Stocks in Focus on July 13, 2020: ESSO and DELTA

Kaohoon Online has selected stocks with a high-growth potential for investors to consider on July 13, 2020.

 

KGI Securities has given an “Outperform” rating on Esso (Thailand) Public Company Limited (ESSO) with a target price at ฿9.50/share.

KGI estimated ESSO to post a 2Q20 net profit of Bt1.0bn, improving from net losses of Bt927mn in 2Q19 and Bt6.3bn in 1Q20 thanks to better refinery contribution. ESSO’s accounting GRM is expected to soar to US$8.3/bbl, up 542% YoY and recovering QoQ from -US$19.3/bbl in 1Q20 since the company would book a net stock gain (including reversion in NRV loss) of Bt1.7bn for the quarter after Dubai crude rose from US$34/bbl in March to US$41/bbl in June.

KGI preferred ESSO over its refinery peers thanks to our positive view on Thailand’s higher oil consumption as the company’s oil marketing business contributes about 20-30% of total EBITDA.

 

KGI Securities has upgraded Delta Electronics (Thailand) Public Company Limited (DELTA) from “Neutral” to “Outperform” with a target price at ฿80.00/share.

DELTA’s 2Q20 earnings were expected to show resilient growth YoY and QoQ on the back of solid demand on the data center. Good momentum is likely to be seen in 2H20, causing KGI to revise up normalized earnings by 19% in 2020-2021.

Moreover, numerous demand cemented KGI’s industry upcycle view. PER re-rating has been taken to capture 26% normalized EPS growth in 2021. Thus, KGI rolled over the target price to end-2021 at Bt80.00, from Bt43.0. Given 15% upside from the last closing price.