KASIKORNBANK
KASIKORNBANK Underperform (16E TP Bt165.00)
Company Update
Close Bt162.00
Banking April 29, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Outlook remains challenging Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
16.838
19.608
KT ZMICO vs. consensus Share data
‐6.5%
‐6.9%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
388.00/11,073.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
214.00/144.00
Avg. daily T/O (shares 000)
8,444.00
NVDR (%)
22.21
Estimated free float (%)
78.45
Beta
1.28
URL
www.kasikornbank.com
CGR
No near‐term share price catalyst We maintain our Underperform rating with the new 16E target price of Bt165/share following our downward earnings revision to reflect the bank’s new guidance. Although the current undemanding valuation could be its share price support, we see no near‐term share price catalyst for the stock given the ongoing challenging operating environment amid the weak macro recovery, especially regarding the asset quality issue. KBANK lowerd policy rate and export growth assumptions KBANK yesterday posted its latest GDP growth forecasts and assumptions, maintaining its Thailand GDP growth forecast for 2016E at 3% with a forecast range of 2.5‐3.5%. However, the bank lowered its key assumptions, mainly 1) the policy rate to 1.25% from 1.5% previously; and 2) export growth to 0% vs. 2% previously; as well as 3) upward adjustments to government consumption and investment and tourism revenue to offset the impacts from depressed exports, private consumption, as well as the effects of the drought. KBANK revised down financial targets (higher provision, lower NIM) KBANK’s BOD yesterday approved a downward revision to the bank’s financial targets, mainly to reflect the recent economic conditions and the bank’s latest macro assumptions. The main revisions are in two areas: 1) raising the provision guidance by 20 bps to up to 190 bps from up to 170 bps; and 2) lowering the NIM target by 10 bps to 3.3‐3.5% from 3.4‐3.6%, following its latest view on the policy rate cut to 1.25%. Meanwhile, the bank maintained its estimate that its NPL ratio could continue to increase to 3.5‐3.6% at end‐16. Cut earnings to reflect the new guidance In our latest 1Q16 results report in which we downgraded our rating for KBANK to Underperform, we highlighted that we see downside risk to our earnings forecasts, mainly on the rate cut impact and the potential for a higher‐than‐expected provision following the bank’s massive provision in 1Q16 (280 bps). Based on KBANK’s new guidance, we lowered our net profit foecasts for KBANK by 9% for 2016E and 2% for 2017E, largely on the higher provision and lower NIM on the rate cut impact. Following our NP revision, we lowered our 16E target price from Bt175/share to Bt165/share for implied target P/BV of 1.26x. Financials and Valuation
Anti‐corruption
Level 4 (Certified)
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
63,365
71,867
73,587
78,123
83,157
Provision (Btm)
14,243
26,377
32,903
30,389
26,764
Net profit (Btm)
46,153
39,474
37,681
43,701
51,733
19.28
16.49
15.74
18.26
21.62
EPS growth (%)
12%
‐14%
‐5%
16%
18%
Book value (Bt)
162.54
EPS (Bt)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
107.41
119.42
131.16
145.42
Dividend (Bt)
4.00
4.00
4.00
4.50
5.00
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PER (X)
8.40
9.82
10.29
8.87
7.49
PBV (X)
1.51
1.36
1.24
1.11
1.00
Dividend yield (%)
2.47
2.47
2.47
2.78
3.09
ROE (%)
19%
15%
13%
13%
14%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: KBANK’s key economic forecasts and assumptions (as of Apr‐16)
Source: KBANK
Figure 2: KBANK’s financial targets for 2016E vs. our forecasts 2014 2015E 2015 1Q16 2016E* 2016E Actual KBANK's Targets Actual Actual KBANK's Targets (Revised) KTZ Forecasts 19.4% N/A 14.5% 13.8% N/A 12.6% 2.0% N/A 1.6% 1.5% N/A 1.4% 3.81% 3.5‐3.7% 3.68% 3.63% 3.3‐3.5% (from 3.4‐3.6%) 3.46% 6%
Company Update
Close Bt162.00
Banking April 29, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Outlook remains challenging Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
16.838
19.608
KT ZMICO vs. consensus Share data
‐6.5%
‐6.9%
Reuters / Bloomberg
KBANK.BK/KBANK TB
Paid‐up Shares (m)
2,393.26
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
388.00/11,073.00
Foreign limit / actual (%)
48.98/48.97
52 week High / Low (Bt)
214.00/144.00
Avg. daily T/O (shares 000)
8,444.00
NVDR (%)
22.21
Estimated free float (%)
78.45
Beta
1.28
URL
www.kasikornbank.com
CGR
No near‐term share price catalyst We maintain our Underperform rating with the new 16E target price of Bt165/share following our downward earnings revision to reflect the bank’s new guidance. Although the current undemanding valuation could be its share price support, we see no near‐term share price catalyst for the stock given the ongoing challenging operating environment amid the weak macro recovery, especially regarding the asset quality issue. KBANK lowerd policy rate and export growth assumptions KBANK yesterday posted its latest GDP growth forecasts and assumptions, maintaining its Thailand GDP growth forecast for 2016E at 3% with a forecast range of 2.5‐3.5%. However, the bank lowered its key assumptions, mainly 1) the policy rate to 1.25% from 1.5% previously; and 2) export growth to 0% vs. 2% previously; as well as 3) upward adjustments to government consumption and investment and tourism revenue to offset the impacts from depressed exports, private consumption, as well as the effects of the drought. KBANK revised down financial targets (higher provision, lower NIM) KBANK’s BOD yesterday approved a downward revision to the bank’s financial targets, mainly to reflect the recent economic conditions and the bank’s latest macro assumptions. The main revisions are in two areas: 1) raising the provision guidance by 20 bps to up to 190 bps from up to 170 bps; and 2) lowering the NIM target by 10 bps to 3.3‐3.5% from 3.4‐3.6%, following its latest view on the policy rate cut to 1.25%. Meanwhile, the bank maintained its estimate that its NPL ratio could continue to increase to 3.5‐3.6% at end‐16. Cut earnings to reflect the new guidance In our latest 1Q16 results report in which we downgraded our rating for KBANK to Underperform, we highlighted that we see downside risk to our earnings forecasts, mainly on the rate cut impact and the potential for a higher‐than‐expected provision following the bank’s massive provision in 1Q16 (280 bps). Based on KBANK’s new guidance, we lowered our net profit foecasts for KBANK by 9% for 2016E and 2% for 2017E, largely on the higher provision and lower NIM on the rate cut impact. Following our NP revision, we lowered our 16E target price from Bt175/share to Bt165/share for implied target P/BV of 1.26x. Financials and Valuation
Anti‐corruption
Level 4 (Certified)
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PPOP (Btm)
63,365
71,867
73,587
78,123
83,157
Provision (Btm)
14,243
26,377
32,903
30,389
26,764
Net profit (Btm)
46,153
39,474
37,681
43,701
51,733
19.28
16.49
15.74
18.26
21.62
EPS growth (%)
12%
‐14%
‐5%
16%
18%
Book value (Bt)
162.54
EPS (Bt)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
107.41
119.42
131.16
145.42
Dividend (Bt)
4.00
4.00
4.00
4.50
5.00
FY Ended 31 Dec
2014
2015
2016E
2017E
2018E
PER (X)
8.40
9.82
10.29
8.87
7.49
PBV (X)
1.51
1.36
1.24
1.11
1.00
Dividend yield (%)
2.47
2.47
2.47
2.78
3.09
ROE (%)
19%
15%
13%
13%
14%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: KBANK’s key economic forecasts and assumptions (as of Apr‐16)
Source: KBANK
Figure 2: KBANK’s financial targets for 2016E vs. our forecasts 2014 2015E 2015 1Q16 2016E* 2016E Actual KBANK's Targets Actual Actual KBANK's Targets (Revised) KTZ Forecasts 19.4% N/A 14.5% 13.8% N/A 12.6% 2.0% N/A 1.6% 1.5% N/A 1.4% 3.81% 3.5‐3.7% 3.68% 3.63% 3.3‐3.5% (from 3.4‐3.6%) 3.46% 6%
