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We initiate a “Buy” recommendation on SE with a 2022 target price of 1.60 baht based on a PER of 15 times, comparable to the average EPS growth in 2022-24 at
39% (CAGR), a PEG of only 0.4 times with factors Supporting the stock price with 3 main points
1) SE is a complete supplier from upstream to downstream of industrial businesses. which we call to buy is the time when the industry is recovering
2) Profits in 2022 are expected to grow leaps and bounds. and will be above the level before COVID-19
3) Upside and positive points from the introduction of joint venture companies (UBA) Entering into IPO

Positive #1—When the industrial sector recovers, there should be stocks. Industrialsupplier A complete solution
From the Utilization rate statistics of the industrial sector, it is found that after decreasing from an average of 67% in 2016-19 to only 60% in 2020, in 2021 we saw a recovery back to 63% and The latest in 1Q22 is at 66%. Combined with the FDI investment figures submitted to the BOI, it is found that it has increased from the past 2021, with a value of 460 billion baht, an increase of 168% YoY, and during 1Q22 the size has also increased. This is 18% YoY, which means that entrepreneurs are already preparing for a new round of investment, and the SE business is a work system that must wait for the infrastructure work to be completed, so it is expected to gradually benefit during 2022-23. In addition, 2H22 is the Plant Shutdown season, causing a large demand for factory maintenance waiting. especially the group Petrochemical expects 2H22 net profit to grow higher than The first half of the year is clear.

Positive #2—SE enters a big round of growth and creates a new S-curve
We expect net profit to grow at an average of 41% CAGR during 2022-24, with 2022 expected to grow 97% YoY, supported by the group Production and piping systems that merge with KESSEL create full-year synergy and the return of investment in various factories. Including increased profits from UBA. Moreover, in the long run, SE seriously aims to develop new businesses. Recently, it started investing in “Linquip” or a platform to manage the procurement of industrial products through matching the Demand and Supply of various businesses on Big data. It is expected to be an upside. Continuing the long-term profit forecast which we have not yet included.

Positive #3—Upside & Catalyst from UBA
SE holds a 40% stake in UBA, a major provider of integrated water and wastewater management services in Thailand. The main project is the management of wastewater treatment ponds and drainage tunnels in Bangkok, such as wastewater treatment ponds at Din Daeng, Rama 4, and Thung Khru, etc. Currently, there is a backlog of approximately 1.8 billion baht (supporting average income for 3 years) and upside will Increased from opportunities for government and private agencies, especially Bangkok, which are emphasizing more on the development of water treatment and drainage systems. (Flood resolution) In addition, UBA is also preparing to be listed on the market, which will be like unlocking the value of assets in the hands of SE…
Valuation and setting the target price
We initiate a BUY recommendation on SE and set a target price for 2022 at 1.60 baht using the PER Valuation method based on a PE target of 15 times or a comparable PEG of only 0.4 times (relatively conservative) and growth. of average EPS in 2022-24 at 39% CAGR on EPS in 2022 at 0.105, while the stock price is equivalent to a PER in 2022 only 10 times lower than HARN (the closest comparable) at 15 times, therefore viewed as an investment opportunity from strong growth And the stock value is not too expensive yet…

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