KASIKORNBANK
KASIKORNBANK Underperform (15E TP Bt210.00)
Company Update
Close Bt195.50
Banking June 30, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Weak outlook remained
FY15
FY16
Consensus EPS (Bt)
19.762
22.315
KT ZMICO vs. consensus Share data
‐15.3%
‐14.7%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
468.00/13,855.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
252.00/190.50
Avg. daily T/O (shares 000)
5,583.00
NVDR (%)
26.46
Estimated free float (%)
78.45
Beta
1.03
URL
www.kasikornbank.com
CGR
Switch rating to Underperform from Buy We switch our rating for KBANK to Underperform from Buy following our earnings cut which reflected the bank’s latest downward revision in its financial targets for the second time. Our new 15E target price now stood at Bt210/share vs. Bt265/share previously. Key risk remains the likelihood of the prolonged sluggish economic growth. Bank revised down its 2015 targets for the third time KBANK revised its financial targets for the second time (after the latest revision in May‐15) as the bank foresees the likelihood of more prolonged sluggish economic growth than its previous estimation. The main revisions are 1) higher NPL estimation to around 2.7‐2.8% (from 2.3‐2.5% previously) and 2) the likelihood of higher credit cost to no more than 150 bps (from ~100 bps previously). The higher asset quality risk lies mainly on SME segment. Note that the bank sets higher provision target follows the bank’s prudent and proactive practice in its risk management. Cut 2015‐16E earnings by 18‐16% relecting the bank’s new guidance We cut our net profit forecasts for 2015‐16E by 18‐16% to reflect the bank’s latest guidance. The main revisions are 1) higher credit cost; 2) lower NIM to reflect the recent rate cut impact as well as higher NPL risk. Foloweing our NP cut, we lowered our 15E target price to Bt210/sharer from Bt265/share. Expect 2Q15E net profit of Bt9.4bn (‐20% YoY, ‐25% QoQ) The main reasons behind the poor earnings for 2Q15E should be 1) higher provision on poorer asset quality; and 2) weakened NIM on rate cut impact and higher NPLs. However, the key bright spot remains the sound non‐interst growth of around 10% YoY. Meanwhile, loan growth is likely at +6% YoY and +3% QoQ. Financial and Valuation FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
PPOP (Btm)
56,067
63,365
66,034
71,240
78,764
Net profit (Btm)
41,325
46,153
40,027
45,576
54,915
17.27
19.28
16.73
19.04
22.95
EPS growth (%)
17%
12%
‐13%
14%
20%
Book value (Bt)
153.62
EPS (Bt)
Prapharas Nonthapiboon Analyst, no 17836
91.60
107.41
FALSE
135.18
Dividend (Bt)
3.50
4.00
4.00
4.50
5.00
FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
PER (X)
11.32
10.14
11.69
10.27
8.52
[email protected]
PBV (X)
2.13
1.82
1.63
1.45
1.27
66 (0) 2695‐5872
Dividend yield (%)
1.79
2.05
2.05
2.30
2.56
ROE (%)
20%
19%
15%
15%
16%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: KBANK’s financial targets for 2015E vs. our forecasts 2014E
2014
31-Oct-14
15-May-15
29-Jun-15
2015E
2015E
2015E
KBANK's Targets*
Actual
ROE
N/A
19.4%
N/A
N/A
N/A
ROA
N/A
2.0%
N/A
N/A
3.4-3.6%
3.8%
3.5-3.7%
3.5-3.7%
N/A 3.5-3.7%
Company Update
Close Bt195.50
Banking June 30, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Weak outlook remained
FY15
FY16
Consensus EPS (Bt)
19.762
22.315
KT ZMICO vs. consensus Share data
‐15.3%
‐14.7%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
468.00/13,855.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
252.00/190.50
Avg. daily T/O (shares 000)
5,583.00
NVDR (%)
26.46
Estimated free float (%)
78.45
Beta
1.03
URL
www.kasikornbank.com
CGR
Switch rating to Underperform from Buy We switch our rating for KBANK to Underperform from Buy following our earnings cut which reflected the bank’s latest downward revision in its financial targets for the second time. Our new 15E target price now stood at Bt210/share vs. Bt265/share previously. Key risk remains the likelihood of the prolonged sluggish economic growth. Bank revised down its 2015 targets for the third time KBANK revised its financial targets for the second time (after the latest revision in May‐15) as the bank foresees the likelihood of more prolonged sluggish economic growth than its previous estimation. The main revisions are 1) higher NPL estimation to around 2.7‐2.8% (from 2.3‐2.5% previously) and 2) the likelihood of higher credit cost to no more than 150 bps (from ~100 bps previously). The higher asset quality risk lies mainly on SME segment. Note that the bank sets higher provision target follows the bank’s prudent and proactive practice in its risk management. Cut 2015‐16E earnings by 18‐16% relecting the bank’s new guidance We cut our net profit forecasts for 2015‐16E by 18‐16% to reflect the bank’s latest guidance. The main revisions are 1) higher credit cost; 2) lower NIM to reflect the recent rate cut impact as well as higher NPL risk. Foloweing our NP cut, we lowered our 15E target price to Bt210/sharer from Bt265/share. Expect 2Q15E net profit of Bt9.4bn (‐20% YoY, ‐25% QoQ) The main reasons behind the poor earnings for 2Q15E should be 1) higher provision on poorer asset quality; and 2) weakened NIM on rate cut impact and higher NPLs. However, the key bright spot remains the sound non‐interst growth of around 10% YoY. Meanwhile, loan growth is likely at +6% YoY and +3% QoQ. Financial and Valuation FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
PPOP (Btm)
56,067
63,365
66,034
71,240
78,764
Net profit (Btm)
41,325
46,153
40,027
45,576
54,915
17.27
19.28
16.73
19.04
22.95
EPS growth (%)
17%
12%
‐13%
14%
20%
Book value (Bt)
153.62
EPS (Bt)
Prapharas Nonthapiboon Analyst, no 17836
91.60
107.41
FALSE
135.18
Dividend (Bt)
3.50
4.00
4.00
4.50
5.00
FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
PER (X)
11.32
10.14
11.69
10.27
8.52
[email protected]
PBV (X)
2.13
1.82
1.63
1.45
1.27
66 (0) 2695‐5872
Dividend yield (%)
1.79
2.05
2.05
2.30
2.56
ROE (%)
20%
19%
15%
15%
16%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: KBANK’s financial targets for 2015E vs. our forecasts 2014E
2014
31-Oct-14
15-May-15
29-Jun-15
2015E
2015E
2015E
KBANK's Targets*
Actual
ROE
N/A
19.4%
N/A
N/A
N/A
ROA
N/A
2.0%
N/A
N/A
3.4-3.6%
3.8%
3.5-3.7%
3.5-3.7%
N/A 3.5-3.7%
