Kiatnakin Bank
Kiatnakin Bank Underperform (17E TP Bt52.00)
Company Update
Close Bt51.00
Banking July 27, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Improving outlook but limited upside Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.215
5.637
KT ZMICO vs. consensus Share data
1.8%
‐1%
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 (%)
44.00/34.26
52 week High / Low (Bt)
53.25/29.50
Avg. daily T/O (shares 000) NVDR (%)
1,845.00 7.59
Estimated free float (%)
68.68
Beta
0.86
URL
www.kiatnakinphatra.com
CGR
Anti‐corruption
Level 4 (Certified)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Valuations leave little room for upside We maintain our Underperform rating for KKP despite our earnings upgrade as the recent price run‐up (+6% in 1 week and +25% in 1 month) could post narrow upside vs. our 2017E target price of Bt52/share. Meanwhile, its sound dividend yield of 5‐6% is still the main price appeal. Some revision of 2016 financial targets KKP revisited some of its financial guidance, which mainly includes 1) lowering its loan grow targets to around 0‐5% from its original aim of 15‐19%; 2) slightly better NIM; 3) an improving asset quality outlook for auto hire purchase loans, while residential project loans still need to be watched closely; and 4) a gradual decline in losses on repossessed cars. Long term strategic intents to focus more on higher yield assets The group’s main long term strategic intents will focus on 1) reducing the dependency on auto hire purchase loans (it targets L‐T HP loans at below 50% from ~65% currently); 2) gearing toward higher yield assets, especially in personal loans, small SME (micro SME under the TCG guarantee program) and car quick cash loans, coupled with penetrating lower risk loans (corporate loans and Lombard loans); and 3) continuing to boost its fee‐based income through its capital market units (especially in hedge funds, equity derivatives trading (EDT) and wealth/fund management) and the issuance of innovative products. Raise net profit estimates for 16‐17E by 8‐21% We raised our net profit estimates for 2016‐17E by 21% and 8%, respectively, to fine‐tune with its latest strategic guidances and the higher‐than‐expected 1H16 results. The main revisions are 1) much lower losses on repossessed cars; 2) a better performance by its capital market units; 3) a lower provision and slightly higher NIM, see Figure 1. Following our upward NP revision coupled with rolling over to use the 17E NP, the 17E target price stands at Bt52/share, for implied target P/BV of 1.0x, based on L‐T ROE of 12%. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btm) EPS (Bt) EPS growth (%) Book value (Bt) Dividend (Bt)
2014 5,695 2,734 3.24 ‐38.4% 43.52 1.85
2015 5,514 3,317 3.92 20.8% 44.79 3.00
2016E 5,046 4,496 5.31 35.5% 46.71 3.00
2017E 4,827 4,727 5.58 5.1% 49.76 3.07
2018E 5,084 5,095 6.02 7.8% 52.92 3.13
FY Ended 31 Dec PER (X) PBV (X) Dividend yield (%) ROE (%)
2014 15.72 1.14 3.63 8%
2015 13.02 1.14 5.88 9%
2016E 9.61 1.09 5.88 11%
2017E 9.14 1.02 6.02 11%
2018E 8.48 0.96 6.13 12%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Key changes in our earnings revision 2016E Previous 3,721
Net profit (Btmn) Net profit change from previous forecasts (%) Net profit change YoY (%) Loan growth (%) Provision for loan loss (Btmn) Provision for loan loss (bps of loans)
New 4,496 21% 36% 0% 2,750 1.55% 376
5% 3,082 1.65% 299
Gain (loss) on investments
2017E Previous 4,394
9% 2,849 1.40% 337
New 4,727 8% 5% 5% 2,424 1.30% 337
Gain (loss) on FX and derivative transactions
709
709
891
891
Gain (loss) from sale of repossessed cars
‐850
‐553
‐750
‐450
Loan spread (%) Source: KT ZMICO Research
4.5%
4.6%
4.5%
4.5%
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
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
1.2 1.0
Avg.
Jul-16
Oct-15
Feb-15
Oct-13
Jun-14
Feb-13
Oct-11
Jun-12
Feb-11
Jun-10
Jan-09
Sep-09
May-08
Jan-05
Sep-05
0.2
Jan-07
0.4
Sep-07
0.6
May-06
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
0.8
Source: Bloomberg, KT ZMICO Research
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
1.3
63
24
+1.5SD
1.2
58
14
+1.0SD
1.1
53
4
+0.5SD
1.0
48
-6
Average
0.9
43
-16
-0.5SD
0.8
38
-26
-1.0SD
0.7
33
-36
-1.5SD
0.6
27
-46
-2.0SD
0.5
22
-56
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.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
13.0
69
35
+1.5SD
11.7
62
22
+1.0SD
10.5
56
9
+0.5SD
9.2
49
-4
Average
8.0
42
-17
2
-0.5SD
6.7
36
-30
0
-1.0SD
5.5
29
-43
-1.5SD
4.2
22
-56
-2.0SD
3.0
16
-69
12
+1 S.D.
10 Avg.
8 6
-1 S.D.
4
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Feb-15
May-14
Dec-12
Aug-13
Mar-12
Jun-11
Oct-10
Jan-10
May-09
Aug-08
Mar-07
Nov-07
Jun-06
Sep-05
Jan-05
-2 S.D.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Interest on Loans and Deposits
2014 4,976
2015 4,754
2016E 4,295
2017E 4,795
2018E 5,687
Hire Purchase Income
9,744
8,910
8,886
8,748
8,995
Interest & Dividend on Securities
604
578
405
439
531
Investment in FRA Unit trusts
606
534
617
451
371
15,929
14,776
14,203
14,432
15,584
7,016
5,328
4,579
4,767
5,265
22,945
20,104
18,782
19,199
20,849
Total Interest Income Interest Expenses on Borrowing Net Interest Income Non‐Interest Income Operating Income
3,968
4,804
6,162
6,412
6,628
26,914
24,908
24,944
25,611
27,477
Operating Expenses
6,519
7,017
7,596
7,861
8,286
Operating Profit
6,125
6,224
5,990
5,893
6,235
Provision (Reversal) for loan loss
3,199
3,208
2,750
2,424
2,415
385
602
870
985
1,062
Taxes
‐45
‐108
‐73
‐81
‐89
Net Profit
2,734
3,317
4,496
4,727
5,095
PPOP
5,695
5,514
5,046
4,827
5,084
3.24
3.92
5.31
5.58
6.02
2014 8,308
2015 10,833
2016E 11,592
2017E 12,202
2018E 12,840
33,015
24,033
25,861
26,875
28,109
Minority Interest
EPS (Bt)
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash & Money Market Items Net Investment
60,385
61,720
66,120
74,066
85,505
Hire Purchase Loans ‐ Gross
Finance & Securities Loans ‐ Gross
124,252
116,246
111,596
112,712
116,093
Net Loans
177,457
169,356
167,158
174,684
188,073
Total Assets
241,153
236,144
238,431
249,325
266,604
Deposits
132,315
104,327
104,953
109,571
120,747
Total Borrowings
184,881
174,621
173,024
180,279
193,487
Total Liabilities
19,805
30,891
32,582
34,079
35,801
Paid‐up Capital Retained Earning Total Equity
8,428
8,468
8,468
8,468
8,468
17,029
18,346
20,821
22,449
24,184
36,682
37,929
40,816
43,002
45,497
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Valuations and Ratio Analysis Year‐end 31 Dec
2014
2015
2016E
2017E
2018E
EPS
3.24
3.92
5.31
5.58
6.02
DPS
1.85
3.00
3.00
3.07
3.13
BVPS
43.52
44.79
48.20
50.78
53.73
15.72
13.02
9.61
9.14
8.48
P/BV (X)
1.14
1.14
1.06
1.00
0.95
Dividend yield (%)
3.63
5.88
5.88
6.02
6.13
Net Profit
‐38.1
21.3
35.5
5.1
7.8
EPS
‐38.4
20.8
35.5
5.1
7.8
6.8
6.0
1.9
0.4
6.8
‐35.6
21.0
28.3
4.1
3.4
‐5.2
7.6
8.2
3.5
5.4
Per/Share Data (Bt)
Multiplier PE (X)
Percentage Growth (%)
Net Interest Income Non Interest Income Operating Expense Operating Profit
1.6
1.6
‐3.8
‐1.6
5.8
Loans
‐3.2
‐3.6
‐0.1
5.1
7.9
Deposits
‐9.4
‐21.2
0.6
4.4
10.2
NPLs
42.1
0.5
‐2.0
3.0
‐4.0
NPLs (Btmn)
10,352
10,408
10,200
10,506
10,086
NPLs/Loans
5.6
5.8
5.7
5.6
5.0
80.4
91.7
112.7
124.5
144.6
Equity/Asset
15.2
16.1
17.1
17.2
17.1
Tier I to Risk Assets
14.8
14.6
15.7
15.8
15.5
Asset Quality Ratio (%)
Loan Loss Reserve/NPLs Capital & Liquidity Ratio (%)
Total Capital Adequacy Ratio
15.2
16.5
17.9
17.9
17.7
Loan to Deposit & Borrowing
144.6
179.5
178.7
179.8
175.9
Profitability Ratio (%) ROA
1.1
1.4
1.9
1.9
2.0
ROE
7.6
8.9
11.4
11.3
11.5
50.6
49.2
48.1
48.9
48.9
Cost to Income Net Interest margin
3.91
4.33
4.52
4.41
4.43
Loan spread
3.98
4.40
4.60
4.47
4.45
Key Assumptions
2014
2015
2016E
2017E
2018E
Loan Growth ‐ Net
‐3.2
‐3.6
‐0.1
5.1
7.9
Cost to Income
50.6
49.2
48.1
48.9
48.9
Net Interest margin Provision (Btmn) Provision (% of loans)
3.9
4.3
4.5
4.4
4.4
3,199
3,208
2,750
2,424
2,415
1.74
1.81
1.55
1.30
1.20
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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, M‐CHAI, LPN. 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 5 of 5
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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.
Company Update
Close Bt51.00
Banking July 27, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Improving outlook but limited upside Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.215
5.637
KT ZMICO vs. consensus Share data
1.8%
‐1%
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 (%)
44.00/34.26
52 week High / Low (Bt)
53.25/29.50
Avg. daily T/O (shares 000) NVDR (%)
1,845.00 7.59
Estimated free float (%)
68.68
Beta
0.86
URL
www.kiatnakinphatra.com
CGR
Anti‐corruption
Level 4 (Certified)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Valuations leave little room for upside We maintain our Underperform rating for KKP despite our earnings upgrade as the recent price run‐up (+6% in 1 week and +25% in 1 month) could post narrow upside vs. our 2017E target price of Bt52/share. Meanwhile, its sound dividend yield of 5‐6% is still the main price appeal. Some revision of 2016 financial targets KKP revisited some of its financial guidance, which mainly includes 1) lowering its loan grow targets to around 0‐5% from its original aim of 15‐19%; 2) slightly better NIM; 3) an improving asset quality outlook for auto hire purchase loans, while residential project loans still need to be watched closely; and 4) a gradual decline in losses on repossessed cars. Long term strategic intents to focus more on higher yield assets The group’s main long term strategic intents will focus on 1) reducing the dependency on auto hire purchase loans (it targets L‐T HP loans at below 50% from ~65% currently); 2) gearing toward higher yield assets, especially in personal loans, small SME (micro SME under the TCG guarantee program) and car quick cash loans, coupled with penetrating lower risk loans (corporate loans and Lombard loans); and 3) continuing to boost its fee‐based income through its capital market units (especially in hedge funds, equity derivatives trading (EDT) and wealth/fund management) and the issuance of innovative products. Raise net profit estimates for 16‐17E by 8‐21% We raised our net profit estimates for 2016‐17E by 21% and 8%, respectively, to fine‐tune with its latest strategic guidances and the higher‐than‐expected 1H16 results. The main revisions are 1) much lower losses on repossessed cars; 2) a better performance by its capital market units; 3) a lower provision and slightly higher NIM, see Figure 1. Following our upward NP revision coupled with rolling over to use the 17E NP, the 17E target price stands at Bt52/share, for implied target P/BV of 1.0x, based on L‐T ROE of 12%. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btm) EPS (Bt) EPS growth (%) Book value (Bt) Dividend (Bt)
2014 5,695 2,734 3.24 ‐38.4% 43.52 1.85
2015 5,514 3,317 3.92 20.8% 44.79 3.00
2016E 5,046 4,496 5.31 35.5% 46.71 3.00
2017E 4,827 4,727 5.58 5.1% 49.76 3.07
2018E 5,084 5,095 6.02 7.8% 52.92 3.13
FY Ended 31 Dec PER (X) PBV (X) Dividend yield (%) ROE (%)
2014 15.72 1.14 3.63 8%
2015 13.02 1.14 5.88 9%
2016E 9.61 1.09 5.88 11%
2017E 9.14 1.02 6.02 11%
2018E 8.48 0.96 6.13 12%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Key changes in our earnings revision 2016E Previous 3,721
Net profit (Btmn) Net profit change from previous forecasts (%) Net profit change YoY (%) Loan growth (%) Provision for loan loss (Btmn) Provision for loan loss (bps of loans)
New 4,496 21% 36% 0% 2,750 1.55% 376
5% 3,082 1.65% 299
Gain (loss) on investments
2017E Previous 4,394
9% 2,849 1.40% 337
New 4,727 8% 5% 5% 2,424 1.30% 337
Gain (loss) on FX and derivative transactions
709
709
891
891
Gain (loss) from sale of repossessed cars
‐850
‐553
‐750
‐450
Loan spread (%) Source: KT ZMICO Research
4.5%
4.6%
4.5%
4.5%
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
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
1.2 1.0
Avg.
Jul-16
Oct-15
Feb-15
Oct-13
Jun-14
Feb-13
Oct-11
Jun-12
Feb-11
Jun-10
Jan-09
Sep-09
May-08
Jan-05
Sep-05
0.2
Jan-07
0.4
Sep-07
0.6
May-06
-0.5 S.D. -1 S.D. -1.5 S.D. -2S.D.
0.8
Source: Bloomberg, KT ZMICO Research
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
1.3
63
24
+1.5SD
1.2
58
14
+1.0SD
1.1
53
4
+0.5SD
1.0
48
-6
Average
0.9
43
-16
-0.5SD
0.8
38
-26
-1.0SD
0.7
33
-36
-1.5SD
0.6
27
-46
-2.0SD
0.5
22
-56
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.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
13.0
69
35
+1.5SD
11.7
62
22
+1.0SD
10.5
56
9
+0.5SD
9.2
49
-4
Average
8.0
42
-17
2
-0.5SD
6.7
36
-30
0
-1.0SD
5.5
29
-43
-1.5SD
4.2
22
-56
-2.0SD
3.0
16
-69
12
+1 S.D.
10 Avg.
8 6
-1 S.D.
4
Source: Bloomberg, KT ZMICO Research
Jul-16
Oct-15
Feb-15
May-14
Dec-12
Aug-13
Mar-12
Jun-11
Oct-10
Jan-10
May-09
Aug-08
Mar-07
Nov-07
Jun-06
Sep-05
Jan-05
-2 S.D.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Interest on Loans and Deposits
2014 4,976
2015 4,754
2016E 4,295
2017E 4,795
2018E 5,687
Hire Purchase Income
9,744
8,910
8,886
8,748
8,995
Interest & Dividend on Securities
604
578
405
439
531
Investment in FRA Unit trusts
606
534
617
451
371
15,929
14,776
14,203
14,432
15,584
7,016
5,328
4,579
4,767
5,265
22,945
20,104
18,782
19,199
20,849
Total Interest Income Interest Expenses on Borrowing Net Interest Income Non‐Interest Income Operating Income
3,968
4,804
6,162
6,412
6,628
26,914
24,908
24,944
25,611
27,477
Operating Expenses
6,519
7,017
7,596
7,861
8,286
Operating Profit
6,125
6,224
5,990
5,893
6,235
Provision (Reversal) for loan loss
3,199
3,208
2,750
2,424
2,415
385
602
870
985
1,062
Taxes
‐45
‐108
‐73
‐81
‐89
Net Profit
2,734
3,317
4,496
4,727
5,095
PPOP
5,695
5,514
5,046
4,827
5,084
3.24
3.92
5.31
5.58
6.02
2014 8,308
2015 10,833
2016E 11,592
2017E 12,202
2018E 12,840
33,015
24,033
25,861
26,875
28,109
Minority Interest
EPS (Bt)
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash & Money Market Items Net Investment
60,385
61,720
66,120
74,066
85,505
Hire Purchase Loans ‐ Gross
Finance & Securities Loans ‐ Gross
124,252
116,246
111,596
112,712
116,093
Net Loans
177,457
169,356
167,158
174,684
188,073
Total Assets
241,153
236,144
238,431
249,325
266,604
Deposits
132,315
104,327
104,953
109,571
120,747
Total Borrowings
184,881
174,621
173,024
180,279
193,487
Total Liabilities
19,805
30,891
32,582
34,079
35,801
Paid‐up Capital Retained Earning Total Equity
8,428
8,468
8,468
8,468
8,468
17,029
18,346
20,821
22,449
24,184
36,682
37,929
40,816
43,002
45,497
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Valuations and Ratio Analysis Year‐end 31 Dec
2014
2015
2016E
2017E
2018E
EPS
3.24
3.92
5.31
5.58
6.02
DPS
1.85
3.00
3.00
3.07
3.13
BVPS
43.52
44.79
48.20
50.78
53.73
15.72
13.02
9.61
9.14
8.48
P/BV (X)
1.14
1.14
1.06
1.00
0.95
Dividend yield (%)
3.63
5.88
5.88
6.02
6.13
Net Profit
‐38.1
21.3
35.5
5.1
7.8
EPS
‐38.4
20.8
35.5
5.1
7.8
6.8
6.0
1.9
0.4
6.8
‐35.6
21.0
28.3
4.1
3.4
‐5.2
7.6
8.2
3.5
5.4
Per/Share Data (Bt)
Multiplier PE (X)
Percentage Growth (%)
Net Interest Income Non Interest Income Operating Expense Operating Profit
1.6
1.6
‐3.8
‐1.6
5.8
Loans
‐3.2
‐3.6
‐0.1
5.1
7.9
Deposits
‐9.4
‐21.2
0.6
4.4
10.2
NPLs
42.1
0.5
‐2.0
3.0
‐4.0
NPLs (Btmn)
10,352
10,408
10,200
10,506
10,086
NPLs/Loans
5.6
5.8
5.7
5.6
5.0
80.4
91.7
112.7
124.5
144.6
Equity/Asset
15.2
16.1
17.1
17.2
17.1
Tier I to Risk Assets
14.8
14.6
15.7
15.8
15.5
Asset Quality Ratio (%)
Loan Loss Reserve/NPLs Capital & Liquidity Ratio (%)
Total Capital Adequacy Ratio
15.2
16.5
17.9
17.9
17.7
Loan to Deposit & Borrowing
144.6
179.5
178.7
179.8
175.9
Profitability Ratio (%) ROA
1.1
1.4
1.9
1.9
2.0
ROE
7.6
8.9
11.4
11.3
11.5
50.6
49.2
48.1
48.9
48.9
Cost to Income Net Interest margin
3.91
4.33
4.52
4.41
4.43
Loan spread
3.98
4.40
4.60
4.47
4.45
Key Assumptions
2014
2015
2016E
2017E
2018E
Loan Growth ‐ Net
‐3.2
‐3.6
‐0.1
5.1
7.9
Cost to Income
50.6
49.2
48.1
48.9
48.9
Net Interest margin Provision (Btmn) Provision (% of loans)
3.9
4.3
4.5
4.4
4.4
3,199
3,208
2,750
2,424
2,415
1.74
1.81
1.55
1.30
1.20
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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, M‐CHAI, LPN. 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 5 of 5
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.
