee to the Monetary Authority of Singapore in respect of the obligations and liabilities of Macquarie Capital Securities (Singapore) Pte Ltd for up to SGD 35 million. This research has been prepared for the general use of the wholesale clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient you must not use or disclose the information in this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. MGL has established and implemented a conflicts policy at group level (which may be revised and updated from time to time) (the "Conflicts Policy") pursuant to regulatory requirements (including the FCA Rules) which sets out how we must seek to identify and manage all material conflicts of interest. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. In preparing this research, we did not take into account your investment objectives, financial situation or particular needs. Macquarie salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions which are contrary to the opinions expressed in this research. Macquarie Research produces a variety of research products including, but not limited to, fundamental analysis, macro-economic analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research, whether as a result of differing time horizons, methodologies, or otherwise. Before making an investment decision on the basis of this research, you need to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of your particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. This research is based on information obtained from sources believed to be reliable but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. No member of the Macquarie Group accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Clients should contact analysts at, and execute transactions through, a Macquarie Group entity in their home jurisdiction unless governing law permits otherwise. The date and timestamp for above share price and market cap is the closed price of the price date. #CLOSE is the final price at which the security is traded in the relevant exchange on the date indicated. Country-specific disclaimers: Australia: In Australia, research is issued and distributed by Macquarie Securities (Australia) Ltd (AFSL No. 238947), a participating organisation of the Australian Securities Exchange. New Zealand: In New Zealand, research is issued and distributed by Macquarie Securities (NZ) Ltd, a NZX Firm. Canada: In Canada, research is prepared, approved and distributed by Macquarie Capital Markets Canada Ltd, a participating organisation of the Toronto Stock Exchange, TSX Venture Exchange & Montréal Exchange. Macquarie Capital Markets North America Ltd., which is a registered broker-dealer and member of FINRA, accepts responsibility for the contents of reports issued by Macquarie Capital Markets Canada Ltd in the United States and sent to US persons. Any US person wishing to effect transactions in the securities described in the reports issued by Macquarie Capital Markets Canada Ltd should do so with Macquarie Capital Markets North America Ltd. The Research Distribution Policy of Macquarie Capital Markets Canada Ltd is to allow all clients that are entitled to have equal access to our research. United Kingdom: In the United Kingdom, research is issued and


14 November 2016 42

distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated by the Financial Conduct Authority (No. 193905). Germany: In Germany, this research is issued and/or distributed by Macquarie Capital (Europe) Limited, Niederlassung Deutschland, which is authorised and regulated by the UK Financial Conduct Authority (No. 193905). and in Germany by BaFin. France: In France, research is issued and distributed by Macquarie Capital (Europe) Ltd, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (No. 193905). Hong Kong & Mainland China: In Hong Kong, research is issued and distributed by Macquarie Capital Limited, which is licensed and regulated by the Securities and Futures Commission. In Mainland China, Macquarie Securities (Australia) Limited Shanghai Representative Office only engages in non-business operational activities excluding issuing and distributing research. Only non-A share research is distributed into Mainland China by Macquarie Capital Limited. Japan: In Japan, research is Issued and distributed by Macquarie Capital Securities (Japan) Limited, a member of the Tokyo Stock Exchange, Inc. and Osaka Exchange, Inc. (Financial Instruments Firm, Kanto Financial Bureau (kin-sho) No. 231, a member of Japan Securities Dealers Association). India: In India, research is issued and distributed by Macquarie Capital Securities (India) Pvt. Ltd. (CIN: U65920MH1995PTC090696), 92, Level 9, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, India, which is a SEBI registered Research Analyst having registration no. INH000000545. Malaysia: In Malaysia, research is issued and distributed by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company registration number: 463469-W) which is a Participating Organisation of Bursa Malaysia Berhad and a holder of Capital Markets Services License issued by the Securities Commission. Taiwan: In Taiwan, research is issued and distributed by Macquarie Capital Limited, Taiwan Securities Branch, which is licensed and regulated by the Financial Supervisory Commission. No portion of the report may be reproduced or quoted by the press or any other person without authorisation from Macquarie. Nothing in this research shall be construed as a solicitation to buy or sell any security or product. Research Associate(s) in this report who are registered as Clerks only assist in the preparation of research and are not engaged in writing the research. Thailand: In Thailand, research is produced, issued and distributed by Macquarie Securities (Thailand) Ltd. Macquarie Securities (Thailand) Ltd. is a licensed securities company that is authorized by the Ministry of Finance, regulated by the Securities and Exchange Commission of Thailand and is an exchange member of the Stock Exchange of Thailand. The Thai Institute of Directors Association has disclosed the Corporate Governance Report of Thai Listed Companies made pursuant to the policy of the Securities and Exchange Commission of Thailand. Macquarie Securities (Thailand) Ltd does not endorse the result of the Corporate Governance Report of Thai Listed Companies but this Report can be accessed at: http://www.thai-iod.com/en/publications.asp?type=4. South Korea: In South Korea, unless otherwise stated, research is prepared, issued and distributed by Macquarie Securities Korea Limited, which is regulated by the Financial Supervisory Services. Information on analysts in MSKL is disclosed at http://dis.kofia.or.kr/websquare/index.jsp?w2xPath=/wq/fundMgr/DISFundMgrAnalystStut.xml&divisionId=MDIS03002001000000&serviceId=SDIS03002001000. South Africa: In South Africa, research is issued and distributed by Macquarie Equities South Africa (Pty) Ltd, a member of the JSE Limited. Singapore: In Singapore, research is issued and distributed by Macquarie Capital Securities (Singapore) Pte Ltd (Company Registration Number: 198702912C), a Capital Markets Services license holder under the Securities and Futures Act to deal in securities and provide custodial services in Singapore. Pursuant to the Financial Advisers (Amendment) Regulations 2005, Macquarie Capital Securities (Singapore) Pte Ltd is exempt from complying with sections 25, 27 and 36 of the Financial Advisers Act. All Singapore-based recipients of research produced by Macquarie Capital (Europe) Limited, Macquarie Capital Markets Canada Ltd, Macquarie Equities South Africa (Pty) Ltd and Macquarie Capital (USA) Inc. represent and warrant that they are institutional investors as defined in the Securities and Futures Act. United States: In the United States, research is issued and distributed by Macquarie Capital (USA) Inc., which is a registered broker-dealer and member of FINRA. Macquarie Capital (USA) Inc, accepts responsibility for the content of each research report prepared by one of its non-US affiliates when the research report is distributed in the United States by Macquarie Capital (USA) Inc. Macquarie Capital (USA) Inc.’s affiliate’s analysts are not registered as research analysts with FINRA, may not be associated persons of Macquarie Capital (USA) Inc., and therefore may not be subject to FINRA rule restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. Information regarding futures is provided for reference purposes only and is not a solicitation for purchases or sales of futures. Any persons receiving this report directly from Macquarie Capital (USA) Inc. and wishing to effect a transaction in any security described herein should do so with Macquarie Capital (USA) Inc. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/research/disclosures, or contact your registered representative at 1-888-MAC-STOCK, or write to the Supervisory Analysts, Research Department, Macquarie Securities, 125 W.55th Street, New York, NY 10019. © Macquarie Group

Asia Research Head of Equity Research

Peter Redhead (Global – Head) (852) 3922 4836

Jake Lynch (Asia – Head) (852) 3922 3583

David Gibson (Japan – Head) (813) 3512 7880

Conrad Werner (ASEAN – Head) (65) 6601 0182

Automobiles/Auto Parts

Janet Lewis (China) (852) 3922 5417

Zhixuan Lin (China) (8621) 2412 9006

Leo Lin (China) (852) 3922 1098

Takuo Katayama (Japan) (813) 3512 7856

James Hong (Korea) (822) 3705 8661

Amit Mishra (India) (9122) 6720 4084

Financials

Scott Russell (Asia) (852) 3922 3567

Dexter Hsu (China, Taiwan) (8862) 2734 7530

Elaine Zhou (Hong Kong) (852) 3922 3278

Keisuke Moriyama (Japan) (813) 3512 7476

Chan Hwang (Korea) (822) 3705 8643

Suresh Ganapathy (India) (9122) 6720 4078

Thomas Stoegner (65) 6601 0854 (Malaysia, Singapore)

Gilbert Lopez (Philippines) (632) 857 0892

Passakorn Linmaneechote (Thailand) (662) 694 7728

Conglomerates

David Ng (China, Hong Kong) (852) 3922 1291

Conrad Werner (Singapore) (65) 6601 0182


Consumer and Gaming

Linda Huang (Asia, China, Hong Kong) (852) 3922 4068

Zibo Chen (China, Hong Kong) (852) 3922 1130

Terence Chang (China, Hong Kong) (852) 3922 3581

Satsuki Kawasaki (Japan) (813) 3512 7870

Mike Allen (Japan) (813) 3512 7859

Kwang Cho (Korea) (822) 3705 4953

KJ Lee (Korea) (822) 3705 9935

Stella Li (Taiwan) (8862) 2734 7514

Amit Sinha (India) (9122) 6720 4085

Fransisca Widjaja (65) 6601 0847 (Indonesia, Singapore)

Karisa Magpayo (Philippines) (632) 857 0899

Chalinee Congmuang (Thailand) (662) 694 7993

Emerging Leaders

Jake Lynch (Asia) (852) 3922 3583

Aditya Suresh (Asia) (852) 3922 1265

Timothy Lam (China, Hong Kong) (852) 3922 1086

Mike Allen (Japan) (813) 3512 7859

Kwang Cho (Korea) (822) 3705 4953

Corinne Jian (Taiwan) (8862) 2734 7522

Marcus Yang (Taiwan) (8862) 2734 7532

Conrad Werner (ASEAN) (65) 6601 0182

Industrials

Janet Lewis (Asia) (852) 3922 5417

Patrick Dai (China) (8621) 2412 9082

Leo Lin (China) (852) 3922 1098

Kunio Sakaida (Japan) (813) 3512 7873

James Hong (Korea) (822) 3705 8661

Inderjeetsingh Bhatia (India) (9122) 6720 4087

Internet, Media and Software

Wendy Huang (Asia, China) (852) 3922 3378

David Gibson (Asia, Japan) (813) 3512 7880

Hillman Chan (China, Hong Kong) (852) 3922 3716

Nathan Ramler (Japan) (813) 3512 7875

Soyun Shin (Korea) (822) 3705 8659

Abhishek Bhandari (India) (9122) 6720 4088

Oil, Gas and Petrochemicals

Polina Diyachkina (Asia, Japan) (813) 3512 7886

Aditya Suresh (Asia, China) (852) 3922 1265

Anna Park (Korea) (822) 3705 8669

Duke Suttikulpanich (ASEAN) (65) 6601 0148

Isaac Chow (Malaysia) (603) 2059 8982

Pharmaceuticals and Healthcare

Abhishek Singhal (India) (9122) 6720 4086

Wei Li (China, Hong Kong) (852) 3922 5494

Property

Tuck Yin Soong (Asia, Singapore) (65) 6601 0838


Raymond Liu (China, Hong Kong) (852) 3922 3629

Wilson Ho (China) (852) 3922 3248

William Montgomery (Japan) (813) 3512 7864


Abhishek Bhandari (India) (9122) 6720 4088

Aiman Mohamad (Malaysia) (603) 2059 8986

Kervin Sisayan (Philippines) (632) 857 0893

Patti Tomaitrichitr (Thailand) (662) 694 7727

Resources / Metals and Mining

Polina Diyachkina (Asia, Japan) (813) 3512 7886

Coria Chow (China) (852) 3922 1181

Anna Park (Korea) (822) 3705 8669

Technology

Damian Thong (Asia, Japan) (813) 3512 7877

George Chang (Japan) (813) 3512 7854

Daniel Kim (Korea) (822) 3705 8641

Allen Chang (Greater China) (852) 3922 1136

Jeffrey Ohlweiler (Greater China) (8862) 2734 7512

Patrick Liao (Greater China) (8862) 2734 7515

Louis Cheng (Greater China) (8862) 2734 7526

Kaylin Tsai (Greater China) (8862) 2734 7523

Telecoms

Nathan Ramler (Asia, Japan) (813) 3512 7875

Danny Chu (Greater China) (852) 3922 4762

Soyun Shin (Korea) (822) 3705 8659

Chirag Jain (India) (9122) 6720 4352

Prem Jearajasingam (ASEAN) (603) 2059 8989

Kervin Sisayan (Philippines) (632) 857 0893

Transport & Infrastructure

Janet Lewis (Asia) (852) 3922 5417


Azita Nazrene (ASEAN) (603) 2059 8980

Utilities & Renewables

Alan Hon (Hong Kong) (852) 3922 3589


Prem Jearajasingam (Malaysia) (603) 2059 8989

Karisa Magpayo (Philippines) (632) 857 0899

Commodities

Colin Hamilton (Global) (44 20) 3037 4061

Ian Roper (65) 6601 0698

Jim Lennon (44 20) 3037 4271

Lynn Zhao (8621) 2412 9035

Matthew Turner (44 20) 3037 4340

Economics

Peter Eadon-Clarke (Global) (813) 3512 7850

Larry Hu (China, Hong Kong) (852) 3922 3778

Tanvee Gupta Jain (India) (9122) 6720 4355

Quantitative / CPG

Gurvinder Brar (Global) (44 20) 3037 4036

Woei Chan (Asia) (852) 3922 1421

Danny Deng (Asia) (852) 3922 4646

Per Gullberg (Asia) (852) 3922 1478

Strategy/Country

Viktor Shvets (Asia, Global) (852) 3922 3883

Chetan Seth (Asia) (852) 3922 4769


Erwin Sanft (China, Hong Kong) (852) 3922 1516

Peter Eadon-Clarke (Japan) (813) 3512 7850

Chan Hwang (Korea) (822) 3705 8643

Jeffrey Ohlweiler (Taiwan) (8862) 2734 7512


Jayden Vantarakis (Indonesia) (6221) 2598 8310

Anand Pathmakanthan (Malaysia) (603) 2059 8833


Conrad Werner (Singapore) (65) 6601 0182

Alastair Macdonald (Thailand) (662) 694 7753

Find our research at Macquarie: www.macquarie.com.au/research Thomson: www.thomson.com/financial Reuters: www.knowledge.reuters.com Bloomberg: MAC GO Factset: http://www.factset.com/home.aspx CapitalIQ www.capitaliq.com Email [email protected] for access

Asia Sales Regional Heads of Sales

Miki Edelman (Global) (1 212) 231 6121

Jeff Evans (Boston) (1 617) 598 2508

Jeffrey Shiu (China, Hong Kong) (852) 3922 2061

Sandeep Bhatia (India) (9122) 6720 4101

Thomas Renz (Geneva) (41 22) 818 7712

Riaz Hyder (Indonesia) (6221) 2598 8486

Nick Cant (Japan) (65) 6601 0210

John Jay Lee (Korea) (822) 3705 9988

Nik Hadi (Malaysia) (603) 2059 8888

Eric Roles (New York) (1 212) 231 2559

Gino C Rojas (Philippines) (632) 857 0861

Regional Heads of Sales cont’d

Paul Colaco (San Francisco) (1 415) 762 5003

Amelia Mehta (Singapore) (65) 6601 0211

Angus Kent (Thailand) (662) 694 7601

Ben Musgrave (UK/Europe) (44 20) 3037 4882

Christina Lee (UK/Europe) (44 20) 3037 4873

Sales Trading

Adam Zaki (Asia) (852) 3922 2002

Stanley Dunda (Indonesia) (6221) 515 1555

Sales Trading cont’d

Suhaida Samsudin (Malaysia) (603) 2059 8888

Michael Santos (Philippines) (632) 857 0813

Chris Reale (New York) (1 212) 231 2555

Marc Rosa (New York) (1 212) 231 2555

Justin Morrison (Singapore) (65) 6601 0288

Daniel Clarke (Taiwan) (8862) 2734 7580

Brendan Rake (Thailand) (662) 694 7707

Mike Keen (UK/Europe) (44 20) 3037 4905

This publication was disseminated on 14 November 2016 at 10:00 UTC.

(index) (relative) THAILAND Thailand...

Documents

Transcript of (index) (relative) THAILAND Thailand...