Muangthai Leasing
Muangthai Leasing Company Update
Outperform (17E TP Bt33.00) Close Bt30.00
Finance & Securities March 24, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
1Q17E earnings to outshine peers Price Performance (%)
Expect 1Q17E net profit of Bt525mn (+88% YoY, +9% QoQ) We expect MTLS to post robust 1Q17E net profit (NP) of Bt525mn (+88% YoY, +9% QoQ). The sharp NP growth YoY should be backed mainly by its robust loan growth of around 85% YoY and 14% QoQ and non‐interest income growth of 52% YoY. Note that the main loan growth driver should come from cars and agricultural land products, which should see higher growth vs. other segments in 2017E. This robust NP growth should also be thanks primarily to its ongoing branch expansion to around >1,900 branches at end‐1Q17 vs. 1,664 branches at end‐16, with around 250 new branches opened in 1Q17 vs. the firm’s plan to expand by around 600 new branches for 2017E. The interest spread should weaken slightly QoQ to ~20% given higher short‐term funding costs (by around 15 bps (+/‐), which is partly due to the market issue of B/E defaults of some listed firms.
B
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.011
1.353
KT ZMICO vs. consensus Share data
‐0.1%
‐0.2%
Reuters / Bloomberg
MTLS.BK/MTLS TB
Paid‐up Shares (m)
2,120.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
64.00/1,836.00
Foreign limit / actual (%)
49.00/4.01
52 week High / Low (Bt)
32.75/14.00
Avg. daily T/O (shares 000) NVDR (%)
10,634.00 4.80
Estimated free float (%)
20.07
Beta
1.15
URL
www.muangthaileasing.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Switch to Outperform from BUY given lower upside potential We switch our rating for MTLS to Outperform from BUY given that the total upside potential comes in lower than 15%. We still see MTLS remaining appealing in the L‐T on its impressive earnings outlook, which should continue outperforming financial peers thanks to the supportive industry outlook that continues to suggest ample room to grow.
NPLs to still increase both YoY and QoQ on rapid credit expansion Its NPLs for 1Q17 should still increase both YoY and QoQ to 1.1‐1.2% of loans vs. 1.07% in 4Q16. The increase in NPLs should still come mainly from NPLs in car title loans, with the firm having made an effort to control its NPLs following its rapid credit expansion. The management said that it will try to control its NPL ratio for 2017E below 1.5%. 2017 targets still highlight promising growth Note that MTLS recently provided its business targets for 2017E, which still indicate a promising earnings outlook. The main targets are 1) top and bottom line growth of around 50% for 2017E and >30% in 2018E; 2) total branches at end‐17E and 18E at around ~2,200 and ~2,800, respectively, with a target to open around 600 new branches in both 2017‐18E; and 3) controlling its NPL ratio below 1.5%. Given around 250 new branches being opened in 1Q17E, we see a possibility that MTLS’s new branch expansion could exceed its target again in 2017E. However, the key downside risk could arise from asset quality risk, which could lead to a higher‐than‐expected provision. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt)
2015 856 825 0.39 52% 2.67 0.20
2016 1,811 1,464 0.69 77% 3.16 0.10
2017E 2,790 2,147 1.01 47% 4.07 0.15
2018E 3,811 2,865 1.35 33% 5.27 0.20
2019E 5,058 3,834 1.81 34% 6.87 0.27
FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2015 77.73 11.35 0.66 15%
2016 43.80 9.58 0.33 24%
2017E 29.87 7.43 0.50 28%
2018E 22.39 5.74 0.67 29%
2019E 16.73 4.40 0.90 30%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: 1Q17E earnings preview Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
1Q16
4Q16
1Q17E
% YoY % QoQ
2016
2017E
% YoY % 1Q to 17E
Interest Income
769
1,270
1,440
87%
13% 4,019
6,571
63%
22%
Interest Expenses
66
102
126
90%
24% 328
657
100%
19%
Net Interest Income
703
1,168
1,314
87%
12% 3,691
5,914
60%
22%
Non Interest Income
96
131
147
52%
12% 453
482
6%
31%
Operating Income
799
1,300
1,461
83%
12% 4,144
6,395
54%
23%
Operating Expenses
390
601
672
72%
12% 1,985
3,058
54%
22%
Operating Profit
409
699
789
93%
13% 2,159
3,338
55%
24%
Provision expenses (Reversal)
57
92
125
118%
36% 332
601
81%
21%
Taxes
70
117
133
90%
13% 348
547
57%
24%
Gain(loss) from foreclosed assets
(2) (7) (6)
178%
14%
Net Profit PPOP EPS (Bt)
280 339 0.13
483 581 0.23
47% 54% 47%
24% 24% 24%
1Q16
4Q16
130
251
Key Statistics and Ratios Gross NPLs (Btmn)
204%
525 656 0.25
‐11% (15) (42)
88% 93% 88%
9% 1,464 13% 1,811 9% 0.69
1Q17E
2016
311
2,147 2,790 1.01 2017E
251
530
Gross NPLs/Loans
0.90%
1.07%
1.16%
1.07%
1.50%
Loan Loss Reserve/NPLs
299%
257%
237%
257%
224%
Loan Loss Reserve/Loans
2.7%
2.7%
2.8%
2.7%
3.4%
38.9%
27.4%
26.1%
27.4%
24.0%
162%
139%
136%
139%
134%
2.6
3.2 47.8%
Equity/Asset Loan to borrowing ratio Debt to equity ratio
1.6
2.6
2.8
Cost to Income
48.8%
46.2%
46.0%
47.9%
Non Interest Income/Total Income
12.1%
10.1%
10.1%
10.9%
7.5%
Interest Spread
19.4%
20.5%
20.2%
19.5%
19.3%
Net Interest Margin
20.7%
21.2%
20.9%
20.4%
20.1%
Loan Growth YoY
79.2%
86.4%
85.0%
86.4%
50.1%
Loan Growth QoQ
14.5%
14.8%
13.6%
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) 10.0
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
38
26
9.0
36
20
+2.5SD
8.6
35
15
+2.0SD
8.2
33
10
+1.5SD
7.8
32
5
+1.0SD
7.4
30
-1
2017E
PBV (x)
+3.5SD
9.3
+3.0SD
+3.0 S.D.
8.0 7.0 6.0 5.0 4.0
+2.5 S.D. +2.0 S.D. +1.5 S.D. +1.0 S.D. +0.5 S.D.
Avg.
-0.5 S.D. -1.0 S.D. -1.5 S.D. -2.0 S.D.
Nov-14 Dec-14 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Jan-17 Feb-17 Mar-17
9.0
Source: Bloomberg, KT ZMICO Research
+0.5SD
7.0
28
-6
Average
6.6
27
-11
-0.5SD
6.2
25
-16
-1.0SD
5.8
24
-22
-1.5SD
5.4
22
-27
-2.0SD
5.0
20
-32
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: MTLS's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 60.0
+2.0 S.D.
55.0
PER (x)
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
50.0
+1.0 S.D.
45.0
+2.0SD
56.8
58
90
+0.5 S.D.
+1.5SD
52.0
53
74
+1.0SD
47.2
48
58
+0.5SD Average -0.5SD -1.0SD -1.5SD -2.0SD
42.3 37.5 32.7 27.8 23.0 18.1
43 38 33 28 23 18
42 26 9 -7 -23 -39
+1.5 S.D.
Avg.
40.0 30.0 25.0 20.0
-0.5 S.D. -1.0 S.D. -1.5 S.D. -2.0 S.D.
Nov-14 Dec-14 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Jan-17 Feb-17 Mar-17
35.0
2017E
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec
2015
2016
2017E
2018E
2019E
Tota l Interes t Income Tota l Interes t Expens es Net Interes t Income Fee a nd Servi ce i ncome Other i ncome Tota l Non‐Interes t Income Opera ti ng Income Pers onnel expens es Reta l expens es Tota l Opera ti ng Expens es Opera ti ng Profi t Provi s i on expens es Extra ordi na ry Items Income Ta x expens e Mi nori ty Interes ts Net Profi t Pre Provi s i oni ng Opera ti ng Profi t (PPOP) EPS (Bt)
2,225 228 1,998 317 17 334 2,331 710 164 1,269 1,063 25 (6) 207 ‐ 825 856 0.39
4,019 328 3,691 436 17 453 4,144 1,097 250 1,985 2,159 332 (15) 348 ‐ 1,464 1,811 0.69
6,571 657 5,914 463 18 482 6,395 1,646 375 3,058 3,338 601 (42) 547 ‐ 2,147 2,790 1.01
9,237 1,024 8,213 498 20 518 8,732 2,172 526 4,182 4,549 857 (89) 738 ‐ 2,865 3,811 1.35
12,366 1,481 10,885 541 22 563 11,448 2,824 657 5,396 6,053 1,081 (144) 994 ‐ 3,834 5,058 1.81
Statement of Financial Position (Btmn) As at 31 Dec
2015
2016
2017E
2018E
2019E
Assets Ca s h Depos i ts wi th ba nks /Loa ns to rel a ted pa rti es Net Inves tment Gros s Loa ns Les s : Loa n Los s Res erves Net Loa ns
153 18 1 12,630 (336) 12,295
539 32 1 23,541 (646) 22,896
593 36 1 35,333 (1,186) 34,147
653 39 1 47,628 (1,948) 45,680
718 42 1 63,569 (2,902) 60,667
Premi s es a nd Equi pment, Net Other As s ets Total Assets
520 97 13,083
772 185 24,426
933 208 35,919
1,113 259 47,745
1,233 324 62,986
Liabilities & Equity O/D a nd Short‐term borrowi ngs from ba nks Other Borrowi ng Other Li a bi l i ti es Total Liabilities
3,218 3,907 306 7,431
10,288 6,673 772 17,733
13,042 13,363 887 27,291
14,639 20,920 1,016 36,575
18,423 28,823 1,166 48,412
2,120 2,380 1,043 109 ‐ 5,652 13,083
2,120 2,380 2,008 184 ‐ 6,692 24,426
2,120 2,380 3,868 259 ‐ 8,627 35,919
2,120 2,380 6,336 334 ‐ 11,170 47,745
2,120 2,380 9,665 409 ‐ 14,574 62,986
Pa i d‐up Ca pi ta l Premi um on Sha re Ca pi ta l Reta i ned Ea rni ng Other Equi ty Items Mi nori ty Interes t Total Shareholders' Equity of the bank Total Liabilities and Shareholders Equity Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Valuation and Ratio Analysis Year‐end 31 Dec
2015
2016
2017E
2018E
2019E
Per/Share Data (Bt) EPS DPS BVPS
0.39 0.20 2.67
0.69 0.10 3.16
1.01 0.15 4.07
1.35 0.20 5.27
1.81 0.27 6.87
Multiplier (X) P/E P/BV Di vi dend yi el d (%)
77.73 11.35 0.66
43.80 9.58 0.33
29.87 7.43 0.50
22.39 5.74 0.67
16.73 4.40 0.90
51.6% 51.6% 53.5% 31.1% 13.6% 46.6% 43.7% 50.2% 49.7% 69.6% 4.2%
77.5% 77.5% 84.8% 51.0% 37.4% 77.7% 56.4% 103.2% 111.6% 86.4% 115.0%
46.6% 46.6% 60.2% 15.0% 6.2% 54.3% 54.1% 54.6% 54.1% 50.1% 111.3%
33.4% 33.4% 38.9% 15.9% 7.6% 36.5% 36.8% 36.3% 36.6% 34.8% 86.3%
33.8% 33.8% 32.5% 16.2% 8.5% 31.1% 29.0% 33.0% 32.7% 33.5% 61.8%
Growth YoY (%) Net Profi t EPS Net Interes t Income Non Interes t Income Fee a nd Servi ce i ncome Opera ti ng Income Opera ti ng Expens es Opera ti ng Profi t PPOP Loa ns NPLs Financial Ratio Gros s NPLs (Btmn) Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Loa ns Provi s i on expens es (Revers a l )/Tota l l oa ns Equi ty/As s et Loa n to borrowi ng ra ti o Debt to Equi ty ra ti o Profitability Ratio ROA ROE Cos t to Income Non Interes t Income/Tota l Income Interes t Sprea d Net Interes t Ma rgi n (NIM) Net profi t Ma rgi n Ta x ra te
Key Assumptions Loa n Growth ‐ Net Cos t to Income Net Interes t Ma rgi n Provi s i on expens es (Revers a l ) (Btmn) Provi s i on expens es (Revers a l )/Tota l l oa ns
117 251 530 987 1,598 0.9% 1.1% 1.5% 2.1% 2.5% 287.6% 257.3% 223.8% 197.3% 181.6% 2.7% 2.7% 3.4% 4.1% 4.6% 0.2% 1.4% 1.7% 1.8% 1.7% 43.2% 27.4% 24.0% 23.4% 23.1% 177.3% 138.8% 133.8% 133.9% 134.6% 1.31 2.65 3.16 3.27 3.32
7.5% 15.3% 54.4% 14.3% 17.9% 19.4% 32.2% 20.0%
7.8% 23.7% 47.9% 10.9% 19.5% 20.4% 32.7% 20.0%
7.1% 28.0% 47.8% 7.5% 19.3% 20.1% 30.4% 20.0%
6.8% 28.9% 47.9% 5.9% 19.0% 19.8% 29.4% 20.0%
6.9% 29.8% 47.1% 4.9% 18.7% 19.6% 29.7% 20.0%
2015 2016 2017E 2018E 2019E 69.6% 86.4% 50.1% 34.8% 33.5% 54.4% 47.9% 47.8% 47.9% 47.1% 19.4% 20.4% 20.1% 19.8% 19.6% 25 332 601 857 1,081 0.2% 1.4% 1.7% 1.8% 1.7%
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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, CI. KT ZMICO is a co‐underwriter of the TPIPP.
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 6 of 6
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
Outperform (17E TP Bt33.00) Close Bt30.00
Finance & Securities March 24, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
1Q17E earnings to outshine peers Price Performance (%)
Expect 1Q17E net profit of Bt525mn (+88% YoY, +9% QoQ) We expect MTLS to post robust 1Q17E net profit (NP) of Bt525mn (+88% YoY, +9% QoQ). The sharp NP growth YoY should be backed mainly by its robust loan growth of around 85% YoY and 14% QoQ and non‐interest income growth of 52% YoY. Note that the main loan growth driver should come from cars and agricultural land products, which should see higher growth vs. other segments in 2017E. This robust NP growth should also be thanks primarily to its ongoing branch expansion to around >1,900 branches at end‐1Q17 vs. 1,664 branches at end‐16, with around 250 new branches opened in 1Q17 vs. the firm’s plan to expand by around 600 new branches for 2017E. The interest spread should weaken slightly QoQ to ~20% given higher short‐term funding costs (by around 15 bps (+/‐), which is partly due to the market issue of B/E defaults of some listed firms.
B
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.011
1.353
KT ZMICO vs. consensus Share data
‐0.1%
‐0.2%
Reuters / Bloomberg
MTLS.BK/MTLS TB
Paid‐up Shares (m)
2,120.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
64.00/1,836.00
Foreign limit / actual (%)
49.00/4.01
52 week High / Low (Bt)
32.75/14.00
Avg. daily T/O (shares 000) NVDR (%)
10,634.00 4.80
Estimated free float (%)
20.07
Beta
1.15
URL
www.muangthaileasing.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Switch to Outperform from BUY given lower upside potential We switch our rating for MTLS to Outperform from BUY given that the total upside potential comes in lower than 15%. We still see MTLS remaining appealing in the L‐T on its impressive earnings outlook, which should continue outperforming financial peers thanks to the supportive industry outlook that continues to suggest ample room to grow.
NPLs to still increase both YoY and QoQ on rapid credit expansion Its NPLs for 1Q17 should still increase both YoY and QoQ to 1.1‐1.2% of loans vs. 1.07% in 4Q16. The increase in NPLs should still come mainly from NPLs in car title loans, with the firm having made an effort to control its NPLs following its rapid credit expansion. The management said that it will try to control its NPL ratio for 2017E below 1.5%. 2017 targets still highlight promising growth Note that MTLS recently provided its business targets for 2017E, which still indicate a promising earnings outlook. The main targets are 1) top and bottom line growth of around 50% for 2017E and >30% in 2018E; 2) total branches at end‐17E and 18E at around ~2,200 and ~2,800, respectively, with a target to open around 600 new branches in both 2017‐18E; and 3) controlling its NPL ratio below 1.5%. Given around 250 new branches being opened in 1Q17E, we see a possibility that MTLS’s new branch expansion could exceed its target again in 2017E. However, the key downside risk could arise from asset quality risk, which could lead to a higher‐than‐expected provision. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%) BV (Bt) Dividend (Bt)
2015 856 825 0.39 52% 2.67 0.20
2016 1,811 1,464 0.69 77% 3.16 0.10
2017E 2,790 2,147 1.01 47% 4.07 0.15
2018E 3,811 2,865 1.35 33% 5.27 0.20
2019E 5,058 3,834 1.81 34% 6.87 0.27
FY Ended 31 Dec PER (x) PBV (x) Dividend yield (%) ROE (%)
2015 77.73 11.35 0.66 15%
2016 43.80 9.58 0.33 24%
2017E 29.87 7.43 0.50 28%
2018E 22.39 5.74 0.67 29%
2019E 16.73 4.40 0.90 30%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Figure 1: 1Q17E earnings preview Statement of comprehensive income (Btmn) Fiscal Year‐Ended Dec.
1Q16
4Q16
1Q17E
% YoY % QoQ
2016
2017E
% YoY % 1Q to 17E
Interest Income
769
1,270
1,440
87%
13% 4,019
6,571
63%
22%
Interest Expenses
66
102
126
90%
24% 328
657
100%
19%
Net Interest Income
703
1,168
1,314
87%
12% 3,691
5,914
60%
22%
Non Interest Income
96
131
147
52%
12% 453
482
6%
31%
Operating Income
799
1,300
1,461
83%
12% 4,144
6,395
54%
23%
Operating Expenses
390
601
672
72%
12% 1,985
3,058
54%
22%
Operating Profit
409
699
789
93%
13% 2,159
3,338
55%
24%
Provision expenses (Reversal)
57
92
125
118%
36% 332
601
81%
21%
Taxes
70
117
133
90%
13% 348
547
57%
24%
Gain(loss) from foreclosed assets
(2) (7) (6)
178%
14%
Net Profit PPOP EPS (Bt)
280 339 0.13
483 581 0.23
47% 54% 47%
24% 24% 24%
1Q16
4Q16
130
251
Key Statistics and Ratios Gross NPLs (Btmn)
204%
525 656 0.25
‐11% (15) (42)
88% 93% 88%
9% 1,464 13% 1,811 9% 0.69
1Q17E
2016
311
2,147 2,790 1.01 2017E
251
530
Gross NPLs/Loans
0.90%
1.07%
1.16%
1.07%
1.50%
Loan Loss Reserve/NPLs
299%
257%
237%
257%
224%
Loan Loss Reserve/Loans
2.7%
2.7%
2.8%
2.7%
3.4%
38.9%
27.4%
26.1%
27.4%
24.0%
162%
139%
136%
139%
134%
2.6
3.2 47.8%
Equity/Asset Loan to borrowing ratio Debt to equity ratio
1.6
2.6
2.8
Cost to Income
48.8%
46.2%
46.0%
47.9%
Non Interest Income/Total Income
12.1%
10.1%
10.1%
10.9%
7.5%
Interest Spread
19.4%
20.5%
20.2%
19.5%
19.3%
Net Interest Margin
20.7%
21.2%
20.9%
20.4%
20.1%
Loan Growth YoY
79.2%
86.4%
85.0%
86.4%
50.1%
Loan Growth QoQ
14.5%
14.8%
13.6%
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) 10.0
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
38
26
9.0
36
20
+2.5SD
8.6
35
15
+2.0SD
8.2
33
10
+1.5SD
7.8
32
5
+1.0SD
7.4
30
-1
2017E
PBV (x)
+3.5SD
9.3
+3.0SD
+3.0 S.D.
8.0 7.0 6.0 5.0 4.0
+2.5 S.D. +2.0 S.D. +1.5 S.D. +1.0 S.D. +0.5 S.D.
Avg.
-0.5 S.D. -1.0 S.D. -1.5 S.D. -2.0 S.D.
Nov-14 Dec-14 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Jan-17 Feb-17 Mar-17
9.0
Source: Bloomberg, KT ZMICO Research
+0.5SD
7.0
28
-6
Average
6.6
27
-11
-0.5SD
6.2
25
-16
-1.0SD
5.8
24
-22
-1.5SD
5.4
22
-27
-2.0SD
5.0
20
-32
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: MTLS's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 60.0
+2.0 S.D.
55.0
PER (x)
Implied market price
Upside/ Downside vs. market price
(Bt)
(%)
50.0
+1.0 S.D.
45.0
+2.0SD
56.8
58
90
+0.5 S.D.
+1.5SD
52.0
53
74
+1.0SD
47.2
48
58
+0.5SD Average -0.5SD -1.0SD -1.5SD -2.0SD
42.3 37.5 32.7 27.8 23.0 18.1
43 38 33 28 23 18
42 26 9 -7 -23 -39
+1.5 S.D.
Avg.
40.0 30.0 25.0 20.0
-0.5 S.D. -1.0 S.D. -1.5 S.D. -2.0 S.D.
Nov-14 Dec-14 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Jan-17 Feb-17 Mar-17
35.0
2017E
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec
2015
2016
2017E
2018E
2019E
Tota l Interes t Income Tota l Interes t Expens es Net Interes t Income Fee a nd Servi ce i ncome Other i ncome Tota l Non‐Interes t Income Opera ti ng Income Pers onnel expens es Reta l expens es Tota l Opera ti ng Expens es Opera ti ng Profi t Provi s i on expens es Extra ordi na ry Items Income Ta x expens e Mi nori ty Interes ts Net Profi t Pre Provi s i oni ng Opera ti ng Profi t (PPOP) EPS (Bt)
2,225 228 1,998 317 17 334 2,331 710 164 1,269 1,063 25 (6) 207 ‐ 825 856 0.39
4,019 328 3,691 436 17 453 4,144 1,097 250 1,985 2,159 332 (15) 348 ‐ 1,464 1,811 0.69
6,571 657 5,914 463 18 482 6,395 1,646 375 3,058 3,338 601 (42) 547 ‐ 2,147 2,790 1.01
9,237 1,024 8,213 498 20 518 8,732 2,172 526 4,182 4,549 857 (89) 738 ‐ 2,865 3,811 1.35
12,366 1,481 10,885 541 22 563 11,448 2,824 657 5,396 6,053 1,081 (144) 994 ‐ 3,834 5,058 1.81
Statement of Financial Position (Btmn) As at 31 Dec
2015
2016
2017E
2018E
2019E
Assets Ca s h Depos i ts wi th ba nks /Loa ns to rel a ted pa rti es Net Inves tment Gros s Loa ns Les s : Loa n Los s Res erves Net Loa ns
153 18 1 12,630 (336) 12,295
539 32 1 23,541 (646) 22,896
593 36 1 35,333 (1,186) 34,147
653 39 1 47,628 (1,948) 45,680
718 42 1 63,569 (2,902) 60,667
Premi s es a nd Equi pment, Net Other As s ets Total Assets
520 97 13,083
772 185 24,426
933 208 35,919
1,113 259 47,745
1,233 324 62,986
Liabilities & Equity O/D a nd Short‐term borrowi ngs from ba nks Other Borrowi ng Other Li a bi l i ti es Total Liabilities
3,218 3,907 306 7,431
10,288 6,673 772 17,733
13,042 13,363 887 27,291
14,639 20,920 1,016 36,575
18,423 28,823 1,166 48,412
2,120 2,380 1,043 109 ‐ 5,652 13,083
2,120 2,380 2,008 184 ‐ 6,692 24,426
2,120 2,380 3,868 259 ‐ 8,627 35,919
2,120 2,380 6,336 334 ‐ 11,170 47,745
2,120 2,380 9,665 409 ‐ 14,574 62,986
Pa i d‐up Ca pi ta l Premi um on Sha re Ca pi ta l Reta i ned Ea rni ng Other Equi ty Items Mi nori ty Interes t Total Shareholders' Equity of the bank Total Liabilities and Shareholders Equity Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Valuation and Ratio Analysis Year‐end 31 Dec
2015
2016
2017E
2018E
2019E
Per/Share Data (Bt) EPS DPS BVPS
0.39 0.20 2.67
0.69 0.10 3.16
1.01 0.15 4.07
1.35 0.20 5.27
1.81 0.27 6.87
Multiplier (X) P/E P/BV Di vi dend yi el d (%)
77.73 11.35 0.66
43.80 9.58 0.33
29.87 7.43 0.50
22.39 5.74 0.67
16.73 4.40 0.90
51.6% 51.6% 53.5% 31.1% 13.6% 46.6% 43.7% 50.2% 49.7% 69.6% 4.2%
77.5% 77.5% 84.8% 51.0% 37.4% 77.7% 56.4% 103.2% 111.6% 86.4% 115.0%
46.6% 46.6% 60.2% 15.0% 6.2% 54.3% 54.1% 54.6% 54.1% 50.1% 111.3%
33.4% 33.4% 38.9% 15.9% 7.6% 36.5% 36.8% 36.3% 36.6% 34.8% 86.3%
33.8% 33.8% 32.5% 16.2% 8.5% 31.1% 29.0% 33.0% 32.7% 33.5% 61.8%
Growth YoY (%) Net Profi t EPS Net Interes t Income Non Interes t Income Fee a nd Servi ce i ncome Opera ti ng Income Opera ti ng Expens es Opera ti ng Profi t PPOP Loa ns NPLs Financial Ratio Gros s NPLs (Btmn) Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Loa n Los s Res erve/Loa ns Provi s i on expens es (Revers a l )/Tota l l oa ns Equi ty/As s et Loa n to borrowi ng ra ti o Debt to Equi ty ra ti o Profitability Ratio ROA ROE Cos t to Income Non Interes t Income/Tota l Income Interes t Sprea d Net Interes t Ma rgi n (NIM) Net profi t Ma rgi n Ta x ra te
Key Assumptions Loa n Growth ‐ Net Cos t to Income Net Interes t Ma rgi n Provi s i on expens es (Revers a l ) (Btmn) Provi s i on expens es (Revers a l )/Tota l l oa ns
117 251 530 987 1,598 0.9% 1.1% 1.5% 2.1% 2.5% 287.6% 257.3% 223.8% 197.3% 181.6% 2.7% 2.7% 3.4% 4.1% 4.6% 0.2% 1.4% 1.7% 1.8% 1.7% 43.2% 27.4% 24.0% 23.4% 23.1% 177.3% 138.8% 133.8% 133.9% 134.6% 1.31 2.65 3.16 3.27 3.32
7.5% 15.3% 54.4% 14.3% 17.9% 19.4% 32.2% 20.0%
7.8% 23.7% 47.9% 10.9% 19.5% 20.4% 32.7% 20.0%
7.1% 28.0% 47.8% 7.5% 19.3% 20.1% 30.4% 20.0%
6.8% 28.9% 47.9% 5.9% 19.0% 19.8% 29.4% 20.0%
6.9% 29.8% 47.1% 4.9% 18.7% 19.6% 29.7% 20.0%
2015 2016 2017E 2018E 2019E 69.6% 86.4% 50.1% 34.8% 33.5% 54.4% 47.9% 47.8% 47.9% 47.1% 19.4% 20.4% 20.1% 19.8% 19.6% 25 332 601 857 1,081 0.2% 1.4% 1.7% 1.8% 1.7%
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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, CI. KT ZMICO is a co‐underwriter of the TPIPP.
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 6 of 6
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
