Muangthai Leasing
Muangthai Leasing Company Update
Buy (16E TP Bt26.00) Close Bt19.90
Finance & Securities June 22, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
2Q16E earnings growth to continue outshining peers Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.570
0.762
KT ZMICO vs. consensus Share data
5.3%
10.2%
Reuters / Bloomberg
MTLS.BK/MTLS TB 2,120.00
Paid‐up Shares (m)
1.00
Par (Bt) Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
42.00/1,199.00 49.00/2.30 22.10/15.00 7,299.00 2.33
NVDR (%) Estimated free float (%)
20.07
Beta
0.82
URL
www.muangthaileasing.co.th
CGR
Anti‐corruption
Level 3 (Declared)
Growth remains intact despite macro headwinds We maintain our BUY rating for MTLS. We still like MTLS in regard to it being one of the top growth stocks in the financial sector as well as its prudent risk management and efficient asset quality control. We still expect MTLS to show outstanding earnings growth vs. financial peers over the next three years thanks to the favorable industry outlook and its long‐standing expertise in the field. Expect 2Q16E net profit of Bt304mn (+66% YoY, +8% QoQ) We expect MTLS to post a robust 2Q16E net profit (NP) of Bt304mn (+66% YoY, +8% QoQ) and a 1H16E NP of Bt584mn (+60% YoY). The sharp NP growth YoY for 2Q16E should be backed mainly by its robust loan growth of ~76% YoY and 14% QoQ and non‐interest income growth of ~22% YoY. This should be thanks primarily to its ongoing aggressive branch expansion to around 1,240 branches at end‐2Q16 vs. 940 branches at end‐15, with around 126 and 300 new branches opened in 2Q16 and 1H16, respectively, vs. the firm’s plan to expand ~450 new branches for 2016. The interest spread should remain quite stable QoQ at ~19% but improve sharply YoY from 17.4%, thanks mainly to its efficient funding cost management and the low interest environment. Asset quality remains manageable Given MTLS’s strength over peers with respect to its prudent practices in asset quality control, its NPL ratio for 2Q16E is likely to remain controllable at ~0.9% of loans vs. 1.25% in 2Q15 and 0.92% at end‐15. Management reaffirms robust lending growth of >50% in 2016‐17E MTLS’s management reaffirmed that its lending growth for the next two years (2016‐17E) will be above 50% backed by its plan to expand 450 new branches in 2016E and 400 branches in 2017E to a total of ~1,750 branches at end‐2017E. This is still in line with MTLS’s L‐T estimate that its top and bottom lines should grow ~50% for 2016‐17E and ~30% after 2018E. MTLS added to SET50 and SET100 indices The Stock Exchange of Thailand (SET) has announced the semi‐annual index review results for the SET50, SET100 and SETHD indices to be used in 2H16 (July 1‐December 31). MTLS was added to both the SET50 and SET100 indices. This should partly help to improve the potential for institutional or foreign investors’ investment in the stock over the L‐T. Financials and Valuation 2014
2015
2016E
2017E
2018E
PPOP (Btm)
572
856
1,373
1,938
2,626
Net profit (Btmn)
544
825
1,276
1,786
2,403 1.13
FY Ended 31 Dec
EPS (Bt)
0.26
0.39
0.60
0.84
EPS growth (%)
15%
52%
55%
40%
35%
BV (Bt)
2.41
2.67
3.07
3.61
4.32
Dividend (Bt)
0.13
0.20
0.30
0.42
0.57
Prapharas Nonthapiboon
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
Analyst, no 17836
PER (x)
77.53
51.14
33.05
23.63
17.56
[email protected]
PBV (x)
8.26
7.46
6.49
5.51
4.60
Dividend yield (%) ROE (%)
0.65
1.01
1.51
2.12
2.85
15%
15%
21%
25%
29%
66 (0) 2695‐5872
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
Figure 1: 2Q16E earnings preview Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
2Q15
1Q16 2Q16E % YoY % QoQ
1H15
1H16E % YoY
2015
2016E % YoY % 1H to 16E
Interest Income
502
769
860
71%
12% 954
1,629
71% 2,225
3,551
60%
46%
Interest Expenses
50
66
75
49%
13% 108
141
31% 228
371
63%
38%
Net Interest Income
452
703
785
74%
12% 845
1,488
76% 1,998
3,180
59%
47%
Non Interest Income
81
96
99
22%
2% 162
195
20% 334
386
16%
51%
Operating Income
532
799
884
66%
11% 1,008
1,683
67% 2,331
3,566
53%
47%
Operating Expenses
298
390
436
46%
12% 566
826
46% 1,269
1,871
47%
44%
Operating Profit
235
409
448
91%
9% 442
857
94% 1,063
1,695
59%
51%
Provision expenses (Reversal)
5
57
65 1160%
13% (16) 122 ‐853% 25
85
245%
144%
Taxes
45
70
77
322
56%
45%
Gain(loss) from foreclosed assets
(1) (2) (2)
95%
Net Profit PPOP EPS (Bt)
183 190 0.09
66% 96% 66%
Key Statistics and Ratios
2Q15
Gross NPLs (Btmn)
117
Gross NPLs/Loans
1.25%
Loan Loss Reserve/NPLs
280 339 0.13
70%
304 371 0.14
9% 91
16% (2) (4) 8% 365 9% 351 8% 0.17
1Q16 2Q16E 130
148
0.90%
0.90%
1H15
258.8% 299.1% 289.3%
Loan Loss Reserve/Loans
146 584 710 0.28
61% 207
75% (6) (11) 60% 825 102% 856 60% 0.39
1H16E
117
148
1.25%
0.90%
1,276 1,373 0.60
2015 117
2016E 0.87%
287.6% 239.2%
3.2%
2.7%
2.6%
3.2%
2.6%
2.7%
2.1%
53.3%
38.9%
34.0%
53.3%
34.0%
43.2%
33.4%
Equity/Asset Loan to borrowing ratio
215.2% 162.5% 152.6%
Debt to equity ratio
0.9
37% 46% 52% 46%
164
0.92%
258.8% 289.3%
83% 55% 60% 55%
215.2% 152.6%
177.3% 146.1%
1.6
1.9
0.9
1.9
1.3
2.0
Cost to Income
55.9%
48.8%
49.3%
56.1%
49.1%
54.4%
52.5%
Non Interest Income/Total Income
15.1%
12.1%
11.1%
16.1%
11.6%
14.3%
10.8% 18.8%
Interest Spread
17.4%
19.4%
19.2%
17.2%
19.2%
17.9%
Net Interest Margin
20.7%
20.7%
20.3%
19.5%
20.4%
19.4%
20.1%
Loan Growth YoY
43.7%
79.2%
76.3%
43.7%
76.3%
69.6%
50.0%
Loan Growth QoQ
15.8%
14.5%
14.0%
15.8%
14.0%
Source: KTZMICO Research
Figure 2: MTLS's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 9.0
+3.0 S.D.
8.5
+2.5 S.D. +2.0 S.D.
8.0
+1.5 S.D.
7.5
+1.0 S.D. +0.5 S.D.
7.0 6.5 6.0 5.5 5.0
Avg. -0.5 S.D. -1.0 S.D. -1.5 S.D. -2 S.D.
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
Oct-15
Source: Bloomberg, KT ZMICO Research
Nov-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Jan-15
Feb-15
Nov-14
Dec-14
4.0
Mar-15
4.5
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
26
30
8.1
25
24
+1.5SD
7.7
24
19
+1.0SD
7.4
23
13
+0.5SD
7.0
22
8
Average
6.6
20
2
-0.5SD
6.3
19
-4
-1.0SD
5.9
18
-9
-1.5SD
5.6
17
-15
-2.0SD
5.2
16
-20
2016E
PBV (x)
+2.5SD
8.5
+2.0SD
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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 TPBI.
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 3 of 3
Buy (16E TP Bt26.00) Close Bt19.90
Finance & Securities June 22, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
2Q16E earnings growth to continue outshining peers Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.570
0.762
KT ZMICO vs. consensus Share data
5.3%
10.2%
Reuters / Bloomberg
MTLS.BK/MTLS TB 2,120.00
Paid‐up Shares (m)
1.00
Par (Bt) Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
42.00/1,199.00 49.00/2.30 22.10/15.00 7,299.00 2.33
NVDR (%) Estimated free float (%)
20.07
Beta
0.82
URL
www.muangthaileasing.co.th
CGR
Anti‐corruption
Level 3 (Declared)
Growth remains intact despite macro headwinds We maintain our BUY rating for MTLS. We still like MTLS in regard to it being one of the top growth stocks in the financial sector as well as its prudent risk management and efficient asset quality control. We still expect MTLS to show outstanding earnings growth vs. financial peers over the next three years thanks to the favorable industry outlook and its long‐standing expertise in the field. Expect 2Q16E net profit of Bt304mn (+66% YoY, +8% QoQ) We expect MTLS to post a robust 2Q16E net profit (NP) of Bt304mn (+66% YoY, +8% QoQ) and a 1H16E NP of Bt584mn (+60% YoY). The sharp NP growth YoY for 2Q16E should be backed mainly by its robust loan growth of ~76% YoY and 14% QoQ and non‐interest income growth of ~22% YoY. This should be thanks primarily to its ongoing aggressive branch expansion to around 1,240 branches at end‐2Q16 vs. 940 branches at end‐15, with around 126 and 300 new branches opened in 2Q16 and 1H16, respectively, vs. the firm’s plan to expand ~450 new branches for 2016. The interest spread should remain quite stable QoQ at ~19% but improve sharply YoY from 17.4%, thanks mainly to its efficient funding cost management and the low interest environment. Asset quality remains manageable Given MTLS’s strength over peers with respect to its prudent practices in asset quality control, its NPL ratio for 2Q16E is likely to remain controllable at ~0.9% of loans vs. 1.25% in 2Q15 and 0.92% at end‐15. Management reaffirms robust lending growth of >50% in 2016‐17E MTLS’s management reaffirmed that its lending growth for the next two years (2016‐17E) will be above 50% backed by its plan to expand 450 new branches in 2016E and 400 branches in 2017E to a total of ~1,750 branches at end‐2017E. This is still in line with MTLS’s L‐T estimate that its top and bottom lines should grow ~50% for 2016‐17E and ~30% after 2018E. MTLS added to SET50 and SET100 indices The Stock Exchange of Thailand (SET) has announced the semi‐annual index review results for the SET50, SET100 and SETHD indices to be used in 2H16 (July 1‐December 31). MTLS was added to both the SET50 and SET100 indices. This should partly help to improve the potential for institutional or foreign investors’ investment in the stock over the L‐T. Financials and Valuation 2014
2015
2016E
2017E
2018E
PPOP (Btm)
572
856
1,373
1,938
2,626
Net profit (Btmn)
544
825
1,276
1,786
2,403 1.13
FY Ended 31 Dec
EPS (Bt)
0.26
0.39
0.60
0.84
EPS growth (%)
15%
52%
55%
40%
35%
BV (Bt)
2.41
2.67
3.07
3.61
4.32
Dividend (Bt)
0.13
0.20
0.30
0.42
0.57
Prapharas Nonthapiboon
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
Analyst, no 17836
PER (x)
77.53
51.14
33.05
23.63
17.56
[email protected]
PBV (x)
8.26
7.46
6.49
5.51
4.60
Dividend yield (%) ROE (%)
0.65
1.01
1.51
2.12
2.85
15%
15%
21%
25%
29%
66 (0) 2695‐5872
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
Figure 1: 2Q16E earnings preview Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
2Q15
1Q16 2Q16E % YoY % QoQ
1H15
1H16E % YoY
2015
2016E % YoY % 1H to 16E
Interest Income
502
769
860
71%
12% 954
1,629
71% 2,225
3,551
60%
46%
Interest Expenses
50
66
75
49%
13% 108
141
31% 228
371
63%
38%
Net Interest Income
452
703
785
74%
12% 845
1,488
76% 1,998
3,180
59%
47%
Non Interest Income
81
96
99
22%
2% 162
195
20% 334
386
16%
51%
Operating Income
532
799
884
66%
11% 1,008
1,683
67% 2,331
3,566
53%
47%
Operating Expenses
298
390
436
46%
12% 566
826
46% 1,269
1,871
47%
44%
Operating Profit
235
409
448
91%
9% 442
857
94% 1,063
1,695
59%
51%
Provision expenses (Reversal)
5
57
65 1160%
13% (16) 122 ‐853% 25
85
245%
144%
Taxes
45
70
77
322
56%
45%
Gain(loss) from foreclosed assets
(1) (2) (2)
95%
Net Profit PPOP EPS (Bt)
183 190 0.09
66% 96% 66%
Key Statistics and Ratios
2Q15
Gross NPLs (Btmn)
117
Gross NPLs/Loans
1.25%
Loan Loss Reserve/NPLs
280 339 0.13
70%
304 371 0.14
9% 91
16% (2) (4) 8% 365 9% 351 8% 0.17
1Q16 2Q16E 130
148
0.90%
0.90%
1H15
258.8% 299.1% 289.3%
Loan Loss Reserve/Loans
146 584 710 0.28
61% 207
75% (6) (11) 60% 825 102% 856 60% 0.39
1H16E
117
148
1.25%
0.90%
1,276 1,373 0.60
2015 117
2016E 0.87%
287.6% 239.2%
3.2%
2.7%
2.6%
3.2%
2.6%
2.7%
2.1%
53.3%
38.9%
34.0%
53.3%
34.0%
43.2%
33.4%
Equity/Asset Loan to borrowing ratio
215.2% 162.5% 152.6%
Debt to equity ratio
0.9
37% 46% 52% 46%
164
0.92%
258.8% 289.3%
83% 55% 60% 55%
215.2% 152.6%
177.3% 146.1%
1.6
1.9
0.9
1.9
1.3
2.0
Cost to Income
55.9%
48.8%
49.3%
56.1%
49.1%
54.4%
52.5%
Non Interest Income/Total Income
15.1%
12.1%
11.1%
16.1%
11.6%
14.3%
10.8% 18.8%
Interest Spread
17.4%
19.4%
19.2%
17.2%
19.2%
17.9%
Net Interest Margin
20.7%
20.7%
20.3%
19.5%
20.4%
19.4%
20.1%
Loan Growth YoY
43.7%
79.2%
76.3%
43.7%
76.3%
69.6%
50.0%
Loan Growth QoQ
15.8%
14.5%
14.0%
15.8%
14.0%
Source: KTZMICO Research
Figure 2: MTLS's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 9.0
+3.0 S.D.
8.5
+2.5 S.D. +2.0 S.D.
8.0
+1.5 S.D.
7.5
+1.0 S.D. +0.5 S.D.
7.0 6.5 6.0 5.5 5.0
Avg. -0.5 S.D. -1.0 S.D. -1.5 S.D. -2 S.D.
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
Oct-15
Source: Bloomberg, KT ZMICO Research
Nov-15
Jul-15
Aug-15
Jun-15
Apr-15
May-15
Jan-15
Feb-15
Nov-14
Dec-14
4.0
Mar-15
4.5
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
26
30
8.1
25
24
+1.5SD
7.7
24
19
+1.0SD
7.4
23
13
+0.5SD
7.0
22
8
Average
6.6
20
2
-0.5SD
6.3
19
-4
-1.0SD
5.9
18
-9
-1.5SD
5.6
17
-15
-2.0SD
5.2
16
-20
2016E
PBV (x)
+2.5SD
8.5
+2.0SD
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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 TPBI.
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 3 of 3
