TISCO Financial Group - Global Alliance Partners
TISCO Financial Group Company Update
Underperform (15TP Bt46.00) Close Bt45.50
Banking
Earnings upgrade/Earnings downgrade/Overview unchanged
January 15, 2015
2015 outlook remains challenging
FY15
FY16
Consensus EPS (Bt)
5.713
6.321
KT ZMICO vs. consensus Share data
4.1%
2.5%
Reuters / Bloomberg
TISCO.BK/TISCO TB
Paid‐up Shares (m)
800.62
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
36.00/1,112.00
Foreign limit / actual (%)
49.00/48.23
52 week High / Low (Bt)
47.50/36.25
Avg. daily T/O (shares 000) NVDR (%)
1,177.00 7.61
Estimated free float (%)
74.26
Beta
0.81
URL
www.tisco.co.th
CGR
Challenging operating environment We maintain our Underperform rating for TISCO despite raising our earnings forecasts in 2015‐16E by 4‐6% as we still expect a challenging operating environment in 2015E. However, the main near‐term share price catalyst for TISCO is its more appealing 2014E dividend yield of ~4.8% vs. the sector average of 2‐3%. 2015 financial targets still highlight weak lending environment TISCO’s key business targets for 2015 still look for weak lending with flat loans or slight growth, at least stable NIM and a much lower provision YoY. Meanwhile, it expects its NPLs to increase at a slower pace. Revise up net profit estimates for 15‐16E We raised our net profit estimates for 2015‐16E by 6% and 4% respectively, mainly on the lower provision and slightly lower loan growth. Following our NP revision, we raised our 15E target price to Bt46.0 from Bt44 previously. Lower provision to be main earnings driver for 2015‐16E We still expect TISCO’s 2015E earnings to grow by 12% YoY although we should see a weak lending environment in the auto hire purchase business in 2015. The main earnings driver should come from the much lower provision, which we expect at 140bps in 2015E vs. 161 bps in 2014 and TISCO’s target of 130bps (+/‐). Financial and Valuation FY Ended 31 Dec
2012
2013
2014
2015E
2016E
PPOP (Btm)
5,507
8,036
8,412
8,323
8,583
Net profit (Btmn)
3,705
4,249
4,250
4,765
5,187
5.09
5.31
5.31
5.95
6.48
13.4%
4.3%
0.0%
12.1%
8.9%
2.40
2.00
2.20
2.44
2.59
BV (Bt)
25.00
28.71
32.14
35.78
39.82
FY Ended 31 Dec
2012
2013
2014
2015E
2016E
EPS (Bt) EPS growth (%) Dividend (Bt)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
PER (x)
8.94
8.57
8.57
7.65
7.02
PBV (x)
1.82
1.58
1.42
1.27
1.14
5.27 21.3%
4.40 20.6%
4.83 17.4%
5.36 17.5%
5.70 17.1%
Dividend yield (%) ROE (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015 financial targets still highlight weak lending environment TISCO provided the group’s key business targets for 2015: 1) flat loans or slight growth; 2) stable NIM or a slight increase; 3) lower provision YoY with the expectation of credit cost being around 130bps (+/‐) vs. 161bps for 2014. Therefore, the main earnings cushion or driver could come from a lower provision while loan growth may see downside risk vs. TISCO’s target in our view. TISCO hinted that it is still likely to see loan contractions in the retail segment, especially in auto hire purchase loans and in the used car segment. This should be due largely to the high competition from automakers’ leasing subsidiaries (captive market) and the continuing higher rate of loan repayments vs. new lending. Meanwhile, it aims to boost its loans in the corporate and SME segments to offset the sluggish auto hire purchase loans. Moreover, TISCO anticipates a stable or possibly a slightly downward interest rate environment for 2015, which should benefit the bank’s net interest margin (NIM). On top of this, it expects to boost fee income, especially in regard to fees related to non‐auto bancassurance (life and non‐life bancassurance). On the asset quality side, TISCO still expects its NPLs to increase at a slower pace and it should still need 1‐2 years to manage down its NPL level. Revise up net profit estimates for 15‐16E by 4‐6% We raised our net profit (NP) forecasts for TISCO to fine‐tune with its 2015 guidance and the latest operating environment. We raised our net profit estimates for 2015‐16E by 6% and 4% respectively, mainly on the lower provision as hinted at earlier and slightly lower loan growth. Following our NP revision, we raised our 15E target price estimate for TISCO to Bt46.0 for an implied target P/BV of 1.3x from Bt44 previously. Figure 1: Key changes in our earnings revision Key assumption changes Net Profit (Btmn) % Change in net profit from previous forecasts % Change in net profit YoY Loan growth (%) Net interest margin (NIM) Net fee income growth (%) Provision for loan loss (Btmn) Provision for loan loss (% of average loans) Cost to income ratio (%)
2015E New Previous 4,765 4,505 6% 12% ‐1% 1% 2.98% 3.03% 9% 10% 3,658 4,218 1.40% 1.55% 38.7% 38.3%
New 5,187 4% 9% 7% 2.93% 9% 3,497 1.30% 38.6%
2016E Previous 5,003 7% 2.96% 11% 4,114 1.45% 38.1%
Source: Company data, KT ZMICO Research
Lower provision to be main earnings driver for 2015‐16E We still expect TISCO’s 2015E earnings to grow by 12% YoY although we should see a weak lending environment for auto hire purchase operators in 2015, including TISCO, based on several operators. Demand for new cars should see some improvement but the higher loan repayment rate as well as the weak used car market should continue to cause net loans to contract in 2015E. Therefore, the main earnings driver should be the much lower provision, which we expect at 140bps in 2015E vs. 161 bps in 2014 and TISCO’s target of 130bps (+/‐). However, in the case that TISCO sets aside a lower‐than‐expected provision, every 10 bps would post upside risk to our net profit forecasts and the 15E target price of around 5%.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: TISCO's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2014E
2.4 +2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
2.0 1.6
Avg. -0.5 S.D. -1 S.D. -1.5 S.D.
1.2
Source: Bloomberg, KT ZMICO Research
Nov-14
Jun-14
Jan-14
Aug-13
Mar-13
Oct-12
Dec-11
Jul-11
Feb-11
Sep-10
Apr-10
Jun-09
Nov-09
Jan-09
0.4
May-12
-2 S.D.
0.8
PBV (x) Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
2.1
68
48
+1.5SD
1.9
62
37
+1.0SD
1.8
57
26
+0.5SD
1.6
52
14
Average
1.5
47
3
-0.5SD
1.3
42
-9
-1.0SD
1.1
36
-20
-1.5SD
1.0
31
-31
-2.0SD
0.8
26
-43
Figure 3: TISCO's PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
2014E
12 11
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg.
PER (x) Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
10.8
57
26
+1.5SD
10.1
53
17
+1.0SD
9.3
50
9
+0.5SD
8.6
46
0
Average
7.9
42
-8
4
-0.5SD
7.1
38
-17
3
-1.0SD
6.4
34
-25
-1.5SD
5.7
30
-34
-2.0SD
4.9
26
-42
Source: Bloomberg, KT ZMICO Research
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jan-09
5
Jul-11
6
Jan-11
7
-0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Jul-10
8
Jan-10
9
Jul-09
10
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Tota l Interes t & Di vi dend Income Interes t Expens es on Borrowi ng Net Interes t Income Non‐Interes t Income Opera ti ng Income Opera ti ng Expens es Opera ti ng Profi t Extra ordi na ry Item Provi s i on (Revers a l ) for Doubtful Accounts Ga i n (Los s ) on Tra di ng Securi ti es Ta xes Mi nori ty Interes t Net Profi t Pre Provi s i oni ng Opera ti ng Profi t (PPOP) Pre Provi s i oni ng Profi t (PPP) EPS (Bt)
Statement of Financial Position (Btmn)
2012
2013
2014
2015E
2016E
15,211 8,166 7,044 6,138 13,183 6,447 5,535 0 1,922 121 1,081 (28) 3,705 5,507 5,627 5.09
18,961 10,144 8,817 6,838 15,655 6,166 8,095 0 4,141 354 1,041 (59) 4,249 8,036 8,390 5.31
18,891 9,351 9,540 6,084 15,624 5,880 8,437 0 4,426 264 1,043 (25) 4,250 8,412 8,676 5.31
17,754 8,484 9,269 6,456 15,726 6,080 8,360 0 3,658 100 1,186 (37) 4,765 8,323 8,423 5.95
18,494 9,166 9,329 7,006 16,335 6,300 8,640 0 3,497 100 1,295 (57) 5,187 8,583 8,683 6.48
2012
2013
2014
2015E
2016E
Year‐end 31 Dec Ca s h & Money Ma rket Items Net Inves tment Fi na nce a nd Securi ti es Loa ns ‐ Gros s Hi re Purcha s e Loa ns ‐ Gros s Net Loa ns Total Assets
32,243 7,016 84,619 163,697 243,544 290,497
54,372 11,647 103,852 182,563 280,619 353,406
39,238 15,003 97,689 165,095 256,390 317,657
31,662 17,015 107,946 151,887 252,679 308,464
33,221 18,716 123,167 154,925 270,459 329,662
Depos i ts Interba nk & Money Ma rket ST a nd LT Borrowi ngs Other l i a bi l i ti es Total Liabilities
219,823 13,971 27,877 10,445 272,117
264,642 12,183 43,084 10,443 330,352
205,384 10,897 65,406 10,145 291,833
191,418 9,808 67,792 10,698 279,715
207,401 10,789 68,196 11,283 297,669
7,279 9,472 1,446 18,196
8,006 11,896 3,085 22,987
8,007 14,429 3,295 25,731
8,007 17,385 3,256 28,647
8,007 20,568 3,306 31,880
Pa i d‐up Ca pi ta l Reta i ned Ea rni ng Other equi ty i tems Total Shareholders' Equity Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Key Statistics and Ratios
2012
2013
2014
2015E
2016E
Year‐end 31 Dec Per/Share Data (Bt) EPS DPS for common s ha res BVPS
5.09 2.40 25.00
5.31 2.00 28.71
5.31 2.20 32.14
5.95 2.44 35.78
6.48 2.59 39.82
8.94 1.82 5.27
8.57 1.58 4.40
8.57 1.42 4.83
7.65 1.27 5.36
7.02 1.14 5.70
Growth (%) Net profit EPS Net Interes t Income Non Interes t Income Operati ng Income Growth Operati ng Expens e Growth Operati ng Profi t Loa ns Depos its NPLs
13.4 13.4 1.9 56.7 21.7 30.6 36.6 34.2 478.8 18.6
14.7 4.3 25.2 11.4 18.8 (4.4) 46.3 15.3 20.4 60.2
0.0 0.0 8.2 (11.0) (0.2) (4.6) 4.2 (8.3) (22.4) 36.0
12.1 12.1 (2.8) 6.1 0.7 3.4 (0.9) (1.1) (6.8) 10.0
8.9 8.9 0.6 8.5 3.9 3.6 3.3 7.0 8.3 2.0
Asset Quality Ratio (%) Gros s NPLs (Btmn) Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Accrued Interes t/Loans Loa n Los s Res erve/Loa ns Property Forecl os ed/Loa ns
3,099 1.2 165.4 0.1 1.8 0.9
4,964 1.7 127.5 0.2 1.9 1.5
6,750 2.6 103.0 0.2 2.3 1.6
7,425 2.9 102.5 0.2 2.6 1.4
7,574 2.7 107.0 0.2 2.6 1.3
Capital and Liquidity Ratio (%) Equi ty/As s et Ti er I to Ri s k As s ets Ca pi ta l Adequa cy Ra ti o Loa n to Depos i t Rati o Loa n to Depos i t a nd Borrowing Rati o
6.3 9.1 13.0 113.0 100.2
6.5 9.1 13.3 108.2 93.1
8.1 12.5 16.7 127.9 97.0
9.3 12.4 16.2 135.7 100.2
9.7 12.8 16.1 134.1 100.9
1.4 21.3 48.9 2.52 2.78
1.3 20.6 39.4 2.57 2.76
1.3 17.4 37.6 2.66 2.86
1.5 17.5 38.7 2.74 2.98
1.6 17.1 38.6 2.66 2.93
2012 34.2 48.9 2.78 1,922 0.77% 0.89%
2013 15.3 39.4 2.76 4,141 1.45% 1.55%
2014 (8.3) 37.6 2.86 4,426 1.68% 1.61%
2015E (1.1) 38.7 2.98 3,658 1.41% 1.40%
2016E 7.0 38.6 2.93 3,497 1.26% 1.30%
Multiplier PER (X) P/BV (X) Di vi dend yi eld (%)
Profitability Ratio (%) ROA ROE Cos t to Income Interes t Sprea d Net Interes t Ma rgi n
Key Assumptions Loa n Growth ‐ Net Cos t to Income Net Interes t Ma rgi n Provi s ion for loa n los s (Btmn) Provi s ion for loa n los s (% of l oans ) Provi s ion for loa n los s (% of a verage l oans )
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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.
Underperform (15TP Bt46.00) Close Bt45.50
Banking
Earnings upgrade/Earnings downgrade/Overview unchanged
January 15, 2015
2015 outlook remains challenging
FY15
FY16
Consensus EPS (Bt)
5.713
6.321
KT ZMICO vs. consensus Share data
4.1%
2.5%
Reuters / Bloomberg
TISCO.BK/TISCO TB
Paid‐up Shares (m)
800.62
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
36.00/1,112.00
Foreign limit / actual (%)
49.00/48.23
52 week High / Low (Bt)
47.50/36.25
Avg. daily T/O (shares 000) NVDR (%)
1,177.00 7.61
Estimated free float (%)
74.26
Beta
0.81
URL
www.tisco.co.th
CGR
Challenging operating environment We maintain our Underperform rating for TISCO despite raising our earnings forecasts in 2015‐16E by 4‐6% as we still expect a challenging operating environment in 2015E. However, the main near‐term share price catalyst for TISCO is its more appealing 2014E dividend yield of ~4.8% vs. the sector average of 2‐3%. 2015 financial targets still highlight weak lending environment TISCO’s key business targets for 2015 still look for weak lending with flat loans or slight growth, at least stable NIM and a much lower provision YoY. Meanwhile, it expects its NPLs to increase at a slower pace. Revise up net profit estimates for 15‐16E We raised our net profit estimates for 2015‐16E by 6% and 4% respectively, mainly on the lower provision and slightly lower loan growth. Following our NP revision, we raised our 15E target price to Bt46.0 from Bt44 previously. Lower provision to be main earnings driver for 2015‐16E We still expect TISCO’s 2015E earnings to grow by 12% YoY although we should see a weak lending environment in the auto hire purchase business in 2015. The main earnings driver should come from the much lower provision, which we expect at 140bps in 2015E vs. 161 bps in 2014 and TISCO’s target of 130bps (+/‐). Financial and Valuation FY Ended 31 Dec
2012
2013
2014
2015E
2016E
PPOP (Btm)
5,507
8,036
8,412
8,323
8,583
Net profit (Btmn)
3,705
4,249
4,250
4,765
5,187
5.09
5.31
5.31
5.95
6.48
13.4%
4.3%
0.0%
12.1%
8.9%
2.40
2.00
2.20
2.44
2.59
BV (Bt)
25.00
28.71
32.14
35.78
39.82
FY Ended 31 Dec
2012
2013
2014
2015E
2016E
EPS (Bt) EPS growth (%) Dividend (Bt)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
PER (x)
8.94
8.57
8.57
7.65
7.02
PBV (x)
1.82
1.58
1.42
1.27
1.14
5.27 21.3%
4.40 20.6%
4.83 17.4%
5.36 17.5%
5.70 17.1%
Dividend yield (%) ROE (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
2015 financial targets still highlight weak lending environment TISCO provided the group’s key business targets for 2015: 1) flat loans or slight growth; 2) stable NIM or a slight increase; 3) lower provision YoY with the expectation of credit cost being around 130bps (+/‐) vs. 161bps for 2014. Therefore, the main earnings cushion or driver could come from a lower provision while loan growth may see downside risk vs. TISCO’s target in our view. TISCO hinted that it is still likely to see loan contractions in the retail segment, especially in auto hire purchase loans and in the used car segment. This should be due largely to the high competition from automakers’ leasing subsidiaries (captive market) and the continuing higher rate of loan repayments vs. new lending. Meanwhile, it aims to boost its loans in the corporate and SME segments to offset the sluggish auto hire purchase loans. Moreover, TISCO anticipates a stable or possibly a slightly downward interest rate environment for 2015, which should benefit the bank’s net interest margin (NIM). On top of this, it expects to boost fee income, especially in regard to fees related to non‐auto bancassurance (life and non‐life bancassurance). On the asset quality side, TISCO still expects its NPLs to increase at a slower pace and it should still need 1‐2 years to manage down its NPL level. Revise up net profit estimates for 15‐16E by 4‐6% We raised our net profit (NP) forecasts for TISCO to fine‐tune with its 2015 guidance and the latest operating environment. We raised our net profit estimates for 2015‐16E by 6% and 4% respectively, mainly on the lower provision as hinted at earlier and slightly lower loan growth. Following our NP revision, we raised our 15E target price estimate for TISCO to Bt46.0 for an implied target P/BV of 1.3x from Bt44 previously. Figure 1: Key changes in our earnings revision Key assumption changes Net Profit (Btmn) % Change in net profit from previous forecasts % Change in net profit YoY Loan growth (%) Net interest margin (NIM) Net fee income growth (%) Provision for loan loss (Btmn) Provision for loan loss (% of average loans) Cost to income ratio (%)
2015E New Previous 4,765 4,505 6% 12% ‐1% 1% 2.98% 3.03% 9% 10% 3,658 4,218 1.40% 1.55% 38.7% 38.3%
New 5,187 4% 9% 7% 2.93% 9% 3,497 1.30% 38.6%
2016E Previous 5,003 7% 2.96% 11% 4,114 1.45% 38.1%
Source: Company data, KT ZMICO Research
Lower provision to be main earnings driver for 2015‐16E We still expect TISCO’s 2015E earnings to grow by 12% YoY although we should see a weak lending environment for auto hire purchase operators in 2015, including TISCO, based on several operators. Demand for new cars should see some improvement but the higher loan repayment rate as well as the weak used car market should continue to cause net loans to contract in 2015E. Therefore, the main earnings driver should be the much lower provision, which we expect at 140bps in 2015E vs. 161 bps in 2014 and TISCO’s target of 130bps (+/‐). However, in the case that TISCO sets aside a lower‐than‐expected provision, every 10 bps would post upside risk to our net profit forecasts and the 15E target price of around 5%.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 2: TISCO's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2014E
2.4 +2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D.
2.0 1.6
Avg. -0.5 S.D. -1 S.D. -1.5 S.D.
1.2
Source: Bloomberg, KT ZMICO Research
Nov-14
Jun-14
Jan-14
Aug-13
Mar-13
Oct-12
Dec-11
Jul-11
Feb-11
Sep-10
Apr-10
Jun-09
Nov-09
Jan-09
0.4
May-12
-2 S.D.
0.8
PBV (x) Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
2.1
68
48
+1.5SD
1.9
62
37
+1.0SD
1.8
57
26
+0.5SD
1.6
52
14
Average
1.5
47
3
-0.5SD
1.3
42
-9
-1.0SD
1.1
36
-20
-1.5SD
1.0
31
-31
-2.0SD
0.8
26
-43
Figure 3: TISCO's PER band and sensitivity of market prices based on PER at different standard deviation levels (X)
2014E
12 11
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg.
PER (x) Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
10.8
57
26
+1.5SD
10.1
53
17
+1.0SD
9.3
50
9
+0.5SD
8.6
46
0
Average
7.9
42
-8
4
-0.5SD
7.1
38
-17
3
-1.0SD
6.4
34
-25
-1.5SD
5.7
30
-34
-2.0SD
4.9
26
-42
Source: Bloomberg, KT ZMICO Research
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jan-09
5
Jul-11
6
Jan-11
7
-0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Jul-10
8
Jan-10
9
Jul-09
10
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Tota l Interes t & Di vi dend Income Interes t Expens es on Borrowi ng Net Interes t Income Non‐Interes t Income Opera ti ng Income Opera ti ng Expens es Opera ti ng Profi t Extra ordi na ry Item Provi s i on (Revers a l ) for Doubtful Accounts Ga i n (Los s ) on Tra di ng Securi ti es Ta xes Mi nori ty Interes t Net Profi t Pre Provi s i oni ng Opera ti ng Profi t (PPOP) Pre Provi s i oni ng Profi t (PPP) EPS (Bt)
Statement of Financial Position (Btmn)
2012
2013
2014
2015E
2016E
15,211 8,166 7,044 6,138 13,183 6,447 5,535 0 1,922 121 1,081 (28) 3,705 5,507 5,627 5.09
18,961 10,144 8,817 6,838 15,655 6,166 8,095 0 4,141 354 1,041 (59) 4,249 8,036 8,390 5.31
18,891 9,351 9,540 6,084 15,624 5,880 8,437 0 4,426 264 1,043 (25) 4,250 8,412 8,676 5.31
17,754 8,484 9,269 6,456 15,726 6,080 8,360 0 3,658 100 1,186 (37) 4,765 8,323 8,423 5.95
18,494 9,166 9,329 7,006 16,335 6,300 8,640 0 3,497 100 1,295 (57) 5,187 8,583 8,683 6.48
2012
2013
2014
2015E
2016E
Year‐end 31 Dec Ca s h & Money Ma rket Items Net Inves tment Fi na nce a nd Securi ti es Loa ns ‐ Gros s Hi re Purcha s e Loa ns ‐ Gros s Net Loa ns Total Assets
32,243 7,016 84,619 163,697 243,544 290,497
54,372 11,647 103,852 182,563 280,619 353,406
39,238 15,003 97,689 165,095 256,390 317,657
31,662 17,015 107,946 151,887 252,679 308,464
33,221 18,716 123,167 154,925 270,459 329,662
Depos i ts Interba nk & Money Ma rket ST a nd LT Borrowi ngs Other l i a bi l i ti es Total Liabilities
219,823 13,971 27,877 10,445 272,117
264,642 12,183 43,084 10,443 330,352
205,384 10,897 65,406 10,145 291,833
191,418 9,808 67,792 10,698 279,715
207,401 10,789 68,196 11,283 297,669
7,279 9,472 1,446 18,196
8,006 11,896 3,085 22,987
8,007 14,429 3,295 25,731
8,007 17,385 3,256 28,647
8,007 20,568 3,306 31,880
Pa i d‐up Ca pi ta l Reta i ned Ea rni ng Other equi ty i tems Total Shareholders' Equity Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 6
Key Statistics and Ratios
2012
2013
2014
2015E
2016E
Year‐end 31 Dec Per/Share Data (Bt) EPS DPS for common s ha res BVPS
5.09 2.40 25.00
5.31 2.00 28.71
5.31 2.20 32.14
5.95 2.44 35.78
6.48 2.59 39.82
8.94 1.82 5.27
8.57 1.58 4.40
8.57 1.42 4.83
7.65 1.27 5.36
7.02 1.14 5.70
Growth (%) Net profit EPS Net Interes t Income Non Interes t Income Operati ng Income Growth Operati ng Expens e Growth Operati ng Profi t Loa ns Depos its NPLs
13.4 13.4 1.9 56.7 21.7 30.6 36.6 34.2 478.8 18.6
14.7 4.3 25.2 11.4 18.8 (4.4) 46.3 15.3 20.4 60.2
0.0 0.0 8.2 (11.0) (0.2) (4.6) 4.2 (8.3) (22.4) 36.0
12.1 12.1 (2.8) 6.1 0.7 3.4 (0.9) (1.1) (6.8) 10.0
8.9 8.9 0.6 8.5 3.9 3.6 3.3 7.0 8.3 2.0
Asset Quality Ratio (%) Gros s NPLs (Btmn) Gros s NPLs /Loa ns Loa n Los s Res erve/NPLs Accrued Interes t/Loans Loa n Los s Res erve/Loa ns Property Forecl os ed/Loa ns
3,099 1.2 165.4 0.1 1.8 0.9
4,964 1.7 127.5 0.2 1.9 1.5
6,750 2.6 103.0 0.2 2.3 1.6
7,425 2.9 102.5 0.2 2.6 1.4
7,574 2.7 107.0 0.2 2.6 1.3
Capital and Liquidity Ratio (%) Equi ty/As s et Ti er I to Ri s k As s ets Ca pi ta l Adequa cy Ra ti o Loa n to Depos i t Rati o Loa n to Depos i t a nd Borrowing Rati o
6.3 9.1 13.0 113.0 100.2
6.5 9.1 13.3 108.2 93.1
8.1 12.5 16.7 127.9 97.0
9.3 12.4 16.2 135.7 100.2
9.7 12.8 16.1 134.1 100.9
1.4 21.3 48.9 2.52 2.78
1.3 20.6 39.4 2.57 2.76
1.3 17.4 37.6 2.66 2.86
1.5 17.5 38.7 2.74 2.98
1.6 17.1 38.6 2.66 2.93
2012 34.2 48.9 2.78 1,922 0.77% 0.89%
2013 15.3 39.4 2.76 4,141 1.45% 1.55%
2014 (8.3) 37.6 2.86 4,426 1.68% 1.61%
2015E (1.1) 38.7 2.98 3,658 1.41% 1.40%
2016E 7.0 38.6 2.93 3,497 1.26% 1.30%
Multiplier PER (X) P/BV (X) Di vi dend yi eld (%)
Profitability Ratio (%) ROA ROE Cos t to Income Interes t Sprea d Net Interes t Ma rgi n
Key Assumptions Loa n Growth ‐ Net Cos t to Income Net Interes t Ma rgi n Provi s ion for loa n los s (Btmn) Provi s ion for loa n los s (% of l oans ) Provi s ion for loa n los s (% of a verage l oans )
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 6
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
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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,
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Telephone: (66-2) 686-1500
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G Floor, Lao Peng Nguan 1 Bldg.,
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Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
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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.
