Srisawad Power 1979 Buy (17E TP Bt57.00)
Srisawad Power 1979 Earnings Review
Buy (17E TP Bt57.00) Close Bt46.50
Financial May 12, 2017
Beat forecast/Below forecast/In line
Results beat forecasts Results date: May 11, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
2.317
2.798
KT ZMICO vs. consensus Share data
‐1.6%
‐1.0%
Reuters / Bloomberg
SAWAD.BK/SAWAD TB
Paid‐up Shares (m)
1,045.50
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
49.00/1,399.00
Foreign limit / actual (%)
49.00/22.18
52 week High / Low (Bt)
47.25/25.00
Avg. daily T/O (shares 000) NVDR (%)
6,302.00 8.97
Estimated free float (%)
47.63
Beta
1.36
URL
www.meebaanmeerod.com
CGR
Anti‐corruption
n.a.
Note: An executive of KT ZMICO Securities is also a member of SAWAD’s board. Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Among the top tier growth stocks in the financial sector We maintain our Buy rating for SAWAD. We like SAWAD for it remaining among the leading growth stocks in the financial sector. We expect SAWAD’s move to restructure as a holding company and acquire BFIT to post benefits to the group in the longer run. 1Q17 net profit above both our forecast and the street estimate SAWAD’s 1Q17 net profit of Bt690mn (+64% YoY, +14% QoQ) was above both our forecast and the street estimate (~Bt615mn). The stronger‐than‐ expected results were due mainly to the recognition of a one‐off gain of Bt102mn as a result of measuring the fair value of SAWAD’s 9.84% equity interest in BFIT held since 27 June 2016 before the business combination with BFIT. Note that SAWAD started to consolidate BFIT’s operation into its financial statements on 9 March 2017. This followed SAWAD’s move to acquire a further 26.51% stake in BFIT on 9 March 2017, which increased SAWAD’s total shareholding in BFIT to 36.35% and enabled it to obtain control over BFIT. Note that SAWAD’s separate net profit (excluding BFIT) for 1Q17 stood at Bt667mn (+63% YoY), which also surpassed our forecast, due mainly to lower‐than‐expected operating expenses. 1Q17 net profit came in at Bt690mn (+64% YoY, +14% QoQ) Apart from the booking of one‐off gain stated earlier, the impressive results were backed mainly by its robust loan growth of 47% YoY and 4% QoQ (+62% YoY and +15% QoQ after consolidation of BFIT). This should be thanks to its continuing branch expansion to 2,188 branches at 1Q17 vs. 2,130 branches at end‐16, with 58 new branches opened in 1Q17 vs. its target for new branches of 200‐300 branches in 2017. Meanwhile, NIM after consolidation of BFIT should stay at ~18‐19% vs. ~22% previously. NPLs up QoQ but reserve ratio more solid after consolidation of BFIT SAWAD’s asset quality remains manageable with the NPL ratio (excluding BFIT) for 1Q17 quite stable QoQ at 3.61% of loans. In terms of a consolidated basis, the group NPL ratio stood at 4.6%, up from 3.63% in 4Q16 (separated basis). However, the group’s reserve to NPL ratio became much more solid as it improved to 101% in 1Q17 vs. 61% (separated basis) in 4Q16, while the reserve to total loans also improved to 4.6% in 1Q17 vs. 2.2% in 4Q16. Business Restructuring Plan underway After the completion of the tender offer process, SAWAD holds a 36.35% stake in BFIT. SAWAD will then process its Business Restructuring Plan proposed earlier, which mainly includes 1) partial business transfer, primarily the remaining assets and liabilities relating to the collateralized lending business to “Srisawad Power 2014” within FY2017; and 2) restructuring itself as a holding company and changing its name to “Srisawad Corporation Pcl.” with Srisawad 2014 as its core company; and 3) restructuring businesses within the group of companies to create better synergies among the group. In addition, SAWAD will establish a subsidiary in Laos (Srisawad Leasing Lao Co., Ltd.) and increase the registered capital of Srisawad Vietnam LLC to pave the way for overseas expansion. Financials and Valuation FY Ended 31 Dec Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt) FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2014 855 0.85 11% 3.43 0.02 2014 54.41 13.55 0.05 37%
2015 1,336 1.31 53% 4.67 0.03 2015 35.50 9.95 0.07 33%
2016 2,005 1.92 46% 6.54 0.05 2016 24.25 7.11 0.10 35%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 2,440 2.28 19% 8.52 0.06 2017E 20.42 5.46 0.13 31%
2018E 3,038 2.77 21% 11.04 0.08 2018E 16.81 4.21 0.17 29%
Figure 1: 1Q17 Earnings Results Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
1Q16
4Q16
1Q17
% YoY % QoQ
2016
2017E
% YoY % 1Q to 17E
Interest Income
837
1,186
1,194
43%
1% 4,008
5,643
41%
21%
Interest Expenses
78
108
126
61%
17% 369
527
43%
24%
Net Interest Income
759
1,079
1,067
41%
‐1% 3,639
5,116
41%
21%
Non Interest Income
294
360
390
33%
8% 1,327
1,563
18%
25%
Operating Income
1,053
1,439
1,458
38%
1% 4,967
6,678
34%
22%
Operating Expenses
488
654
650
33%
‐1% 2,298
3,214
40%
20%
Operating Profit Provision expenses (Reversal)
565
785
808
43%
3% 2,669
3,465
30%
23%
38
24
41
6%
66% 158
408
158%
10%
Taxes
105
151
174
65%
15% 502
611
22%
28%
Net Profit
420
608
690
64%
14% 2,005
2,440
22%
28%
PPOP
459
634
634
38%
0% 2,167
2,853
32%
22%
EPS (Bt)
0.41
0.58
0.66
60%
14% 1.92
2.28
19%
29%
1Q16
4Q16
1Q17
2016
Gross NPLs (Btmn)
599
635
923
635
Gross NPLs/Loans
4.85%
3.63%
4.60%
3.63%
4.16%
Loan Loss Reserve/NPLs
89.3%
61.3%
101.0%
61.3%
81.2%
Key Statistics and Ratios (%)
Loan Loss Reserve/Loans Equity/Asset Loan to borrowing ratio Debt to equity ratio (x)
2017E 992
3.2%
2.2%
4.6%
2.2%
3.4%
34.6%
30.8%
26.4%
30.8%
33.0%
136.1%
120.9%
1.9
2.2
111.5%
120.4%
2.6
2.2
135.2% 2.0
Cost to Income
46.4%
45.4%
44.6%
46.3%
48.1%
Non Interest Income/Total Income
28.0%
25.0%
26.8%
26.7%
23.4% 24.0%
Interest Spread
24.4%
25.4%
22.3%
24.4%
Net Interest Margin
22.5%
22.7%
18.3%
22.1%
21.9%
Loan Growth YoY
40.8%
51.0%
62.4%
51.0%
36.4%
6.9%
11.6%
15.0%
Loan Growth QoQ Source: KTZMICO Research
Figure 2: SAWAD's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
Source: Bloomberg, KT ZMICO Research
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Aug-15
May-15
2017E
Feb-15
Nov-14
Aug-14
May-14
12.0 11.0 +3.0 S.D. 10.0 9.0 +2.0 S.D. 8.0 +1.0 S.D. 7.0 Avg. 6.0 -1 S.D. 5.0 -2.0 S.D. 4.0 3.0 2.0
Implied PBV (x) market price
p Downside to current price
(Bt)
(%)
+2.0SD
9.0
76
64
+1.5SD
8.3
71
53
+1.0SD
7.7
65
41
+0.5SD
7.1
60
29
Average
6.4
55
17
-0.5SD
5.8
49
6
-1.0SD
5.1
44
-6
-1.5SD
4.5
38
-18
-2.0SD
3.9
33
-29
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: SAWAD's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 45
2017E
Implied PER (x) market price (Bt)
(%)
+2.0SD
31.9
73
56
+1.5SD
29.6
67
45
+1.0SD
27.3
62
34
+0.5SD
25.0
57
22
Average
22.7
52
11
40 +3.0 S.D.
May-17
Feb-17
Nov-16
Aug-16
May-16
-0.5SD
20.3
46
0
-1.0SD
18.0
41
-12
-1.5SD
15.7
36
-23
-2.0SD
13.4
30
-34
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Nov-15
Aug-15
May-15
May-15
Feb-15
Feb-15
Nov-14
Aug-14
Nov-14
Aug-14
May-14
May-14
Feb-16
+2.0 S.D.
12.0 30 +1.0S.D. 11.0 25 Avg. +3.0 S.D. 10.0 20 -1 S.D. 9.0 +2.0 S.D. 15 S.D. S.D. 8.0 -2+1.0 10 7.0 Avg. 6.0 -1 S.D. 5.0 -2.0 S.D. 4.0 Source: Bloomberg, KT ZMICO Research 3.0 2.0
Aug-15
(X) 35
Downside to current price
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, M‐CHAI, POMPUI, TFD, TTL, NMG.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Buy (17E TP Bt57.00) Close Bt46.50
Financial May 12, 2017
Beat forecast/Below forecast/In line
Results beat forecasts Results date: May 11, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
2.317
2.798
KT ZMICO vs. consensus Share data
‐1.6%
‐1.0%
Reuters / Bloomberg
SAWAD.BK/SAWAD TB
Paid‐up Shares (m)
1,045.50
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
49.00/1,399.00
Foreign limit / actual (%)
49.00/22.18
52 week High / Low (Bt)
47.25/25.00
Avg. daily T/O (shares 000) NVDR (%)
6,302.00 8.97
Estimated free float (%)
47.63
Beta
1.36
URL
www.meebaanmeerod.com
CGR
Anti‐corruption
n.a.
Note: An executive of KT ZMICO Securities is also a member of SAWAD’s board. Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Among the top tier growth stocks in the financial sector We maintain our Buy rating for SAWAD. We like SAWAD for it remaining among the leading growth stocks in the financial sector. We expect SAWAD’s move to restructure as a holding company and acquire BFIT to post benefits to the group in the longer run. 1Q17 net profit above both our forecast and the street estimate SAWAD’s 1Q17 net profit of Bt690mn (+64% YoY, +14% QoQ) was above both our forecast and the street estimate (~Bt615mn). The stronger‐than‐ expected results were due mainly to the recognition of a one‐off gain of Bt102mn as a result of measuring the fair value of SAWAD’s 9.84% equity interest in BFIT held since 27 June 2016 before the business combination with BFIT. Note that SAWAD started to consolidate BFIT’s operation into its financial statements on 9 March 2017. This followed SAWAD’s move to acquire a further 26.51% stake in BFIT on 9 March 2017, which increased SAWAD’s total shareholding in BFIT to 36.35% and enabled it to obtain control over BFIT. Note that SAWAD’s separate net profit (excluding BFIT) for 1Q17 stood at Bt667mn (+63% YoY), which also surpassed our forecast, due mainly to lower‐than‐expected operating expenses. 1Q17 net profit came in at Bt690mn (+64% YoY, +14% QoQ) Apart from the booking of one‐off gain stated earlier, the impressive results were backed mainly by its robust loan growth of 47% YoY and 4% QoQ (+62% YoY and +15% QoQ after consolidation of BFIT). This should be thanks to its continuing branch expansion to 2,188 branches at 1Q17 vs. 2,130 branches at end‐16, with 58 new branches opened in 1Q17 vs. its target for new branches of 200‐300 branches in 2017. Meanwhile, NIM after consolidation of BFIT should stay at ~18‐19% vs. ~22% previously. NPLs up QoQ but reserve ratio more solid after consolidation of BFIT SAWAD’s asset quality remains manageable with the NPL ratio (excluding BFIT) for 1Q17 quite stable QoQ at 3.61% of loans. In terms of a consolidated basis, the group NPL ratio stood at 4.6%, up from 3.63% in 4Q16 (separated basis). However, the group’s reserve to NPL ratio became much more solid as it improved to 101% in 1Q17 vs. 61% (separated basis) in 4Q16, while the reserve to total loans also improved to 4.6% in 1Q17 vs. 2.2% in 4Q16. Business Restructuring Plan underway After the completion of the tender offer process, SAWAD holds a 36.35% stake in BFIT. SAWAD will then process its Business Restructuring Plan proposed earlier, which mainly includes 1) partial business transfer, primarily the remaining assets and liabilities relating to the collateralized lending business to “Srisawad Power 2014” within FY2017; and 2) restructuring itself as a holding company and changing its name to “Srisawad Corporation Pcl.” with Srisawad 2014 as its core company; and 3) restructuring businesses within the group of companies to create better synergies among the group. In addition, SAWAD will establish a subsidiary in Laos (Srisawad Leasing Lao Co., Ltd.) and increase the registered capital of Srisawad Vietnam LLC to pave the way for overseas expansion. Financials and Valuation FY Ended 31 Dec Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt) FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2014 855 0.85 11% 3.43 0.02 2014 54.41 13.55 0.05 37%
2015 1,336 1.31 53% 4.67 0.03 2015 35.50 9.95 0.07 33%
2016 2,005 1.92 46% 6.54 0.05 2016 24.25 7.11 0.10 35%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 2,440 2.28 19% 8.52 0.06 2017E 20.42 5.46 0.13 31%
2018E 3,038 2.77 21% 11.04 0.08 2018E 16.81 4.21 0.17 29%
Figure 1: 1Q17 Earnings Results Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
1Q16
4Q16
1Q17
% YoY % QoQ
2016
2017E
% YoY % 1Q to 17E
Interest Income
837
1,186
1,194
43%
1% 4,008
5,643
41%
21%
Interest Expenses
78
108
126
61%
17% 369
527
43%
24%
Net Interest Income
759
1,079
1,067
41%
‐1% 3,639
5,116
41%
21%
Non Interest Income
294
360
390
33%
8% 1,327
1,563
18%
25%
Operating Income
1,053
1,439
1,458
38%
1% 4,967
6,678
34%
22%
Operating Expenses
488
654
650
33%
‐1% 2,298
3,214
40%
20%
Operating Profit Provision expenses (Reversal)
565
785
808
43%
3% 2,669
3,465
30%
23%
38
24
41
6%
66% 158
408
158%
10%
Taxes
105
151
174
65%
15% 502
611
22%
28%
Net Profit
420
608
690
64%
14% 2,005
2,440
22%
28%
PPOP
459
634
634
38%
0% 2,167
2,853
32%
22%
EPS (Bt)
0.41
0.58
0.66
60%
14% 1.92
2.28
19%
29%
1Q16
4Q16
1Q17
2016
Gross NPLs (Btmn)
599
635
923
635
Gross NPLs/Loans
4.85%
3.63%
4.60%
3.63%
4.16%
Loan Loss Reserve/NPLs
89.3%
61.3%
101.0%
61.3%
81.2%
Key Statistics and Ratios (%)
Loan Loss Reserve/Loans Equity/Asset Loan to borrowing ratio Debt to equity ratio (x)
2017E 992
3.2%
2.2%
4.6%
2.2%
3.4%
34.6%
30.8%
26.4%
30.8%
33.0%
136.1%
120.9%
1.9
2.2
111.5%
120.4%
2.6
2.2
135.2% 2.0
Cost to Income
46.4%
45.4%
44.6%
46.3%
48.1%
Non Interest Income/Total Income
28.0%
25.0%
26.8%
26.7%
23.4% 24.0%
Interest Spread
24.4%
25.4%
22.3%
24.4%
Net Interest Margin
22.5%
22.7%
18.3%
22.1%
21.9%
Loan Growth YoY
40.8%
51.0%
62.4%
51.0%
36.4%
6.9%
11.6%
15.0%
Loan Growth QoQ Source: KTZMICO Research
Figure 2: SAWAD's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
Source: Bloomberg, KT ZMICO Research
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Aug-15
May-15
2017E
Feb-15
Nov-14
Aug-14
May-14
12.0 11.0 +3.0 S.D. 10.0 9.0 +2.0 S.D. 8.0 +1.0 S.D. 7.0 Avg. 6.0 -1 S.D. 5.0 -2.0 S.D. 4.0 3.0 2.0
Implied PBV (x) market price
p Downside to current price
(Bt)
(%)
+2.0SD
9.0
76
64
+1.5SD
8.3
71
53
+1.0SD
7.7
65
41
+0.5SD
7.1
60
29
Average
6.4
55
17
-0.5SD
5.8
49
6
-1.0SD
5.1
44
-6
-1.5SD
4.5
38
-18
-2.0SD
3.9
33
-29
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 3: SAWAD's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 45
2017E
Implied PER (x) market price (Bt)
(%)
+2.0SD
31.9
73
56
+1.5SD
29.6
67
45
+1.0SD
27.3
62
34
+0.5SD
25.0
57
22
Average
22.7
52
11
40 +3.0 S.D.
May-17
Feb-17
Nov-16
Aug-16
May-16
-0.5SD
20.3
46
0
-1.0SD
18.0
41
-12
-1.5SD
15.7
36
-23
-2.0SD
13.4
30
-34
May-17
Feb-17
Nov-16
Aug-16
May-16
Feb-16
Nov-15
Nov-15
Aug-15
May-15
May-15
Feb-15
Feb-15
Nov-14
Aug-14
Nov-14
Aug-14
May-14
May-14
Feb-16
+2.0 S.D.
12.0 30 +1.0S.D. 11.0 25 Avg. +3.0 S.D. 10.0 20 -1 S.D. 9.0 +2.0 S.D. 15 S.D. S.D. 8.0 -2+1.0 10 7.0 Avg. 6.0 -1 S.D. 5.0 -2.0 S.D. 4.0 Source: Bloomberg, KT ZMICO Research 3.0 2.0
Aug-15
(X) 35
Downside to current price
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, M‐CHAI, POMPUI, TFD, TTL, NMG.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
