Kiatnakin Bank Underperform (16E TP Bt40.00)
Kiatnakin Bank Underperform (16E TP Bt40.00)
Earnings Review
Close Bt51.00
Banking July 20, 2016
Beat forecast/Below forecast/In line
2Q16 net profit ahead of estimate; potential earnings upgrade underway Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.720
5.163
KT ZMICO vs. consensus Share data
‐6.8%
0.5%
Reuters / Bloomberg
KKP.BK/KKP TB
Paid‐up Shares (m)
846.75
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
43.00/1,234.00
Foreign limit / actual (%)
44.00/33.94
52 week High / Low (Bt)
52.00/29.50
Avg. daily T/O (shares 000) NVDR (%)
1,767.00 6.97
Estimated free float (%)
68.68
Beta
0.82
URL
http://www.kiatnakinphatra.com
CGR
Level 4 (Certified)
Anti‐corruption
Recent price rally could limit further upside in the near term Although we see a potential earnings upgrade for KKP, the recent price rally (+7% in 1 week and +24% in 1 month) could limit further upside in the near term. We will revisit our earnings and rating after the analyst meeting set for 26 Jul‐16. 2Q16 net profit surpassed both our forecast and the street KKP posted 2Q16 net profit (NP) of Bt1,297mn (+73% YoY, +17% QoQ), beating our forecast (Bt1,081mn) and the street estimate (Bt1,014mn). The higher‐than‐expected NP was due largely to 1) a lower‐than‐expected provision as KKP set a provision of Bt618mn vs. our estimate of Bt700mn; 2) higher‐than‐expected NIM on extraordinarily high interest income (Bt311mn) from investments in loans in the quarter vs. Bt53mn in 1Q16 and Bt126mn in 2Q15; and 3) higher‐than‐expected gain on trading and FX transactions, especially related to gain from the capital market units. 2Q16 net profit stood at Bt1,297mn (+73% YoY, +17% QoQ) The strong NP increase both YoY and QoQ was due largely to 1) higher NIM on unusually high income from investments in loans as mentioned earlier; 2) the continuing lower losses from the sales of repossessed cars (totaling Bt131mn in 2Q16 vs. Bt152mn in 1Q16 vs. Bt288mn in 2Q15). and 3) higher income from the capital market units both YoY and QoQ. Meanwhile, loans remained weak with a drop by 0.3% YoY and 3.3% YTD. Asset quality weakened QoQ from loans to real estate development The NPL ratio for 2Q16 increased QoQ to 6.1% from 5.7% in 1Q16 caused mainly by qualitative NPL classification for loans to real estate development. In contrast, the NPL ratio for hire purchase loans continued to decline to 2.1% in 2Q16 vs. 2.2% in 1Q16 and 2.4% at end‐15. Meanwhile, its loan loss reserve (LLR) to NPL ratio was quite stable QoQ at 96% and its LLR to the BoT’s required LLR in 2Q16 improved to 170% from 167% in 1Q16 and 143% in 2Q15 as it set a general provision of Bt300mn in 2Q16. See potential earnings upgrade The 1H16 net profit of Bt2.4bn (+70% YoY) represented 65% of our FY16 NP forecast; thus, we see upside risk to our current earnings forecast and TP for 2016E. The potential earnings revision should be backed mainly by the potential for much lower than expected losses on repossessed cars and higher‐than‐expected NIM. Financials and Valuation FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
5,695
5,514
5,313
5,388
5,584
Net profit (Btm)
2,734
3,317
3,721
4,394
4,870
3.24
3.92
4.40
5.19
5.75
EPS growth (%)
‐38.4%
20.8%
12.2%
18.1%
10.8%
Book value (Bt)
52.92
EPS (Bt)
43.52
44.79
46.71
49.76
Dividend (Bt)
1.85
3.00
2.20
2.30
2.40
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
15.72
13.02
11.60
9.83
8.87
66 (0) 2695‐5872
PBV (X)
1.14
1.14
1.09
1.02
0.96
Prapharas Nonthapiboon Analyst, no 17836
Dividend yield (%)
3.63
5.88
4.31
4.51
4.71
ROE (%)
7.6%
8.9%
9.5%
10.6%
11.1%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: 2Q16 earnings results Statement of comprehensive income (Btmn) Fiscal Year‐Ended December
2Q15
1Q16
2Q16 % YoY % QoQ
1H15
1H16 % YoY
2015
2016E % YoY % 1H to 16E
Net Interes t Income
2,202
2,337
2,535
15%
8% 4,403
4,872
11% 9,449
9,779
3%
Non Interes t Income
838
1,444
1,496
79%
4% 2,039
2,940
44% 4,804
5,432
13%
50% 54%
Opera ti ng Income
3,040
3,781
4,031
33%
7% 6,442
7,812
21% 14,252
15,211
7%
51%
Opera ti ng Expens es Opera ti ng Profi t
1,565 1,539
1,809 1,541
1,910 1,646
22% 7%
6% 3,254 7% 3,027
3,719 3,186
14% 7,017 5% 6,224
7,560 6,161
8% ‐1%
49% 52%
Provi s i on for l oa n l os s (Revers a l ) Ta xes expens es (Revers a l )
524 191
584 276
618 178
18% ‐7%
6% 1,442 ‐36% 311
1,202 454
‐17% 3,208 46% 602
3,082 731
‐4% 22%
39% 62%
Net Profi t
749
1,107
1,297
73%
17% 1,413
2,404
70% 3,317
3,721
12%
65%
PPOP‐a fter ta x EPS (Bt)
1,337 0.89
1,259 1.31
1,440 1.53
8% 73%
14% 2,694 17% 1.67
2,699 2.84
0% 5,514 70% 3.92
5,313 4.40
‐4% 12%
51% 65%
Key Statistics & Ratios Gros s NPLs (Btmn)
2Q15 1Q16 2Q16 12,097 10,106 10,662
1H15 1H16 12,097 10,662
2015 10,408
Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Loa ns 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
6.9% 5.7% 6.1% 72.6% 97.1% 95.5% 4.9% 5.3% 5.5% 14.8% 14.5% 15.1% 15.1% 17.2% 17.8% 146.1% 186.8% 176.0% 145.8% 186.3% 175.6%
6.9% 6.1% 72.6% 95.5% 4.9% 5.5% 14.8% 15.1% 15.1% 17.8% 146.1% 176.0% 145.8% 175.6%
5.8% 5.5% 91.7% 115.6% 5.1% 6.0% 14.6% 15.3% 16.5% 17.9% 180.0% 186.0% 179.5% 185.5%
2016E 10,200
Provi s i on to l oa ns
1.20%
1.33%
1.41%
1.61%
1.37%
1.81%
1.65%
Cos t to Income Non‐i nteres t Income/Tota l Income
51.5% 27.6%
47.8% 38.2%
47.4% 37.1%
50.5% 31.6%
47.6% 37.6%
49.2% 33.7%
49.7% 35.7%
Net Interes t Ma rgi n Interes t Sprea d
4.03% 4.05%
4.42% 4.48%
4.79% 4.36%
4.00% 3.96%
4.60% 4.42%
4.33% 4.24%
4.53% 4.39%
Ta x ra te
20.1%
19.9%
11.8%
17.6%
15.9%
14.9%
16.0%
‐9.5% Loa n growth YoY Loa n growth QoQ ‐3.0% Source: Bloomberg and KTZMICO Research
‐3.0% ‐1.2%
‐0.3% ‐0.4%
‐9.5% ‐3.0%
‐0.3% ‐0.4%
‐3.6%
5.1%
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)
1.6 1.4 1.2 1.0 0.8 0.6 0.4
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
Avg.
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Jun-14
Feb-15
Oct-13
Feb-13
Oct-11
Jun-12
Jun-10
Feb-11
Jan-09
Sep-09
May-08
Jan-07
Sep-07
May-06
Jan-05
Sep-05
0.2
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
1.3
62
22
+1.5SD
1.2
57
12
+1.0SD
1.1
52
2
+0.5SD
1.0
47
-8
Average
0.9
42
-18
-0.5SD
0.8
37
-28
-1.0SD
0.7
32
-37
-1.5SD
0.6
27
-47
-2.0SD
0.5
22
-57
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 (X)
2016E
16 14
to current price (%) 13
+2.0SD
13.1
58
+1.5SD
11.8
52
2
+1.0SD
10.6
47
-9
Avg.
6
-1 S.D.
2
Upside/ Downside
price (Bt) +1 S.D.
8
4
Implied market
+2 S.D.
12 10
PER (x)
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Feb-15
May-14
Dec-12
Aug-13
Jun-11
Mar-12
Oct-10
Jan-10
May-09
Aug-08
Mar-07
Nov-07
Jun-06
Sep-05
Jan-05
0
+0.5SD
9.3
41
-20
Average
8.1
35
-31
-0.5SD
6.8
30
-41
-1.0SD
5.5
24
-52
-1.5SD
4.3
19
-63
-2.0SD
3.0
13
-74
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, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT, EKH.
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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th
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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.
Earnings Review
Close Bt51.00
Banking July 20, 2016
Beat forecast/Below forecast/In line
2Q16 net profit ahead of estimate; potential earnings upgrade underway Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.720
5.163
KT ZMICO vs. consensus Share data
‐6.8%
0.5%
Reuters / Bloomberg
KKP.BK/KKP TB
Paid‐up Shares (m)
846.75
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
43.00/1,234.00
Foreign limit / actual (%)
44.00/33.94
52 week High / Low (Bt)
52.00/29.50
Avg. daily T/O (shares 000) NVDR (%)
1,767.00 6.97
Estimated free float (%)
68.68
Beta
0.82
URL
http://www.kiatnakinphatra.com
CGR
Level 4 (Certified)
Anti‐corruption
Recent price rally could limit further upside in the near term Although we see a potential earnings upgrade for KKP, the recent price rally (+7% in 1 week and +24% in 1 month) could limit further upside in the near term. We will revisit our earnings and rating after the analyst meeting set for 26 Jul‐16. 2Q16 net profit surpassed both our forecast and the street KKP posted 2Q16 net profit (NP) of Bt1,297mn (+73% YoY, +17% QoQ), beating our forecast (Bt1,081mn) and the street estimate (Bt1,014mn). The higher‐than‐expected NP was due largely to 1) a lower‐than‐expected provision as KKP set a provision of Bt618mn vs. our estimate of Bt700mn; 2) higher‐than‐expected NIM on extraordinarily high interest income (Bt311mn) from investments in loans in the quarter vs. Bt53mn in 1Q16 and Bt126mn in 2Q15; and 3) higher‐than‐expected gain on trading and FX transactions, especially related to gain from the capital market units. 2Q16 net profit stood at Bt1,297mn (+73% YoY, +17% QoQ) The strong NP increase both YoY and QoQ was due largely to 1) higher NIM on unusually high income from investments in loans as mentioned earlier; 2) the continuing lower losses from the sales of repossessed cars (totaling Bt131mn in 2Q16 vs. Bt152mn in 1Q16 vs. Bt288mn in 2Q15). and 3) higher income from the capital market units both YoY and QoQ. Meanwhile, loans remained weak with a drop by 0.3% YoY and 3.3% YTD. Asset quality weakened QoQ from loans to real estate development The NPL ratio for 2Q16 increased QoQ to 6.1% from 5.7% in 1Q16 caused mainly by qualitative NPL classification for loans to real estate development. In contrast, the NPL ratio for hire purchase loans continued to decline to 2.1% in 2Q16 vs. 2.2% in 1Q16 and 2.4% at end‐15. Meanwhile, its loan loss reserve (LLR) to NPL ratio was quite stable QoQ at 96% and its LLR to the BoT’s required LLR in 2Q16 improved to 170% from 167% in 1Q16 and 143% in 2Q15 as it set a general provision of Bt300mn in 2Q16. See potential earnings upgrade The 1H16 net profit of Bt2.4bn (+70% YoY) represented 65% of our FY16 NP forecast; thus, we see upside risk to our current earnings forecast and TP for 2016E. The potential earnings revision should be backed mainly by the potential for much lower than expected losses on repossessed cars and higher‐than‐expected NIM. Financials and Valuation FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
5,695
5,514
5,313
5,388
5,584
Net profit (Btm)
2,734
3,317
3,721
4,394
4,870
3.24
3.92
4.40
5.19
5.75
EPS growth (%)
‐38.4%
20.8%
12.2%
18.1%
10.8%
Book value (Bt)
52.92
EPS (Bt)
43.52
44.79
46.71
49.76
Dividend (Bt)
1.85
3.00
2.20
2.30
2.40
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
15.72
13.02
11.60
9.83
8.87
66 (0) 2695‐5872
PBV (X)
1.14
1.14
1.09
1.02
0.96
Prapharas Nonthapiboon Analyst, no 17836
Dividend yield (%)
3.63
5.88
4.31
4.51
4.71
ROE (%)
7.6%
8.9%
9.5%
10.6%
11.1%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: 2Q16 earnings results Statement of comprehensive income (Btmn) Fiscal Year‐Ended December
2Q15
1Q16
2Q16 % YoY % QoQ
1H15
1H16 % YoY
2015
2016E % YoY % 1H to 16E
Net Interes t Income
2,202
2,337
2,535
15%
8% 4,403
4,872
11% 9,449
9,779
3%
Non Interes t Income
838
1,444
1,496
79%
4% 2,039
2,940
44% 4,804
5,432
13%
50% 54%
Opera ti ng Income
3,040
3,781
4,031
33%
7% 6,442
7,812
21% 14,252
15,211
7%
51%
Opera ti ng Expens es Opera ti ng Profi t
1,565 1,539
1,809 1,541
1,910 1,646
22% 7%
6% 3,254 7% 3,027
3,719 3,186
14% 7,017 5% 6,224
7,560 6,161
8% ‐1%
49% 52%
Provi s i on for l oa n l os s (Revers a l ) Ta xes expens es (Revers a l )
524 191
584 276
618 178
18% ‐7%
6% 1,442 ‐36% 311
1,202 454
‐17% 3,208 46% 602
3,082 731
‐4% 22%
39% 62%
Net Profi t
749
1,107
1,297
73%
17% 1,413
2,404
70% 3,317
3,721
12%
65%
PPOP‐a fter ta x EPS (Bt)
1,337 0.89
1,259 1.31
1,440 1.53
8% 73%
14% 2,694 17% 1.67
2,699 2.84
0% 5,514 70% 3.92
5,313 4.40
‐4% 12%
51% 65%
Key Statistics & Ratios Gros s NPLs (Btmn)
2Q15 1Q16 2Q16 12,097 10,106 10,662
1H15 1H16 12,097 10,662
2015 10,408
Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Loa ns 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
6.9% 5.7% 6.1% 72.6% 97.1% 95.5% 4.9% 5.3% 5.5% 14.8% 14.5% 15.1% 15.1% 17.2% 17.8% 146.1% 186.8% 176.0% 145.8% 186.3% 175.6%
6.9% 6.1% 72.6% 95.5% 4.9% 5.5% 14.8% 15.1% 15.1% 17.8% 146.1% 176.0% 145.8% 175.6%
5.8% 5.5% 91.7% 115.6% 5.1% 6.0% 14.6% 15.3% 16.5% 17.9% 180.0% 186.0% 179.5% 185.5%
2016E 10,200
Provi s i on to l oa ns
1.20%
1.33%
1.41%
1.61%
1.37%
1.81%
1.65%
Cos t to Income Non‐i nteres t Income/Tota l Income
51.5% 27.6%
47.8% 38.2%
47.4% 37.1%
50.5% 31.6%
47.6% 37.6%
49.2% 33.7%
49.7% 35.7%
Net Interes t Ma rgi n Interes t Sprea d
4.03% 4.05%
4.42% 4.48%
4.79% 4.36%
4.00% 3.96%
4.60% 4.42%
4.33% 4.24%
4.53% 4.39%
Ta x ra te
20.1%
19.9%
11.8%
17.6%
15.9%
14.9%
16.0%
‐9.5% Loa n growth YoY Loa n growth QoQ ‐3.0% Source: Bloomberg and KTZMICO Research
‐3.0% ‐1.2%
‐0.3% ‐0.4%
‐9.5% ‐3.0%
‐0.3% ‐0.4%
‐3.6%
5.1%
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)
1.6 1.4 1.2 1.0 0.8 0.6 0.4
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
Avg.
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Jun-14
Feb-15
Oct-13
Feb-13
Oct-11
Jun-12
Jun-10
Feb-11
Jan-09
Sep-09
May-08
Jan-07
Sep-07
May-06
Jan-05
Sep-05
0.2
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
1.3
62
22
+1.5SD
1.2
57
12
+1.0SD
1.1
52
2
+0.5SD
1.0
47
-8
Average
0.9
42
-18
-0.5SD
0.8
37
-28
-1.0SD
0.7
32
-37
-1.5SD
0.6
27
-47
-2.0SD
0.5
22
-57
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 (X)
2016E
16 14
to current price (%) 13
+2.0SD
13.1
58
+1.5SD
11.8
52
2
+1.0SD
10.6
47
-9
Avg.
6
-1 S.D.
2
Upside/ Downside
price (Bt) +1 S.D.
8
4
Implied market
+2 S.D.
12 10
PER (x)
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Feb-15
May-14
Dec-12
Aug-13
Jun-11
Mar-12
Oct-10
Jan-10
May-09
Aug-08
Mar-07
Nov-07
Jun-06
Sep-05
Jan-05
0
+0.5SD
9.3
41
-20
Average
8.1
35
-31
-0.5SD
6.8
30
-41
-1.0SD
5.5
24
-52
-1.5SD
4.3
19
-63
-2.0SD
3.0
13
-74
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, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT, EKH.
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.
