3Q16 net profit ahead of estimates on extra income
Kiatnakin Bank Underperform (17E TP Bt52.00)
Earnings Review
Close Bt57.00
Banking October 18, 2016
Beat forecast/Below forecast/In line
3Q16 net profit ahead of estimates on extra income Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.201
5.604
KT ZMICO vs. consensus Share data
7.3%
7.4%
Reuters / Bloomberg
KKP.BK/KKP TB
Paid‐up Shares (m)
846.75
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
48.00/1,368.00
Foreign limit / actual (%)
44.00/36.04
52 week High / Low (Bt)
59.25/32.00
Avg. daily T/O (shares 000)
3,144.00
NVDR (%)
11.15
Estimated free float (%)
68.68
Beta
0.89
URL
http://kiatnakin.co.th
CGR
Level 4 (Certified)
Anti‐corruption
Will revisit earnings after the analyst meeting We maintain an Underperform rating for KKP given no upside potential vs. our current 17E TP. We will revisit our earnings and rating after the analyst meeting, likely set for 2 Nov‐16. 3Q16 net profit surpassed both our forecast and the street KKP posted 3Q16 net profit (NP) of Bt1,691mn (+83% YoY, +30% QoQ), beating both our forecast and the street estimate of ~Bt1,200mn. The higher‐than‐expected NP was due mainly to 1) its booking of huge gain (Bt815mn) from the sale of foreclosed properties vs. our forecast of ~Bt170mn and 2) higher‐than‐expected NIM as it booked huge interest income (Bt569mn) on investment in loans vs. Bt146mn in 3Q15 and Bt311mn in 2Q16. Note that this income source is quite volatile each quarter depending on the success of the loan resolution/restructuring process. 3Q16 net profit stood at Bt1,691mn (+83% YoY, +30% QoQ) The robust NP growth, especially YoY, was due largely to 1) the massive gain (Bt815mn) from the sale of foreclosed properties as mentioned earlier vs. gain of Bt142mn in 2Q16 and Bt205mn in 3Q15; 2) higher NIM both YoY and QoQ on high interest income on investment in loans mentioned earlier; 3) the booking of pre‐tax gain of Bt114mn from the sale of KKTrade (the group’s retail securities arm) to Yuanta Securities in 3Q16. Meanwhile, loans remained weak with a drop by 0.6% YoY and 1.3% YTD, dragged down mainly by hire purchase loans (‐2.6% YoY) and commercial lending (‐14% YoY). Meanwhile, other loan segments still grew strongly YoY, e.g., Lombard loans (+191%), housing loans (+161%) personal loans (+68%), micro SMEs and SME Car3x (+50%). Asset quality and reserve ratio improved QoQ The NPL ratio for 3Q16 declined slightly QoQ to 5.9% from 6.1%, resulting in a higher loan loss reserve (LLR) to NPL ratio to 105% from 96% and a higher reserve to the BoT’s required reserve to 182% from 170%. The higher reserve ratio was also backed by the banks move to set aside a huge provision of Bt1.0bn (including a general reserve of Bt750mn) in 3Q16 as a buffer against economic uncertainties following its booking of huge extra gain as mentioned earlier. See potential upside risk to our earnings forecast for 2016E The 9M16 net profit of Bt4,095mn (+75% YoY) represented 91% of our FY16 NP forecast; thus, we see upside risk to our current earnings forecast for 2016E, mainly on the two huge extra income items mentioned earlier as well as higher‐than‐expected NIM. Financials and Valuation FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
5,695
5,514
5,046
4,827
5,084
Net profit (Btm)
2,734
3,317
4,496
4,727
5,095
3.24
3.92
5.31
5.58
6.02
EPS growth (%)
‐38.4%
20.8%
35.5%
5.1%
7.8%
Book value (Bt)
53.73
EPS (Bt)
43.52
44.79
48.20
50.78
Dividend (Bt)
1.85
3.00
3.00
3.07
3.13
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
17.57
14.55
10.74
10.21
9.47
66 (0) 2695‐5872
PBV (X)
1.27
1.27
1.18
1.12
1.06
Dividend yield (%)
3.25
5.26
5.26
5.39
5.49
8%
9%
11%
11%
12%
Prapharas Nonthapiboon Analyst, no 17836
ROE (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: 3Q16 earnings results Statement of comprehensive income (Btmn) Fiscal Year‐Ended December Net Interes t Income
3Q15 2Q16 3Q16 % YoY % QoQ 9M15 9M16 % YoY 2015 2016E % YoY % 9M to 16E 2,476 2,535 2,959 20% 17% 6,879 7,831 14% 9,449 9,624 2% 81%
Non Interes t Income
1,362
1,496
1,959
44%
31% 3,401
4,899
44% 4,804
6,162
28%
Opera ti ng Income
3,838
4,031
4,918
28%
22% 10,280
12,730
24% 14,252
15,786
11%
80% 81%
Opera ti ng Expens es
1,692
1,910
1,939
15%
1% 4,946
5,658
14% 7,017
7,596
8%
74%
Opera ti ng Profi t
1,692
1,646
2,052
21%
25% 4,719
5,238
11% 6,224
5,990
‐4%
87%
Provi s i on for loan l os s (Revers a l ) Ta xes expens es (Revers a l )
941 264
618 178
1,011 253
7% ‐4%
63% 2,384 43% 575
2,213 707
‐7% 3,208 23% 602
2,750 870
‐14% 45%
80% 81%
Net Profi t
923
1,297
1,691
83%
30% 2,337
4,095
75% 3,317
4,496
36%
91%
PPOP‐a fter ta x EPS (Bt)
1,411 1.09
1,440 1.53
1,774 2.00
26% 83%
23% 4,105 30% 2.77
4,473 4.84
9% 5,514 75% 3.92
5,046 5.31
‐8% 36%
89% 91%
Key Statistics & Ratios Gros s NPLs (Btmn)
3Q15 2Q16 11,587 10,662
3Q16 10,391
9M15 11,587
9M16 10,391
2015 10,408
Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Requi red Res erve Ti er I/Ri s k As s et Ca pi ta l Adequa cy Ra ti o Loa n to Depos i t Ra ti o Loa n to Depos i t & ST borrowi ng
6.6% 6.1% 79.7% 95.5% 158.5% 169.8% 14.9% 15.1% 14.5% 17.8% 164.1% 176.0% 110.9% 113.6%
5.9% 105.4% 181.6% 15.3% 18.8% 173.7% 114.5%
6.6% 79.7% 158.5% 14.9% 14.5% 164.1% 110.9%
5.9% 105.4% 181.6% 15.3% 18.8% 173.7% 114.5%
5.8% 5.7% 91.7% 112.7% 156.5% N.A. 14.6% 15.7% 16.5% 17.9% 180.0% 179.1% 113.5% 112.6%
2016E 10,200
Provi s i on to l oa ns
1.07%
1.41%
1.15%
1.43%
1.30%
1.81%
1.55%
Cos t to Income Non‐i nteres t Income/Tota l Income
44.1% 35.5%
47.4% 37.1%
39.4% 39.8%
48.1% 33.1%
44.4% 38.5%
49.2% 33.7%
48.1% 39.0%
Net Interes t Ma rgin
4.63%
4.79%
5.52%
4.21%
4.91%
4.33%
4.52%
Interes t Sprea d
4.72%
4.36%
4.70%
4.21%
4.51%
4.24%
4.38%
Ta x ra te Loa n growth YoY
22.0% ‐5.9%
11.8% ‐0.3%
12.9% ‐0.6%
19.04% ‐5.9%
14.9% ‐0.6%
14.9% ‐3.6%
16.0% ‐0.1%
0.6%
‐0.4%
0.3%
0.6%
0.3%
Loa n growth QoQ Source: Bloomberg and KTZMICO Research
Figure 2: KKP's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 1.8
2016E
PBV (x)
+2.0SD
1.3
+1.5SD
1.2
58
2
+1.0SD
1.1
53
-7
1.6
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0.2
Jan-10
0.4
Jan-09
0.6
Avg.
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
Jan-08
0.8
Jan-07
1.0
Jan-06
1.2
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
Jan-05
1.4
Implied market
Upside/ Downside
price (Bt)
to current price (%)
63
11
+0.5SD
1.0
48
-16
Average
0.9
43
-25
-0.5SD
0.8
38
-34
-1.0SD
0.7
33
-43
-1.5SD
0.6
28
-51
-2.0SD
0.5
23
-60
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: KKP's PER band and sensitivity of market prices based on PER at different standard deviation levels 2016E
(X) 16 14
PER (x)
+2 S.D.
12
+1 S.D.
10 Avg.
8 6
-1 S.D.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
13.0
69
21
+1.5SD
11.8
62
10
+1.0SD
10.5
56
-2
+0.5SD
9.3
49
-14
Average
8.0
43
-25
2
-0.5SD
6.8
36
-37
0
-1.0SD
5.5
29
-48
-1.5SD
4.3
23
-60
-2.0SD
3.0
16
-72
4
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
-2 S.D.
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.
Earnings Review
Close Bt57.00
Banking October 18, 2016
Beat forecast/Below forecast/In line
3Q16 net profit ahead of estimates on extra income Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.201
5.604
KT ZMICO vs. consensus Share data
7.3%
7.4%
Reuters / Bloomberg
KKP.BK/KKP TB
Paid‐up Shares (m)
846.75
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
48.00/1,368.00
Foreign limit / actual (%)
44.00/36.04
52 week High / Low (Bt)
59.25/32.00
Avg. daily T/O (shares 000)
3,144.00
NVDR (%)
11.15
Estimated free float (%)
68.68
Beta
0.89
URL
http://kiatnakin.co.th
CGR
Level 4 (Certified)
Anti‐corruption
Will revisit earnings after the analyst meeting We maintain an Underperform rating for KKP given no upside potential vs. our current 17E TP. We will revisit our earnings and rating after the analyst meeting, likely set for 2 Nov‐16. 3Q16 net profit surpassed both our forecast and the street KKP posted 3Q16 net profit (NP) of Bt1,691mn (+83% YoY, +30% QoQ), beating both our forecast and the street estimate of ~Bt1,200mn. The higher‐than‐expected NP was due mainly to 1) its booking of huge gain (Bt815mn) from the sale of foreclosed properties vs. our forecast of ~Bt170mn and 2) higher‐than‐expected NIM as it booked huge interest income (Bt569mn) on investment in loans vs. Bt146mn in 3Q15 and Bt311mn in 2Q16. Note that this income source is quite volatile each quarter depending on the success of the loan resolution/restructuring process. 3Q16 net profit stood at Bt1,691mn (+83% YoY, +30% QoQ) The robust NP growth, especially YoY, was due largely to 1) the massive gain (Bt815mn) from the sale of foreclosed properties as mentioned earlier vs. gain of Bt142mn in 2Q16 and Bt205mn in 3Q15; 2) higher NIM both YoY and QoQ on high interest income on investment in loans mentioned earlier; 3) the booking of pre‐tax gain of Bt114mn from the sale of KKTrade (the group’s retail securities arm) to Yuanta Securities in 3Q16. Meanwhile, loans remained weak with a drop by 0.6% YoY and 1.3% YTD, dragged down mainly by hire purchase loans (‐2.6% YoY) and commercial lending (‐14% YoY). Meanwhile, other loan segments still grew strongly YoY, e.g., Lombard loans (+191%), housing loans (+161%) personal loans (+68%), micro SMEs and SME Car3x (+50%). Asset quality and reserve ratio improved QoQ The NPL ratio for 3Q16 declined slightly QoQ to 5.9% from 6.1%, resulting in a higher loan loss reserve (LLR) to NPL ratio to 105% from 96% and a higher reserve to the BoT’s required reserve to 182% from 170%. The higher reserve ratio was also backed by the banks move to set aside a huge provision of Bt1.0bn (including a general reserve of Bt750mn) in 3Q16 as a buffer against economic uncertainties following its booking of huge extra gain as mentioned earlier. See potential upside risk to our earnings forecast for 2016E The 9M16 net profit of Bt4,095mn (+75% YoY) represented 91% of our FY16 NP forecast; thus, we see upside risk to our current earnings forecast for 2016E, mainly on the two huge extra income items mentioned earlier as well as higher‐than‐expected NIM. Financials and Valuation FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
5,695
5,514
5,046
4,827
5,084
Net profit (Btm)
2,734
3,317
4,496
4,727
5,095
3.24
3.92
5.31
5.58
6.02
EPS growth (%)
‐38.4%
20.8%
35.5%
5.1%
7.8%
Book value (Bt)
53.73
EPS (Bt)
43.52
44.79
48.20
50.78
Dividend (Bt)
1.85
3.00
3.00
3.07
3.13
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
17.57
14.55
10.74
10.21
9.47
66 (0) 2695‐5872
PBV (X)
1.27
1.27
1.18
1.12
1.06
Dividend yield (%)
3.25
5.26
5.26
5.39
5.49
8%
9%
11%
11%
12%
Prapharas Nonthapiboon Analyst, no 17836
ROE (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: 3Q16 earnings results Statement of comprehensive income (Btmn) Fiscal Year‐Ended December Net Interes t Income
3Q15 2Q16 3Q16 % YoY % QoQ 9M15 9M16 % YoY 2015 2016E % YoY % 9M to 16E 2,476 2,535 2,959 20% 17% 6,879 7,831 14% 9,449 9,624 2% 81%
Non Interes t Income
1,362
1,496
1,959
44%
31% 3,401
4,899
44% 4,804
6,162
28%
Opera ti ng Income
3,838
4,031
4,918
28%
22% 10,280
12,730
24% 14,252
15,786
11%
80% 81%
Opera ti ng Expens es
1,692
1,910
1,939
15%
1% 4,946
5,658
14% 7,017
7,596
8%
74%
Opera ti ng Profi t
1,692
1,646
2,052
21%
25% 4,719
5,238
11% 6,224
5,990
‐4%
87%
Provi s i on for loan l os s (Revers a l ) Ta xes expens es (Revers a l )
941 264
618 178
1,011 253
7% ‐4%
63% 2,384 43% 575
2,213 707
‐7% 3,208 23% 602
2,750 870
‐14% 45%
80% 81%
Net Profi t
923
1,297
1,691
83%
30% 2,337
4,095
75% 3,317
4,496
36%
91%
PPOP‐a fter ta x EPS (Bt)
1,411 1.09
1,440 1.53
1,774 2.00
26% 83%
23% 4,105 30% 2.77
4,473 4.84
9% 5,514 75% 3.92
5,046 5.31
‐8% 36%
89% 91%
Key Statistics & Ratios Gros s NPLs (Btmn)
3Q15 2Q16 11,587 10,662
3Q16 10,391
9M15 11,587
9M16 10,391
2015 10,408
Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Requi red Res erve Ti er I/Ri s k As s et Ca pi ta l Adequa cy Ra ti o Loa n to Depos i t Ra ti o Loa n to Depos i t & ST borrowi ng
6.6% 6.1% 79.7% 95.5% 158.5% 169.8% 14.9% 15.1% 14.5% 17.8% 164.1% 176.0% 110.9% 113.6%
5.9% 105.4% 181.6% 15.3% 18.8% 173.7% 114.5%
6.6% 79.7% 158.5% 14.9% 14.5% 164.1% 110.9%
5.9% 105.4% 181.6% 15.3% 18.8% 173.7% 114.5%
5.8% 5.7% 91.7% 112.7% 156.5% N.A. 14.6% 15.7% 16.5% 17.9% 180.0% 179.1% 113.5% 112.6%
2016E 10,200
Provi s i on to l oa ns
1.07%
1.41%
1.15%
1.43%
1.30%
1.81%
1.55%
Cos t to Income Non‐i nteres t Income/Tota l Income
44.1% 35.5%
47.4% 37.1%
39.4% 39.8%
48.1% 33.1%
44.4% 38.5%
49.2% 33.7%
48.1% 39.0%
Net Interes t Ma rgin
4.63%
4.79%
5.52%
4.21%
4.91%
4.33%
4.52%
Interes t Sprea d
4.72%
4.36%
4.70%
4.21%
4.51%
4.24%
4.38%
Ta x ra te Loa n growth YoY
22.0% ‐5.9%
11.8% ‐0.3%
12.9% ‐0.6%
19.04% ‐5.9%
14.9% ‐0.6%
14.9% ‐3.6%
16.0% ‐0.1%
0.6%
‐0.4%
0.3%
0.6%
0.3%
Loa n growth QoQ Source: Bloomberg and KTZMICO Research
Figure 2: KKP's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 1.8
2016E
PBV (x)
+2.0SD
1.3
+1.5SD
1.2
58
2
+1.0SD
1.1
53
-7
1.6
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0.2
Jan-10
0.4
Jan-09
0.6
Avg.
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
Jan-08
0.8
Jan-07
1.0
Jan-06
1.2
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
Jan-05
1.4
Implied market
Upside/ Downside
price (Bt)
to current price (%)
63
11
+0.5SD
1.0
48
-16
Average
0.9
43
-25
-0.5SD
0.8
38
-34
-1.0SD
0.7
33
-43
-1.5SD
0.6
28
-51
-2.0SD
0.5
23
-60
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: KKP's PER band and sensitivity of market prices based on PER at different standard deviation levels 2016E
(X) 16 14
PER (x)
+2 S.D.
12
+1 S.D.
10 Avg.
8 6
-1 S.D.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
13.0
69
21
+1.5SD
11.8
62
10
+1.0SD
10.5
56
-2
+0.5SD
9.3
49
-14
Average
8.0
43
-25
2
-0.5SD
6.8
36
-37
0
-1.0SD
5.5
29
-48
-1.5SD
4.3
23
-60
-2.0SD
3.0
16
-72
4
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
Jan-05
-2 S.D.
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.
