KASIKORNBANK
KASIKORNBANK Outperform (17E TP Bt200.00)
Company Update
Close Bt187.50
Banking October 3, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Expect flat earnings YoY for 3Q16E Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
16.130
19.080
KT ZMICO vs. consensus Share data
‐1.8%
‐9.2%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
449.00/12,973.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
203.00/144.00
Avg. daily T/O (shares 000)
8,895.00
NVDR (%)
25.47
Estimated free float (%)
66.02
Beta
1.39
URL
www.kasikornbank.com
CGR
Outperform rating maintained We maintain our Outperform rating and keep KBANK as our top stock pick in the sector. We view that KBANK will be one of the primary banks to gain from the ongoing gradual economic growth and the new round of consumption recovery given its solid non‐intrerst income base. Financial targets maintained KBANK kept its 2016 targets unchanged but provided some key indications that 1) cost to income for 2016 is likely to be near the low‐ end target (45‐47%); and 2) the non‐interst income target (up to 10% growth) could be quite challenging to achieve. Specifically, for the asset quality outlook, the bank expects that its NPL ratio should still rise but likely peak in 3Q16. Subsequently, there should be a stable outlook in 4Q16E as the bank sees the acceleration rate for new NPL formation being quite slower. Expect 3Q16E net profit of Bt10bn (‐1% YoY and +6% QoQ) The main reason behind the NP improvement QoQ should be a lower proivision following KBANK’s policy this year that it will set a higher provision in 1H16 (at 241 bps vs. the bank’s guidance of up to 190 bps for FY16) vs. 2H16. Loans will likely grow by 1% QoQ (4% YTD), still in line with the bank’s target of 6‐7% for 2016E. NIM is likely to decline both YoY and QoQ on the impact of weakened asset quality. Non‐interest income should decline both YoY and QoQ, partly on the impact of the low season effect in 3Q16. KBANK expects its NPL ratio to peak in 3Q16E As per the bank’s latest indication, its NPL ratio will likely peak in 3Q16E and could see a stable outlook for 4Q16E. This implies that we should see a sharp hike in its NPLs QoQ in 3Q16E (vs. 2.9% in 2Q16 and the bank’s guidanc of 3.5‐3.6% at end‐2016). However, despite the likelihood of a higher NPL ratio in 3Q16, KBANK said that it is keeping its provision guidance (up to 190 bps) for 2016E unchanged as it already set a higher provision during 1H16. Financials and Valuation FY Ended 31 Dec
Level 4 (Certified)
Anti‐corruption
2014
2015
2016E
2017E
2018E
Provision (Btm)
14,243
26,377
33,276
35,017
38,167
Net profit (Btm)
46,153
39,474
37,897
41,461
46,873
19.28
16.49
15.84
17.32
19.59
EPS (Bt)
Prapharas Nonthapiboon
EPS growth (%)
12%
‐14%
‐4%
9%
13%
Book value (Bt)
107.41
119.42
131.25
144.58
160.16
Dividend (Bt)
4.00
4.00
4.00
4.00
4.50
Analyst, no 17836
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
9.72
11.37
11.84
10.82
9.57
PBV (X)
1.75
1.57
1.43
1.30
1.17
Dividend yield (%)
2.13
2.13
2.13
2.13
2.40
ROE (%)
19%
15%
13%
13%
13%
66 (0) 2695‐5872
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: KBANK’s financial targets for 2016E vs. our forecasts
ROE ROA Net i nteres t ma rgi n (NIM) Loa n growth YoY Non‐i nteres t i ncome growth Provi s i on/yea r (bps ) Cos t to i ncome ra ti o Gros s NPL ra ti o
2014 2015E 2015 1H16 2016E* 2016E Actual KBANK's Targets Actual Actual KBANK's Targets KTZ Forecasts 19.4% N/A 14.5% 26.6% N/A 12.6% 2.0% N/A 1.6% 1.5% N/A 1.4% 3.81% 3.5‐3.7% 3.68% 3.57% 3.3‐3.5% 3.51% 6%
Company Update
Close Bt187.50
Banking October 3, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Expect flat earnings YoY for 3Q16E Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
16.130
19.080
KT ZMICO vs. consensus Share data
‐1.8%
‐9.2%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
449.00/12,973.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
203.00/144.00
Avg. daily T/O (shares 000)
8,895.00
NVDR (%)
25.47
Estimated free float (%)
66.02
Beta
1.39
URL
www.kasikornbank.com
CGR
Outperform rating maintained We maintain our Outperform rating and keep KBANK as our top stock pick in the sector. We view that KBANK will be one of the primary banks to gain from the ongoing gradual economic growth and the new round of consumption recovery given its solid non‐intrerst income base. Financial targets maintained KBANK kept its 2016 targets unchanged but provided some key indications that 1) cost to income for 2016 is likely to be near the low‐ end target (45‐47%); and 2) the non‐interst income target (up to 10% growth) could be quite challenging to achieve. Specifically, for the asset quality outlook, the bank expects that its NPL ratio should still rise but likely peak in 3Q16. Subsequently, there should be a stable outlook in 4Q16E as the bank sees the acceleration rate for new NPL formation being quite slower. Expect 3Q16E net profit of Bt10bn (‐1% YoY and +6% QoQ) The main reason behind the NP improvement QoQ should be a lower proivision following KBANK’s policy this year that it will set a higher provision in 1H16 (at 241 bps vs. the bank’s guidance of up to 190 bps for FY16) vs. 2H16. Loans will likely grow by 1% QoQ (4% YTD), still in line with the bank’s target of 6‐7% for 2016E. NIM is likely to decline both YoY and QoQ on the impact of weakened asset quality. Non‐interest income should decline both YoY and QoQ, partly on the impact of the low season effect in 3Q16. KBANK expects its NPL ratio to peak in 3Q16E As per the bank’s latest indication, its NPL ratio will likely peak in 3Q16E and could see a stable outlook for 4Q16E. This implies that we should see a sharp hike in its NPLs QoQ in 3Q16E (vs. 2.9% in 2Q16 and the bank’s guidanc of 3.5‐3.6% at end‐2016). However, despite the likelihood of a higher NPL ratio in 3Q16, KBANK said that it is keeping its provision guidance (up to 190 bps) for 2016E unchanged as it already set a higher provision during 1H16. Financials and Valuation FY Ended 31 Dec
Level 4 (Certified)
Anti‐corruption
2014
2015
2016E
2017E
2018E
Provision (Btm)
14,243
26,377
33,276
35,017
38,167
Net profit (Btm)
46,153
39,474
37,897
41,461
46,873
19.28
16.49
15.84
17.32
19.59
EPS (Bt)
Prapharas Nonthapiboon
EPS growth (%)
12%
‐14%
‐4%
9%
13%
Book value (Bt)
107.41
119.42
131.25
144.58
160.16
Dividend (Bt)
4.00
4.00
4.00
4.00
4.50
Analyst, no 17836
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
[email protected]
PER (X)
9.72
11.37
11.84
10.82
9.57
PBV (X)
1.75
1.57
1.43
1.30
1.17
Dividend yield (%)
2.13
2.13
2.13
2.13
2.40
ROE (%)
19%
15%
13%
13%
13%
66 (0) 2695‐5872
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: KBANK’s financial targets for 2016E vs. our forecasts
ROE ROA Net i nteres t ma rgi n (NIM) Loa n growth YoY Non‐i nteres t i ncome growth Provi s i on/yea r (bps ) Cos t to i ncome ra ti o Gros s NPL ra ti o
2014 2015E 2015 1H16 2016E* 2016E Actual KBANK's Targets Actual Actual KBANK's Targets KTZ Forecasts 19.4% N/A 14.5% 26.6% N/A 12.6% 2.0% N/A 1.6% 1.5% N/A 1.4% 3.81% 3.5‐3.7% 3.68% 3.57% 3.3‐3.5% 3.51% 6%
