Srisawad Power 1979
Srisawad Power 1979 Company Update
Outperform (15E TP Bt41.00) Close Bt40.50
Financial June 5, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Growth momentum continues
FY15
FY16
Consensus EPS (Bt)
1.193
1.593
KT ZMICO vs. consensus Share data
‐9.5%
‐10.9%
Reuters / Bloomberg
SAWAD.BK/SAWAD TB
Paid‐up Shares (m)
1,020.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
41.00/1,224.00
Foreign limit / actual (%)
49.00/14.11
52 week High / Low (Bt)
42.89/14.61
Avg. daily T/O (shares 000) NVDR (%)
17,336.00 1.31
Estimated free float (%)
43.34
Beta
1.35
URL
www.meebaanmeerod.com
CGR
‐
Remains a leading growth play stock We maintain our Outperform rating and the 15E target price of Bt41/share. We still like SAWAD for being among the top growth stocks in the financial sector with potential for outstanding earnings growth over the next few years. Moreover, the M&A theme and potential inorganic expansion could be catalysts to its share price and earnings. New businesses see progress We are seeing gradual progress in SAWAD’s new businesses, especially in the debt collection and distressed asset management businesses. Meanwhile, SAWAD remains quite cautious in regard to expanding to the nano‐finance business. More aggressive branch expansion may post upside risk to 16‐17E NP SAWAD opened 140 new branches in 1Q15 vs. its new target of 300 new branches/per year in the next three years (up from the original target of around 200 branches set earlier) vs. 1,022 branches at end‐14. This higher target may post some upside risk to our loan growth and earnings forecasts in 2016‐17E onwards as the average breakeven period for a new branch is around one year. Expect 2Q15E net profit to see robust growth of ~47% YoY We preliminarily estimate SAWAD to post 2Q15E net profit of around Bt260mn (+47% YoY but ‐6% QoQ) vs. net profit of Bt177mn in 2Q14 and Bt278mn in 1Q15. The robust NP growth YoY should be backed by continued strong loan growth of around 35‐40% YoY following its aggressive branch expansion plan. Meanwhile, NP is likely to weaken QoQ due to the normal low season every 2Q (there are fewer working days in 2Q as a result of several long holidays along with the impact of school opening in May). Hence, we are likely to see a slight increase in both provision expenses and NPLs QoQ in 2Q on seasonality as well. Financials and Valuation 2013
2014
2015E
2016E
2017E
PPOP (Btm)
707
1,043
1,366
1,797
2,286
Net profit (Btmn)
575
855
1,106
1,445
1,818
EPS (Bt)
0.77
0.85
1.08
1.42
1.78
EPS growth (%)
‐33%
11%
27%
31%
26%
FY Ended 31 Dec
BV (Bt)
1.51
3.43
4.45
5.32
6.39
Dividend (Bt)
0.60
0.02
0.54
0.71
0.89
Prapharas Nonthapiboon
FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
Analyst, no 17836
PER (x)
52.79
47.39
37.36
28.59
22.72
[email protected]
PBV (x)
26.87
11.80
9.11
7.61
6.33
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
1.48
0.06
1.34
1.75
2.20
66%
37%
28%
29%
30%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
New businesses see gradual progress As mentioned in earlier reports, we are seeing gradual progress for SAWAD’s new businesses, especially in the debt collection and distressed asset management (NPL purchase) businesses. Note that SAWAD already bought NPLs with a cost of ~Bt200mn (at ~29% of principal and interest due or at 64% of principal) from SME bank in 1Q15 and it booked this transaction under investment in receivables. We expect this transaction to generate a return to SAWAD in 1‐2 years after the acquisition. Note that SAWAD has preliminarily set a budget for NPL purchases of ~Bt1.0bn. For the debt collection business, SAWAD is already doing debt collection service for four automakers as well as for SME Bank and a large Thai bank with a loan size of ~Bt7bn each. It is currently in the bidding process with another large Thai bank. The revenue will be recorded based on the success rate of its debt collection. SAWAD is also conducting a feasibility study on expanding to regional countries, especially Myanmar, in which the firm sees good potential and return for hire purchase lending for new vehicles. Although we see good potential for its new businesses in terms of helping to expand and diversify its revenue base in the longer term, we do not expect a significant contribution in the next couple years. Still very cautious on the nano‐finance business In terms of the nano‐finance business, SAWAD remains very cautious in regard to expanding to this business as these are clean loans that post higher risk vs. its current core business, i.e., auto title loans, which are fully collateralized. SAWAD initially prefers to use the strategy of finding lending partners in the nano‐finance business to mass lending. For example, the firm will contact well‐known franchisers with proven track records or well‐established products, e.g., Mr. Keng Empire (fried noodle in creamy white sauce), Joke Bangkok franchise, Jeang fish ball noodle franchise, etc., and expand to the franchisees of these brands. SAWAD has initially set a budget of no more than Bt500mn for expanding to the nano‐finance business. The firm prefers to focus on its core business, which still offers a promising return over the longer term. Figure 1: Financial and valuation summary vs. peers Name
Net Profit (Btmn) 13
14
NP Growth(%)
PER (X)
P/BV (X)
PEG (X)
PBV/ROE(%) Div.Yield(%)
ROE (%)
15E
14
15E
14
15E
14
15E
14
15E
14
15E
14
15E
14
15E
Aeon Thana Sinsap Thailand* KrungThai Card Asia Sermkij Leasing Ratchthani Leasing Thitikorn Large companies
2,501 2,418 2,808 1,283 1,755 2,094 641 671 839 754 704 815 429 196 294 5,608 5,743 6,849
‐3 37 5 ‐7 ‐54 2
16 19 25 16 50 19
9.7 13.6 10.4 9.9 24.9 13.7
8.9 11.4 8.3 n.a. 12.8 10.4
n.a. 3.2 1.7 1.8 1.2 2.0
1.8 2.7 1.6 1.7 1.2 1.8
‐2.87 0.37 2.20 ‐1.44 ‐0.46 ‐0.44
0.92 0.59 0.33 n.a. 0.13 0.49
n.a. 0.12 0.10 0.09 0.25 0.14
0.08 0.11 0.08 0.08 0.16 0.10
n.a. 3.0 6.5 0.7 1.9 3.0
4.1 3.5 8.6 6.7 3.0 5.2
n.a. 26.0 16.9 19.8 4.9 16.9
23.4 26.0 20.8 20.8 7.1 19.6
Group Lease IFS Capital Thailand Krungthai Car Rent & Lease Lease It Singer Thailand Muang Thai Leasing Srisawad Power 1979 Small companies
240 115 509 125 138 n.a. 273 214 n.a. 32 48 63 321 241 274 351 544 838 575 855 1,106 1,280 1,688 2,281
‐52 10 ‐22 49 ‐25 55 49 32
344 107.3 n.a. 10.5 n.a. 12.4 31 19.4 13 15.6 54 73.2 29 47.4 35 29.8
26.0 n.a. n.a. 16.3 13.7 47.6 37.4 28.7
5.1 1.4 n.a. 2.8 n.a. 7.8 11.8 5.8
3.2 1.3 1.4 2.5 2.2 7.0 9.1 3.8
‐1.90 1.42 ‐0.56 ‐1.88 ‐0.62 4.88 4.16 1.6
0.08 n.a. n.a. 0.85 0.98 0.88 1.39 1.0
n.a. n.a. n.a. 0.16 n.a. 0.51 0.31 0.33
0.26 n.a. n.a. 0.85 0.12 0.45 0.33 0.40
0.5 4.8 n.a. n.a. n.a. 0.7 0.1 1.5
1.8 5.6 5.8 3.0 3.8 1.1 1.3 3.2
4.8 13.8 n.a. 17.2 n.a. 15.5 37.5 17.7
12.7 14.5 14.8 16.5 18.1 15.6 27.8 17.1
Sector average
6,887 7,431 9,130
8
19.5
3.9
2.8 0.60 0.76
0.23
0.25
2.3
4.2 17.3 18.4
23
21.7
Source: KTZMICO Research, Bloomberg * Fiscal year ended March
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: SAWAD's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
p Downside to current price
2015E
PBV (x)
(Bt)
(%)
+3.5SD
12.2
54
34
+3.0SD
11.4
51
25
+2.5SD
10.6
47
16
-0.5 S.D.
+2.0SD
9.8
43
7
-1 S.D.
+1.5SD
9.0
40
-2
+1.0SD
8.1
36
-11
+0.5SD
7.3
33
-19
Average
6.5
29
-28
-0.5SD
5.7
25
-37
-1.0SD
4.9
22
-46
-1.5SD
4.1
18
-55
-2.0SD
3.3
15
-64
12.0
+3.0 S.D.
10.0
+2.5 S.D. +2.0 S.D. +1.5 S.D.
8.0
+1.0 S.D. +0.5 S.D.
6.0
Avg.
-1.5 S.D.
4.0
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jun-15
Apr-15
May-15
Feb-15
Mar-15
Jan-15
Dec-14
Dec-14
Oct-14
Nov-14
Jul-14
Aug-14
Jun-14
Jun-14
May-14
0.0
Sep-14
2.0
Implied market price
Figure 3: SAWAD's PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
Implied market price
Upside/ Downside to current price
(Bt)
(%)
51
25
43.5
47
16
+2.0SD
40.1
43
7
+1.5SD
36.7
40
-2
+1.0SD
33.3
36
-11
+0.5SD
29.9
32
-20
Average
26.5
29
-29
10
-0.5SD
23.0
25
-38
5
-1.0SD
19.6
21
-47
-1.5SD
16.2
18
-57
-2.0SD
12.8
14
-66
50 45 40 35 30
+3.0 S.D. +2.5 S.D. +2.0 S.D. +1 .5S.D. +1.0S.D. +0.5 S.D. Avg.
25
-0.5 S.D.
20
-1 S.D. -1 .5 S.D.
15
Source: Bloomberg, KT ZMICO Research
Jun-15
Apr-15
May-15
Mar-15
Feb-15
Jan-15
Dec-14
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
Jun-14
May-14
-2 S.D.
2015E
PER (x)
+3.0SD
46.9
+2.5SD
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) 2013
2014
Total Interest Income
1,446
1,955
2,548
3,289
4,240
Total Interest Expenses
230
219
227
313
431
Year‐end 31 Dec
2015E
2016E
2017E
Net Interest Income
1,216
1,736
2,322
2,977
3,809
Total Non‐Interest Income
491
735
915
1,102
1,246
Operating Income
1,707
2,471
3,236
4,079
5,055
Fee and service expenses
122
126
138
159
183
Administrative expenses
727
1,095
1,456
1,762
2,132
Total Operating Expenses
849
1,220
1,594
1,920
2,314
Operating Profit
858
1,251
1,642
2,158
2,740
Provision expenses
132
189
260
352
468
Extraordinary Items
‐
‐
‐
‐
‐
Income Tax expense
151
207
276
361
454
Net Profit
575
855
1,106
1,445
1,818
Pre Provisioning Operating Profit (PPOP)
707
1,043
1,366
1,797
2,286
EPS (Bt)
0.77
0.85
1.08
1.42
1.78
2013
2014
Cash
100
348
383
421
463
Deposits with banks/Loans to related parties
21
21
27
35
46
Net Investment
‐
40
‐
‐
‐
7,816
10,005
13,043
16,719
Statement of Financial Position (Btmn) As at 31 Dec
2015E
2016E
2017E
Assets
Gross Loans
5,722
Less: Loan Loss Reserves
(183) (273) (383) (539) (756)
Net Loans
5,539
7,543
9,622
12,504
15,963
Foreclosed properties
95
208
249
274
302
Premises and Equipment, Net
145
245
291
331
351
Other Assets
147
186
238
259
290
Total Assets
6,046
8,592
10,811
13,824
17,415
4,565
3,764
2,056
2,861
4,738
Liabilities & Equity S‐T borrowings from financial institutions Other Borrowings
100
1,000
3,900
5,200
5,800
Other Liabilities
251
395
320
337
354
Total Liabilities
4,916
5,160
6,276
8,398
10,892
Paid‐up Capital
750
1,000
1,020
1,020
1,020
Premium on Share Capital
‐
1,422
1,422
1,422
1,422
Retained Earning
289
874
1,912
2,759
3,809
Other Equity Items
91
136
181
226
271
Minority Interest
‐
‐
‐
‐
‐
Total Shareholders' Equity
1,131
3,432
4,535
5,427
6,522
Total Liabilities and Shareholders Equity Source: KTZMICO Research
6,046
8,592
10,811
13,824
17,415
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Valuation and Ratio Analysis Year‐end 31 Dec
2013
2014
2015E
2016E
2017E
Per/Share Data (Bt) EPS
0.77
0.85
1.08
1.42
1.78
DPS
0.60
0.02
0.54
0.71
0.89
BVPS
1.51
3.43
4.45
5.32
6.39
52.79
47.39
37.36
28.59
22.72
Multiplier (X) P/E P/BV
26.87
11.80
9.11
7.61
6.33
Dividend yield (%)
1.48
0.06
1.34
1.75
2.20
Net Profit
42.1%
48.5%
29.4%
30.7%
25.8%
EPS
‐32.6%
11.4%
26.8%
30.7%
25.8%
Net Interest Income
36.2%
42.8%
33.7%
28.2%
28.0%
Growth YoY (%)
Non Interest Income Net Fee and Service income
65.5%
60.9%
30.6%
25.1%
16.6%
348.2%
69.1%
20.4%
19.9%
12.8%
Operating Income
46.0%
44.8%
31.0%
26.0%
23.9%
Operating Expenses
31.2%
43.7%
30.6%
20.5%
20.5%
Operating Profit
64.4%
45.8%
31.3%
31.4%
27.0%
PPOP
76.4%
47.6%
30.9%
31.6%
27.2%
Loans
43.7%
36.6%
28.0%
30.4%
28.2%
NPLs
35.5%
52.8%
34.2%
33.1%
31.9%
Gross NPLs (Btmn)
211
323
433
577
761
Gross NPLs/Loans
3.7%
4.1%
4.3%
4.4%
4.6%
Loan Loss Reserve/NPLs
86.5%
84.6%
88.3%
93.4%
99.4%
Loan Loss Reserve/Loans
3.2%
3.5%
3.8%
4.1%
4.5%
Financial Ratio
Provision expenses (Reversal)/Total loans Equity/Asset Loan to borrowing ratio Debt to Equity ratio
2.3%
2.4%
2.6%
2.7%
2.8%
18.7%
39.9%
41.9%
39.3%
37.5%
122.7%
164.1%
168.0%
161.8%
158.7%
4.35
1.50
1.38
1.55
1.67
ROA
10.9%
11.7%
11.4%
11.7%
11.6%
ROE
66.1%
37.5%
27.8%
29.0%
30.4%
Cost to Income
49.7%
49.4%
49.3%
47.1%
45.8%
Non Interest Income/Total Income
28.8%
29.7%
28.3%
27.0%
24.6%
24.02%
25.50%
25.93%
25.76%
25.53%
20.8%
19.5%
20.0%
20.0%
20.0%
Net Interest Margin (NIM) Tax rate
Key Assumptions
2013
2014
2015E
2016E
2017E
Loan Growth ‐ Net
43.7%
36.6%
28.0%
30.4%
28.2%
Cost to Income
49.7%
49.4%
49.3%
47.1%
45.8%
Net Interest Margin
24.0%
25.5%
25.9%
25.8%
25.5%
Provision expenses (Reversal) (Btmn) Provision expenses (Reversal)/Total loans Source: KTZMICO Research
132 189 260 352 468 2.3%
2.4%
2.6%
2.7%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
2.8%
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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 6 of 6
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Outperform (15E TP Bt41.00) Close Bt40.50
Financial June 5, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Growth momentum continues
FY15
FY16
Consensus EPS (Bt)
1.193
1.593
KT ZMICO vs. consensus Share data
‐9.5%
‐10.9%
Reuters / Bloomberg
SAWAD.BK/SAWAD TB
Paid‐up Shares (m)
1,020.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
41.00/1,224.00
Foreign limit / actual (%)
49.00/14.11
52 week High / Low (Bt)
42.89/14.61
Avg. daily T/O (shares 000) NVDR (%)
17,336.00 1.31
Estimated free float (%)
43.34
Beta
1.35
URL
www.meebaanmeerod.com
CGR
‐
Remains a leading growth play stock We maintain our Outperform rating and the 15E target price of Bt41/share. We still like SAWAD for being among the top growth stocks in the financial sector with potential for outstanding earnings growth over the next few years. Moreover, the M&A theme and potential inorganic expansion could be catalysts to its share price and earnings. New businesses see progress We are seeing gradual progress in SAWAD’s new businesses, especially in the debt collection and distressed asset management businesses. Meanwhile, SAWAD remains quite cautious in regard to expanding to the nano‐finance business. More aggressive branch expansion may post upside risk to 16‐17E NP SAWAD opened 140 new branches in 1Q15 vs. its new target of 300 new branches/per year in the next three years (up from the original target of around 200 branches set earlier) vs. 1,022 branches at end‐14. This higher target may post some upside risk to our loan growth and earnings forecasts in 2016‐17E onwards as the average breakeven period for a new branch is around one year. Expect 2Q15E net profit to see robust growth of ~47% YoY We preliminarily estimate SAWAD to post 2Q15E net profit of around Bt260mn (+47% YoY but ‐6% QoQ) vs. net profit of Bt177mn in 2Q14 and Bt278mn in 1Q15. The robust NP growth YoY should be backed by continued strong loan growth of around 35‐40% YoY following its aggressive branch expansion plan. Meanwhile, NP is likely to weaken QoQ due to the normal low season every 2Q (there are fewer working days in 2Q as a result of several long holidays along with the impact of school opening in May). Hence, we are likely to see a slight increase in both provision expenses and NPLs QoQ in 2Q on seasonality as well. Financials and Valuation 2013
2014
2015E
2016E
2017E
PPOP (Btm)
707
1,043
1,366
1,797
2,286
Net profit (Btmn)
575
855
1,106
1,445
1,818
EPS (Bt)
0.77
0.85
1.08
1.42
1.78
EPS growth (%)
‐33%
11%
27%
31%
26%
FY Ended 31 Dec
BV (Bt)
1.51
3.43
4.45
5.32
6.39
Dividend (Bt)
0.60
0.02
0.54
0.71
0.89
Prapharas Nonthapiboon
FY Ended 31 Dec
2013
2014
2015E
2016E
2017E
Analyst, no 17836
PER (x)
52.79
47.39
37.36
28.59
22.72
[email protected]
PBV (x)
26.87
11.80
9.11
7.61
6.33
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
1.48
0.06
1.34
1.75
2.20
66%
37%
28%
29%
30%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
New businesses see gradual progress As mentioned in earlier reports, we are seeing gradual progress for SAWAD’s new businesses, especially in the debt collection and distressed asset management (NPL purchase) businesses. Note that SAWAD already bought NPLs with a cost of ~Bt200mn (at ~29% of principal and interest due or at 64% of principal) from SME bank in 1Q15 and it booked this transaction under investment in receivables. We expect this transaction to generate a return to SAWAD in 1‐2 years after the acquisition. Note that SAWAD has preliminarily set a budget for NPL purchases of ~Bt1.0bn. For the debt collection business, SAWAD is already doing debt collection service for four automakers as well as for SME Bank and a large Thai bank with a loan size of ~Bt7bn each. It is currently in the bidding process with another large Thai bank. The revenue will be recorded based on the success rate of its debt collection. SAWAD is also conducting a feasibility study on expanding to regional countries, especially Myanmar, in which the firm sees good potential and return for hire purchase lending for new vehicles. Although we see good potential for its new businesses in terms of helping to expand and diversify its revenue base in the longer term, we do not expect a significant contribution in the next couple years. Still very cautious on the nano‐finance business In terms of the nano‐finance business, SAWAD remains very cautious in regard to expanding to this business as these are clean loans that post higher risk vs. its current core business, i.e., auto title loans, which are fully collateralized. SAWAD initially prefers to use the strategy of finding lending partners in the nano‐finance business to mass lending. For example, the firm will contact well‐known franchisers with proven track records or well‐established products, e.g., Mr. Keng Empire (fried noodle in creamy white sauce), Joke Bangkok franchise, Jeang fish ball noodle franchise, etc., and expand to the franchisees of these brands. SAWAD has initially set a budget of no more than Bt500mn for expanding to the nano‐finance business. The firm prefers to focus on its core business, which still offers a promising return over the longer term. Figure 1: Financial and valuation summary vs. peers Name
Net Profit (Btmn) 13
14
NP Growth(%)
PER (X)
P/BV (X)
PEG (X)
PBV/ROE(%) Div.Yield(%)
ROE (%)
15E
14
15E
14
15E
14
15E
14
15E
14
15E
14
15E
14
15E
Aeon Thana Sinsap Thailand* KrungThai Card Asia Sermkij Leasing Ratchthani Leasing Thitikorn Large companies
2,501 2,418 2,808 1,283 1,755 2,094 641 671 839 754 704 815 429 196 294 5,608 5,743 6,849
‐3 37 5 ‐7 ‐54 2
16 19 25 16 50 19
9.7 13.6 10.4 9.9 24.9 13.7
8.9 11.4 8.3 n.a. 12.8 10.4
n.a. 3.2 1.7 1.8 1.2 2.0
1.8 2.7 1.6 1.7 1.2 1.8
‐2.87 0.37 2.20 ‐1.44 ‐0.46 ‐0.44
0.92 0.59 0.33 n.a. 0.13 0.49
n.a. 0.12 0.10 0.09 0.25 0.14
0.08 0.11 0.08 0.08 0.16 0.10
n.a. 3.0 6.5 0.7 1.9 3.0
4.1 3.5 8.6 6.7 3.0 5.2
n.a. 26.0 16.9 19.8 4.9 16.9
23.4 26.0 20.8 20.8 7.1 19.6
Group Lease IFS Capital Thailand Krungthai Car Rent & Lease Lease It Singer Thailand Muang Thai Leasing Srisawad Power 1979 Small companies
240 115 509 125 138 n.a. 273 214 n.a. 32 48 63 321 241 274 351 544 838 575 855 1,106 1,280 1,688 2,281
‐52 10 ‐22 49 ‐25 55 49 32
344 107.3 n.a. 10.5 n.a. 12.4 31 19.4 13 15.6 54 73.2 29 47.4 35 29.8
26.0 n.a. n.a. 16.3 13.7 47.6 37.4 28.7
5.1 1.4 n.a. 2.8 n.a. 7.8 11.8 5.8
3.2 1.3 1.4 2.5 2.2 7.0 9.1 3.8
‐1.90 1.42 ‐0.56 ‐1.88 ‐0.62 4.88 4.16 1.6
0.08 n.a. n.a. 0.85 0.98 0.88 1.39 1.0
n.a. n.a. n.a. 0.16 n.a. 0.51 0.31 0.33
0.26 n.a. n.a. 0.85 0.12 0.45 0.33 0.40
0.5 4.8 n.a. n.a. n.a. 0.7 0.1 1.5
1.8 5.6 5.8 3.0 3.8 1.1 1.3 3.2
4.8 13.8 n.a. 17.2 n.a. 15.5 37.5 17.7
12.7 14.5 14.8 16.5 18.1 15.6 27.8 17.1
Sector average
6,887 7,431 9,130
8
19.5
3.9
2.8 0.60 0.76
0.23
0.25
2.3
4.2 17.3 18.4
23
21.7
Source: KTZMICO Research, Bloomberg * Fiscal year ended March
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: SAWAD's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
p Downside to current price
2015E
PBV (x)
(Bt)
(%)
+3.5SD
12.2
54
34
+3.0SD
11.4
51
25
+2.5SD
10.6
47
16
-0.5 S.D.
+2.0SD
9.8
43
7
-1 S.D.
+1.5SD
9.0
40
-2
+1.0SD
8.1
36
-11
+0.5SD
7.3
33
-19
Average
6.5
29
-28
-0.5SD
5.7
25
-37
-1.0SD
4.9
22
-46
-1.5SD
4.1
18
-55
-2.0SD
3.3
15
-64
12.0
+3.0 S.D.
10.0
+2.5 S.D. +2.0 S.D. +1.5 S.D.
8.0
+1.0 S.D. +0.5 S.D.
6.0
Avg.
-1.5 S.D.
4.0
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jun-15
Apr-15
May-15
Feb-15
Mar-15
Jan-15
Dec-14
Dec-14
Oct-14
Nov-14
Jul-14
Aug-14
Jun-14
Jun-14
May-14
0.0
Sep-14
2.0
Implied market price
Figure 3: SAWAD's PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
Implied market price
Upside/ Downside to current price
(Bt)
(%)
51
25
43.5
47
16
+2.0SD
40.1
43
7
+1.5SD
36.7
40
-2
+1.0SD
33.3
36
-11
+0.5SD
29.9
32
-20
Average
26.5
29
-29
10
-0.5SD
23.0
25
-38
5
-1.0SD
19.6
21
-47
-1.5SD
16.2
18
-57
-2.0SD
12.8
14
-66
50 45 40 35 30
+3.0 S.D. +2.5 S.D. +2.0 S.D. +1 .5S.D. +1.0S.D. +0.5 S.D. Avg.
25
-0.5 S.D.
20
-1 S.D. -1 .5 S.D.
15
Source: Bloomberg, KT ZMICO Research
Jun-15
Apr-15
May-15
Mar-15
Feb-15
Jan-15
Dec-14
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
Jun-14
May-14
-2 S.D.
2015E
PER (x)
+3.0SD
46.9
+2.5SD
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) 2013
2014
Total Interest Income
1,446
1,955
2,548
3,289
4,240
Total Interest Expenses
230
219
227
313
431
Year‐end 31 Dec
2015E
2016E
2017E
Net Interest Income
1,216
1,736
2,322
2,977
3,809
Total Non‐Interest Income
491
735
915
1,102
1,246
Operating Income
1,707
2,471
3,236
4,079
5,055
Fee and service expenses
122
126
138
159
183
Administrative expenses
727
1,095
1,456
1,762
2,132
Total Operating Expenses
849
1,220
1,594
1,920
2,314
Operating Profit
858
1,251
1,642
2,158
2,740
Provision expenses
132
189
260
352
468
Extraordinary Items
‐
‐
‐
‐
‐
Income Tax expense
151
207
276
361
454
Net Profit
575
855
1,106
1,445
1,818
Pre Provisioning Operating Profit (PPOP)
707
1,043
1,366
1,797
2,286
EPS (Bt)
0.77
0.85
1.08
1.42
1.78
2013
2014
Cash
100
348
383
421
463
Deposits with banks/Loans to related parties
21
21
27
35
46
Net Investment
‐
40
‐
‐
‐
7,816
10,005
13,043
16,719
Statement of Financial Position (Btmn) As at 31 Dec
2015E
2016E
2017E
Assets
Gross Loans
5,722
Less: Loan Loss Reserves
(183) (273) (383) (539) (756)
Net Loans
5,539
7,543
9,622
12,504
15,963
Foreclosed properties
95
208
249
274
302
Premises and Equipment, Net
145
245
291
331
351
Other Assets
147
186
238
259
290
Total Assets
6,046
8,592
10,811
13,824
17,415
4,565
3,764
2,056
2,861
4,738
Liabilities & Equity S‐T borrowings from financial institutions Other Borrowings
100
1,000
3,900
5,200
5,800
Other Liabilities
251
395
320
337
354
Total Liabilities
4,916
5,160
6,276
8,398
10,892
Paid‐up Capital
750
1,000
1,020
1,020
1,020
Premium on Share Capital
‐
1,422
1,422
1,422
1,422
Retained Earning
289
874
1,912
2,759
3,809
Other Equity Items
91
136
181
226
271
Minority Interest
‐
‐
‐
‐
‐
Total Shareholders' Equity
1,131
3,432
4,535
5,427
6,522
Total Liabilities and Shareholders Equity Source: KTZMICO Research
6,046
8,592
10,811
13,824
17,415
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Valuation and Ratio Analysis Year‐end 31 Dec
2013
2014
2015E
2016E
2017E
Per/Share Data (Bt) EPS
0.77
0.85
1.08
1.42
1.78
DPS
0.60
0.02
0.54
0.71
0.89
BVPS
1.51
3.43
4.45
5.32
6.39
52.79
47.39
37.36
28.59
22.72
Multiplier (X) P/E P/BV
26.87
11.80
9.11
7.61
6.33
Dividend yield (%)
1.48
0.06
1.34
1.75
2.20
Net Profit
42.1%
48.5%
29.4%
30.7%
25.8%
EPS
‐32.6%
11.4%
26.8%
30.7%
25.8%
Net Interest Income
36.2%
42.8%
33.7%
28.2%
28.0%
Growth YoY (%)
Non Interest Income Net Fee and Service income
65.5%
60.9%
30.6%
25.1%
16.6%
348.2%
69.1%
20.4%
19.9%
12.8%
Operating Income
46.0%
44.8%
31.0%
26.0%
23.9%
Operating Expenses
31.2%
43.7%
30.6%
20.5%
20.5%
Operating Profit
64.4%
45.8%
31.3%
31.4%
27.0%
PPOP
76.4%
47.6%
30.9%
31.6%
27.2%
Loans
43.7%
36.6%
28.0%
30.4%
28.2%
NPLs
35.5%
52.8%
34.2%
33.1%
31.9%
Gross NPLs (Btmn)
211
323
433
577
761
Gross NPLs/Loans
3.7%
4.1%
4.3%
4.4%
4.6%
Loan Loss Reserve/NPLs
86.5%
84.6%
88.3%
93.4%
99.4%
Loan Loss Reserve/Loans
3.2%
3.5%
3.8%
4.1%
4.5%
Financial Ratio
Provision expenses (Reversal)/Total loans Equity/Asset Loan to borrowing ratio Debt to Equity ratio
2.3%
2.4%
2.6%
2.7%
2.8%
18.7%
39.9%
41.9%
39.3%
37.5%
122.7%
164.1%
168.0%
161.8%
158.7%
4.35
1.50
1.38
1.55
1.67
ROA
10.9%
11.7%
11.4%
11.7%
11.6%
ROE
66.1%
37.5%
27.8%
29.0%
30.4%
Cost to Income
49.7%
49.4%
49.3%
47.1%
45.8%
Non Interest Income/Total Income
28.8%
29.7%
28.3%
27.0%
24.6%
24.02%
25.50%
25.93%
25.76%
25.53%
20.8%
19.5%
20.0%
20.0%
20.0%
Net Interest Margin (NIM) Tax rate
Key Assumptions
2013
2014
2015E
2016E
2017E
Loan Growth ‐ Net
43.7%
36.6%
28.0%
30.4%
28.2%
Cost to Income
49.7%
49.4%
49.3%
47.1%
45.8%
Net Interest Margin
24.0%
25.5%
25.9%
25.8%
25.5%
Provision expenses (Reversal) (Btmn) Provision expenses (Reversal)/Total loans Source: KTZMICO Research
132 189 260 352 468 2.3%
2.4%
2.6%
2.7%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
2.8%
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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 6 of 6
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
