3Q16 results in line
TMB Bank Earnings Review
Underperform (17E TP Bt2.30) Close Bt2.00
Banking
Beat forecast/Below forecast/In line
October 19, 2016
3Q16 results in line; potential earnings cut from consensus Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.203
0.234
KT ZMICO vs. consensus Share data
‐11.3%
‐14.5%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,807.37
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
88.00/2,503.00 50.36/33.26 2.76/1.83 156,314.00
NVDR (%)
10.14
Estimated free float (%)
43.92
Beta
1.12
URL
www.tmbbank.com
CGR
Level 4 (Certified)
Anti‐corruption
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Asset quality issue to remain a challenging task We maintain our Underperform rating and the 17E target price for TMB. We still expect TMB to have a challenging task in handling the asset quality issue despite its prudent risk management and provisioning. 3Q16 net profit in line with our forecast but slightly below the street TMB posted 3Q16 net profit (NP) of Bt1.85bn (‐34% YoY, ‐14% QoQ), quite in line with our forecast (Bt1.92bn) but 6% below the street estimate (Bt1.97bn). 3Q16 net profit stood at Bt1.85bn (‐34% YoY, ‐14% QoQ) The main reason behind the NP drop was a hike in the provision (to 175 bps in 3Q16 vs. 140 bps in 2Q16 and 60 bps in 3Q15) following the bank’s latest raising of the provision guidance for 2016E to 140‐150 bps from around 120‐130 bps hinted previously; see Figure 2. The bank claimed that the higher provision guidance is a cushion for any headwinds and in line with its intention to make a greater effort at NPL control through either more aggressive bad loan write‐offs or NPL sales in 2H16. As mentioned in our preview report, TMB will formally announce its latest provision guidance in the analyst meeting set for 20 Oct, in which we expect to see a consensus earnings cut. Note that we already cut and fine‐tuned our NP forecast with the new guidance as our current NP forecasts for 2016‐17E were already below the consensus estimates by 10‐17%, respectively. 3Q16 core profit grew well (+16% YoY, +4% QoQ) on stronger NIM Its core profit of Bt4.3bn still grew well by 16% YoY and 4% QoQ. The main driver came from NIM, which was above our forecast and remained the main bright spot. TMB still managed to improve its NIM on both a YoY and QoQ basis, thanks especially to its efficient funding cost management. Net loans still grew softly at 5.9% YoY and just 1.8% YTD (+2.4% YTD for performing loan growth) vs. the bank’s performing loan growth target of 6‐8% and our net loan growth forecast of 3% for 2016E. The main growth driver for its performing loans for 9M16 was retail loans (+25% YTD driven mainly by housing loans), while corporate and SME loans were still down by 4% and 2.1% YTD, respectively. NPLs lowered QoQ following the bank’s effort to resolve NPLs As per the bank’s latest indication that it will be more aggressive in controlling and bringing down its NPLs through either more aggressive NPL write‐offs or NPL sales in 2H16, its NPLs and NPL ratio for 3Q16 decreased to 2.5% of loans from 2.87% in 2Q16 and 2.95% in 3Q15. The reserve‐to‐NPL ratio for 3Q16 was stable QoQ at 142%, while the reserve to the BoT’s required reserve was lower QoQ to 161% from 165%. 9M16 net profit stood at Bt6.1bn (‐9% YoY) 9M16 net profit of Bt6.1bn (‐9% YoY) represented 76% of our FY16 forecast. We therefore maintain our earnings forecasts. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt) FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2014 12,846 9,539 0.22 66% 1.60 0.060 2014 9.16 1.25 3.00 14.5%
2015 14,665 9,333 0.21 ‐2% 1.75 0.060 2015 9.38 1.14 3.00 12.8%
2016E 16,499 8,004 0.18 ‐14% 1.91 0.060 2016E 10.93 1.05 3.00 10.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 17,330 8,557 0.20 7% 2.05 0.059 2017E 10.23 0.98 2.93 9.9%
2018E 18,794 9,920 0.23 16% 2.22 0.068 2018E 8.82 0.90 3.40 10.6%
Figure 1: 3Q16 earnings results Statement of Comprehensive Income (Btmn) Fiscal Year‐Ended December Net Interest Income Non Interest Income Operating Income Operating Expenses Operating Profit before tax Provision for loan loss (Reversal) Taxes Net Profit PPOP‐after tax EPS (Bt) Key Statistics & Ratios
3Q15 5,783 2,614 8,397 4,173 4,258 820 583 2,815 3,675 0.06 3Q15
Gross NPLs (Btmn)
19,794
Gross NPLs/Loans
2.95%
2Q16 6,173 2,343 8,516 4,039 4,430 1,998 325 2,151 4,106 0.05 2Q16
3Q16 % YoY % QoQ 9M15 9M16 % YoY 2015 6,268 8% 2% 17,205 18,370 6.8% 23,220 2,696 3% 15% 7,557 7,518 ‐0.5% 10,230 8,965 7% 5% 24,762 25,888 4.5% 33,450 4,124 ‐1% 2% 11,896 12,074 1.5% 16,467 4,726 11% 7% 12,730 13,601 6.8% 16,275 2,541 210% 27% 4,556 6,416 40.8% 5,479 451 ‐23% 39% 1,583 1,299 ‐17.9% 2,153 1,845 ‐34% ‐14% 6,712 6,088 ‐9.3% 9,333 4,275 16% 4% 11,147 12,302 10.4% 14,665 0.04 ‐35% ‐14% 0.15 0.14 ‐9.4% 0.21 3Q16
9M15
19,779 17,466 2.87%
9M16
19,794 17,466
2.50%
2.95%
2.50%
2016E % YoY % 9M to 16E 24,614 6% 75% 10,551 3% 71% 35,165 5% 74% 16,698 1% 72% 17,692 9% 77% 8,674 58% 74% 1,763 ‐18% 74% 8,004 ‐14% 76% 16,499 13% 75% 0.18 ‐14% 76%
2015
2016E
20,473 21,779 2.99%
3.07%
Loan Loss Reserve/NPLs
146.3% 143.4% 142.3%
146.3% 142.3%
141.8% 143.4%
Loan Loss Reserve/Required Reserve
180.0% 165.3% 160.8%
180.0% 160.8%
168.0%
N.A.
Tier I/Risk Assets
11.0%
12.5%
12.9%
11.0%
12.9%
11.3%
12.8%
Capital Adequacy Ratio Loan to Deposit Ratio
16.4%
18.0%
18.4%
16.4%
18.4%
16.7%
18.1%
92.9%
92.2%
97.5%
92.9%
97.5%
90.1%
92.0%
Loan to Deposit & ST borrowing
88.5%
86.8%
91.5%
88.5%
91.5%
86.1%
86.8%
Cost to Income
50.2%
48.3%
47.5%
48.0%
46.6%
49.2%
47.5%
Non Interest Income/Total Income
31.1%
27.5%
30.1%
30.0%
3.02%
3.13%
3.24%
29.0% 3.11%
30.6%
Net Interest Margin
30.5% 3.01%
3.00%
3.08%
Tax rate
17.1%
13.1%
19.6%
19.1%
17.6%
18.7%
18.0%
Provision/Loans
0.58%
1.35%
1.72%
1.11%
1.45%
0.94%
1.45%
Provision/Average loans Loan growth YoY
0.60% 9.6%
1.40% 7.4%
1.75% 5.9%
0.16%
1.50%
9.6%
5.9%
0.99% 9.5%
1.47% 3.0%
3.0%
0.9%
0.0%
3.0%
0.0%
Loan growth QoQ
Source: KTZMICO Research
Figure 2: TMB’s financial guidance for 2016 vs. our forecasts Performance Targets Loa n growth Depos i t growth Net Interes t Ma rgi n (NIM) Net fee i ncome growth Cos t to Income Ra ti o ROE NPL ra ti o Provi s i on (% of l oa ns ) Loa n Los s Covera ge
2015
2015
2016
2016
TMB's Guidance 6‐8%* NA ~3% 30%
Actual 9.5% 12.8% 3.00% 36.4%
TMB's Guidance 6‐8%* 0‐2% 3.0‐3.2% (from ~3%) 5‐10%
KTZ's forecasts 3.0% 0.8% 3.08% 3.9%
140%
140‐145%
1.45%
Source: KT ZMICO Research * Performing loan growth
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2016E
2.5
PBV (x)
+2 S.D. 2.0 1.5 1.0
+1.5 S.D. +1 S.D. +0.5 S.D. Avg. -0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
0.0
Jan-09
0.5
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
2.1
4.11
105
+1.5SD
2.0
3.75
87
+1.0SD
1.8
3.39
69
+0.5SD
1.6
3.03
51
Average
1.4
2.67
33
-0.5SD
1.2
2.31
15
-1.0SD
1.0
1.95
-2
-1.5SD
0.8
1.59
-20
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA, BPP.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Underperform (17E TP Bt2.30) Close Bt2.00
Banking
Beat forecast/Below forecast/In line
October 19, 2016
3Q16 results in line; potential earnings cut from consensus Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.203
0.234
KT ZMICO vs. consensus Share data
‐11.3%
‐14.5%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,807.37
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
88.00/2,503.00 50.36/33.26 2.76/1.83 156,314.00
NVDR (%)
10.14
Estimated free float (%)
43.92
Beta
1.12
URL
www.tmbbank.com
CGR
Level 4 (Certified)
Anti‐corruption
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Asset quality issue to remain a challenging task We maintain our Underperform rating and the 17E target price for TMB. We still expect TMB to have a challenging task in handling the asset quality issue despite its prudent risk management and provisioning. 3Q16 net profit in line with our forecast but slightly below the street TMB posted 3Q16 net profit (NP) of Bt1.85bn (‐34% YoY, ‐14% QoQ), quite in line with our forecast (Bt1.92bn) but 6% below the street estimate (Bt1.97bn). 3Q16 net profit stood at Bt1.85bn (‐34% YoY, ‐14% QoQ) The main reason behind the NP drop was a hike in the provision (to 175 bps in 3Q16 vs. 140 bps in 2Q16 and 60 bps in 3Q15) following the bank’s latest raising of the provision guidance for 2016E to 140‐150 bps from around 120‐130 bps hinted previously; see Figure 2. The bank claimed that the higher provision guidance is a cushion for any headwinds and in line with its intention to make a greater effort at NPL control through either more aggressive bad loan write‐offs or NPL sales in 2H16. As mentioned in our preview report, TMB will formally announce its latest provision guidance in the analyst meeting set for 20 Oct, in which we expect to see a consensus earnings cut. Note that we already cut and fine‐tuned our NP forecast with the new guidance as our current NP forecasts for 2016‐17E were already below the consensus estimates by 10‐17%, respectively. 3Q16 core profit grew well (+16% YoY, +4% QoQ) on stronger NIM Its core profit of Bt4.3bn still grew well by 16% YoY and 4% QoQ. The main driver came from NIM, which was above our forecast and remained the main bright spot. TMB still managed to improve its NIM on both a YoY and QoQ basis, thanks especially to its efficient funding cost management. Net loans still grew softly at 5.9% YoY and just 1.8% YTD (+2.4% YTD for performing loan growth) vs. the bank’s performing loan growth target of 6‐8% and our net loan growth forecast of 3% for 2016E. The main growth driver for its performing loans for 9M16 was retail loans (+25% YTD driven mainly by housing loans), while corporate and SME loans were still down by 4% and 2.1% YTD, respectively. NPLs lowered QoQ following the bank’s effort to resolve NPLs As per the bank’s latest indication that it will be more aggressive in controlling and bringing down its NPLs through either more aggressive NPL write‐offs or NPL sales in 2H16, its NPLs and NPL ratio for 3Q16 decreased to 2.5% of loans from 2.87% in 2Q16 and 2.95% in 3Q15. The reserve‐to‐NPL ratio for 3Q16 was stable QoQ at 142%, while the reserve to the BoT’s required reserve was lower QoQ to 161% from 165%. 9M16 net profit stood at Bt6.1bn (‐9% YoY) 9M16 net profit of Bt6.1bn (‐9% YoY) represented 76% of our FY16 forecast. We therefore maintain our earnings forecasts. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt) FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2014 12,846 9,539 0.22 66% 1.60 0.060 2014 9.16 1.25 3.00 14.5%
2015 14,665 9,333 0.21 ‐2% 1.75 0.060 2015 9.38 1.14 3.00 12.8%
2016E 16,499 8,004 0.18 ‐14% 1.91 0.060 2016E 10.93 1.05 3.00 10.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 17,330 8,557 0.20 7% 2.05 0.059 2017E 10.23 0.98 2.93 9.9%
2018E 18,794 9,920 0.23 16% 2.22 0.068 2018E 8.82 0.90 3.40 10.6%
Figure 1: 3Q16 earnings results Statement of Comprehensive Income (Btmn) Fiscal Year‐Ended December Net Interest Income Non Interest Income Operating Income Operating Expenses Operating Profit before tax Provision for loan loss (Reversal) Taxes Net Profit PPOP‐after tax EPS (Bt) Key Statistics & Ratios
3Q15 5,783 2,614 8,397 4,173 4,258 820 583 2,815 3,675 0.06 3Q15
Gross NPLs (Btmn)
19,794
Gross NPLs/Loans
2.95%
2Q16 6,173 2,343 8,516 4,039 4,430 1,998 325 2,151 4,106 0.05 2Q16
3Q16 % YoY % QoQ 9M15 9M16 % YoY 2015 6,268 8% 2% 17,205 18,370 6.8% 23,220 2,696 3% 15% 7,557 7,518 ‐0.5% 10,230 8,965 7% 5% 24,762 25,888 4.5% 33,450 4,124 ‐1% 2% 11,896 12,074 1.5% 16,467 4,726 11% 7% 12,730 13,601 6.8% 16,275 2,541 210% 27% 4,556 6,416 40.8% 5,479 451 ‐23% 39% 1,583 1,299 ‐17.9% 2,153 1,845 ‐34% ‐14% 6,712 6,088 ‐9.3% 9,333 4,275 16% 4% 11,147 12,302 10.4% 14,665 0.04 ‐35% ‐14% 0.15 0.14 ‐9.4% 0.21 3Q16
9M15
19,779 17,466 2.87%
9M16
19,794 17,466
2.50%
2.95%
2.50%
2016E % YoY % 9M to 16E 24,614 6% 75% 10,551 3% 71% 35,165 5% 74% 16,698 1% 72% 17,692 9% 77% 8,674 58% 74% 1,763 ‐18% 74% 8,004 ‐14% 76% 16,499 13% 75% 0.18 ‐14% 76%
2015
2016E
20,473 21,779 2.99%
3.07%
Loan Loss Reserve/NPLs
146.3% 143.4% 142.3%
146.3% 142.3%
141.8% 143.4%
Loan Loss Reserve/Required Reserve
180.0% 165.3% 160.8%
180.0% 160.8%
168.0%
N.A.
Tier I/Risk Assets
11.0%
12.5%
12.9%
11.0%
12.9%
11.3%
12.8%
Capital Adequacy Ratio Loan to Deposit Ratio
16.4%
18.0%
18.4%
16.4%
18.4%
16.7%
18.1%
92.9%
92.2%
97.5%
92.9%
97.5%
90.1%
92.0%
Loan to Deposit & ST borrowing
88.5%
86.8%
91.5%
88.5%
91.5%
86.1%
86.8%
Cost to Income
50.2%
48.3%
47.5%
48.0%
46.6%
49.2%
47.5%
Non Interest Income/Total Income
31.1%
27.5%
30.1%
30.0%
3.02%
3.13%
3.24%
29.0% 3.11%
30.6%
Net Interest Margin
30.5% 3.01%
3.00%
3.08%
Tax rate
17.1%
13.1%
19.6%
19.1%
17.6%
18.7%
18.0%
Provision/Loans
0.58%
1.35%
1.72%
1.11%
1.45%
0.94%
1.45%
Provision/Average loans Loan growth YoY
0.60% 9.6%
1.40% 7.4%
1.75% 5.9%
0.16%
1.50%
9.6%
5.9%
0.99% 9.5%
1.47% 3.0%
3.0%
0.9%
0.0%
3.0%
0.0%
Loan growth QoQ
Source: KTZMICO Research
Figure 2: TMB’s financial guidance for 2016 vs. our forecasts Performance Targets Loa n growth Depos i t growth Net Interes t Ma rgi n (NIM) Net fee i ncome growth Cos t to Income Ra ti o ROE NPL ra ti o Provi s i on (% of l oa ns ) Loa n Los s Covera ge
2015
2015
2016
2016
TMB's Guidance 6‐8%* NA ~3% 30%
Actual 9.5% 12.8% 3.00% 36.4%
TMB's Guidance 6‐8%* 0‐2% 3.0‐3.2% (from ~3%) 5‐10%
KTZ's forecasts 3.0% 0.8% 3.08% 3.9%
140%
140‐145%
1.45%
Source: KT ZMICO Research * Performing loan growth
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2016E
2.5
PBV (x)
+2 S.D. 2.0 1.5 1.0
+1.5 S.D. +1 S.D. +0.5 S.D. Avg. -0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
0.0
Jan-09
0.5
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
2.1
4.11
105
+1.5SD
2.0
3.75
87
+1.0SD
1.8
3.39
69
+0.5SD
1.6
3.03
51
Average
1.4
2.67
33
-0.5SD
1.2
2.31
15
-1.0SD
1.0
1.95
-2
-1.5SD
0.8
1.59
-20
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA, BPP.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
