TISCO Financial Group
TISCO Financial Group Outperform (17E TP Bt75.00)
Earnings Review
Close Bt73.00
Banking July 12, 2017
Beat forecast/Below forecast/In line
2Q17 net profit in line with both our forecast and the street Results date: July 11, 2017 Price Performance (%)
Earnings outlook to outpace larger banks We maintain our Outperform rating. We expect TISCO to feel no material impacts from IFRS9 and the PromptPay program, unlike other larger banks, which should enable it to show outpacing earnings growth vs. larger banks in the next few years. We also see that the acquisition of SCBT’s retail business will help strengthen TISCO’s profitability and competiveness in the L‐T. 2Q17 net profit in line with both our forecast and the street estimate TISCO’s 2Q17 net profit (NP) of Bt1.5bn was quite in line with both our forecast (Bt1.5bn) and the street estimate (Bt1.43bn). 2Q17 net profit came in at Bt1.5bn (+25% YoY, +1% QoQ) The strong results YoY were backed mainly by stronger NIM and a lower provision on the continuing improvement in its asset quality. NIM for 2Q17 increased solidly YoY to 4.11% from 3.82% and still improved slightly QoQ from 4.07%, thanks partly to a higher loan yield backed by strong growth in high‐yield consumer loans (+4% QoQ and +6% YTD), especially for Auto cash and Somwang. Meanwhile, loans for 2Q17 still contracted by 2% QoQ and 4% YTD, mainly from the decline in auto hire purchase loans (‐2.8% QoQ, ‐5.2% YTD). The flat NP QoQ was due to lower brokerage fees QoQ and lower fee income QoQ as it booked huge underwriting income (~Bt120mn) for the TPIPP IPO case in 1Q17.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
7.476
8.350
KT ZMICO vs. consensus Share data
3.1%
5.0%
Reuters / Bloomberg
TISCO.BK/TISCO TB
Paid‐up Shares (m)
800.65
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
58.00/1,713.00
Foreign limit / actual (%)
49.00/44.53
52 week High / Low (Bt)
80.75/49.75
Avg. daily T/O (shares 000)
3,712.00
NVDR (%)
19.04
Estimated free float (%)
77.39
Beta
0.64
URL
www.tisco.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Asset quality and reserve position improved solidly QoQ Its NPLs for 2Q17 still declined both YoY and QoQ, but the NPL ratio was quite flat QoQ at 2.4% of loans due to a loan drop by 2% QoQ. This improved its reserve‐to‐NPL ratio QoQ for 2Q17 to 172% from 164% in 1Q17 and its reserve to the BoT’s required reserve to 202% from 194%. Despite the improving asset quality, TISCO still set a prudent provision for conservativeness as most of the provision set in 2Q17 was a general provision for a countercyclical buffer (with an excess provison of Bt404mn in 2Q17). 1H17 net profit came in at Bt3.0bn (+22% YoY) With 1H17 net profit of Bt3.0bn representing 49% of our FY17 NP forecast, we keep our earnings forecast unchanged. Note that TISCO will consolidate SCBT’s retail assets in 4Q17E. Financials and Valuation FY Ended 31 Dec
2015
2016
2017E
2018E
2019E
PPOP (Btm)
9,399
8,965
9,001
9,978
10,778
Net profit (Btm)
4,250
5,005
6,173
7,024
7,622
5.31
6.25
7.71
8.77
9.52
0%
18%
23%
14%
9%
2.20
3.50
3.70
3.90
4.00
Book value (Bt)
35.09
38.96
43.26
48.43
54.15
FY Ended 31 Dec
2015
2016
2017E
2018E
2019E
EPS (Bt) EPS growth (%) Dividend (Bt)
Prapharas Nonthapiboon Analyst, no 17836
PER (X)
13.75
11.68
9.47
8.32
7.67
[email protected]
PBV (X)
2.08
1.87
1.69
1.51
1.35
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
3.01 15.8%
4.79 16.9%
5.07 18.8%
5.34 19.1%
5.48 18.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
Figure 1: 2Q17 earnings results Statement of Comprehensive Income 2Q16
1Q17
2Q17 % YoY % QoQ
1H16
1H17 % YoY
Fiscal Year‐Ended December Net Interes t Income
2,691
2,764
2,761
3%
0% 5,383
5,525
Non Interes t Income
1,409
1,705
1,615
15%
‐5% 2,922
3,320
Opera ti ng Income
4,099
4,469
4,376
7%
‐2% 8,305
8,845
2016
2017E % YoY % 1H to 17E
3% 10,920 11,618 14%
6,140
6%
48%
6,695
9%
50%
6% 17,060 18,313
7%
48% 50%
Opera ti ng Expens es
1,676
1,867
1,956
17%
5% 3,335
3,823
15%
6,844
7,712
13%
Opera ti ng Profi t
2,137
2,226
2,045
‐4%
‐8% 4,366
4,272
‐2%
8,983
9,020
0%
47%
Provi s i on (Revers a l )
926
753
542
‐41%
‐28% 1,907
1,295
‐32%
3,972
2,908
‐27%
45%
Ta xes
289
351
370
28%
5% 598
721
21%
1,221
1,500
23%
48%
Net Profi t PPOP EPS (Bt)
1,208 2,136 1.51
1,491 2,218 1.86
1,505 2,042 1.88
25% ‐4% 25%
1% 2,463 ‐8% 4,362 1% 3.08
2,996 4,260 3.74
22% ‐2% 22%
5,005 8,965 6.25
6,173 9,001 7.71
23% 0% 23%
49% 47% 49%
Key Statistics & Ratios
2Q16 1Q17 2Q17 7,000 5,221 5,199
Gros s NPLs (Btmn)
Gros s NPLs /Loa ns 3.03% Loa n Los s Res erve/NPLs 97.0% LLR/BoT requi red res erve 143.7% Ti er I/Ri s k As s et 14.6% Ca pi ta l Adequa cy Ra ti o 18.6% Loa n to Depos i t Ra ti o 151.9% Loa n to Depos i ts a nd Borrowi ngs 105.4% Cos t to Income 40.9% Non Interes t Income/Tota l Income 33.2% Ta x ra te 19.3% Net Interes t Ma rgi n 3.82% Interes t Sprea d 4.36% Provi s i on/Loa ns 1.60% Provi s i on to a vera ge l oa ns 1.60% Loa n growth YoY ‐7.4% Loa n growth QoQ ‐1.0% Source: Bloomberg and KTZMICO Research
2.37% 2.41% 164.0% 172.4% 194.6% 201.5% 14.9% 15.6% 19.8% 20.5% 141.4% 138.7% 101.0% 96.5% 41.8% 44.7% 37.2% 34.7% 19.0% 19.7% 4.07% 4.11% 4.70% 4.78% 1.36% 1.00% 1.35% 0.99% ‐5.4% ‐6.4% ‐2.0% ‐2.0%
1H16 1H17 7,000 5,199
2016 2017E 5,710 6,054
3.03% 2.41% 97.0% 172.4% 143.7% 201.5% 14.6% 15.6% 18.6% 20.5% 151.9% 138.7% 105.4% 96.5% 40.1% 43.2% 35.2% 37.5% 19.5% 19.3% 3.78% 4.09% 3.87% 4.74% 2.82% 1.18% 1.63% 1.17% ‐7.4% ‐6.4% ‐1.0% ‐2.0%
2.54% 2.33% 139.8% 138.6% 172.6% N.A. 15.2% 15.4% 19.3% 18.8% 145.1% 140.0% 99.8% 100.9% 40.1% 42.1% 36.0% 36.6% 19.6% 19.5% 3.98% 4.02% 3.79% 2.54% 1.77% 1.20% 1.72% 1.20% ‐5.6% 15.5%
Figure 2: TISCO's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 2.4 +2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg.
2.0 1.6
-0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
1.2 0.8
Jul-17
Jan-17
Jul-16
Jul-15
Jan-16
Jul-14
Jan-15
Jul-13
Jan-14
Jul-12
Jan-13
Jul-11
Jan-12
Jul-10
Jan-11
Jul-09
Jan-10
Jan-09
0.4
Source: Bloomberg, KT ZMICO Research
2017E
PBV (x)
Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
2.0
87
19
+1.5SD
1.9
81
11
+1.0SD
1.7
74
2
+0.5SD
1.6
68
-7
Average
1.4
61
-16
-0.5SD
1.3
55
-25
-1.0SD
1.1
48
-34
-1.5SD
1.0
42
-43
-2.0SD
0.8
35
-52
Figure 3: TISCO's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 12 11 10 9 8 7
2017E
PER (x)
+2.0SD
10.6
82
+1.5SD
9.9
77
5
+1.0SD
9.3
71
-2
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg. -0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Implied market Upside/ Downside price (Bt) to current price (%) 12
41
-44
Jan-10
Jul-09
Jan-09
Source: Bloomberg, KT ZMICO Research
Jul-17
5.3
Jan-17
-37
-2.0SD
Jul-16
46
Jan-16
5.9
Jul-15
-30
-1.5SD
Jul-14
-23
51
Jan-15
56
6.6
Jul-13
7.3
-1.0SD
Jan-14
-0.5SD
3
Jan-13
4
Jul-12
-16
Jul-11
-9
61
Jan-12
66
7.9
Jul-10
8.6
Average
5
Jan-11
+0.5SD
6
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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, TTL, NMG, SAWAD, TFD. KT ZMICO is a co‐underwriter of the IPO of BGRIM.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 3
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
Earnings Review
Close Bt73.00
Banking July 12, 2017
Beat forecast/Below forecast/In line
2Q17 net profit in line with both our forecast and the street Results date: July 11, 2017 Price Performance (%)
Earnings outlook to outpace larger banks We maintain our Outperform rating. We expect TISCO to feel no material impacts from IFRS9 and the PromptPay program, unlike other larger banks, which should enable it to show outpacing earnings growth vs. larger banks in the next few years. We also see that the acquisition of SCBT’s retail business will help strengthen TISCO’s profitability and competiveness in the L‐T. 2Q17 net profit in line with both our forecast and the street estimate TISCO’s 2Q17 net profit (NP) of Bt1.5bn was quite in line with both our forecast (Bt1.5bn) and the street estimate (Bt1.43bn). 2Q17 net profit came in at Bt1.5bn (+25% YoY, +1% QoQ) The strong results YoY were backed mainly by stronger NIM and a lower provision on the continuing improvement in its asset quality. NIM for 2Q17 increased solidly YoY to 4.11% from 3.82% and still improved slightly QoQ from 4.07%, thanks partly to a higher loan yield backed by strong growth in high‐yield consumer loans (+4% QoQ and +6% YTD), especially for Auto cash and Somwang. Meanwhile, loans for 2Q17 still contracted by 2% QoQ and 4% YTD, mainly from the decline in auto hire purchase loans (‐2.8% QoQ, ‐5.2% YTD). The flat NP QoQ was due to lower brokerage fees QoQ and lower fee income QoQ as it booked huge underwriting income (~Bt120mn) for the TPIPP IPO case in 1Q17.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
7.476
8.350
KT ZMICO vs. consensus Share data
3.1%
5.0%
Reuters / Bloomberg
TISCO.BK/TISCO TB
Paid‐up Shares (m)
800.65
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
58.00/1,713.00
Foreign limit / actual (%)
49.00/44.53
52 week High / Low (Bt)
80.75/49.75
Avg. daily T/O (shares 000)
3,712.00
NVDR (%)
19.04
Estimated free float (%)
77.39
Beta
0.64
URL
www.tisco.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Asset quality and reserve position improved solidly QoQ Its NPLs for 2Q17 still declined both YoY and QoQ, but the NPL ratio was quite flat QoQ at 2.4% of loans due to a loan drop by 2% QoQ. This improved its reserve‐to‐NPL ratio QoQ for 2Q17 to 172% from 164% in 1Q17 and its reserve to the BoT’s required reserve to 202% from 194%. Despite the improving asset quality, TISCO still set a prudent provision for conservativeness as most of the provision set in 2Q17 was a general provision for a countercyclical buffer (with an excess provison of Bt404mn in 2Q17). 1H17 net profit came in at Bt3.0bn (+22% YoY) With 1H17 net profit of Bt3.0bn representing 49% of our FY17 NP forecast, we keep our earnings forecast unchanged. Note that TISCO will consolidate SCBT’s retail assets in 4Q17E. Financials and Valuation FY Ended 31 Dec
2015
2016
2017E
2018E
2019E
PPOP (Btm)
9,399
8,965
9,001
9,978
10,778
Net profit (Btm)
4,250
5,005
6,173
7,024
7,622
5.31
6.25
7.71
8.77
9.52
0%
18%
23%
14%
9%
2.20
3.50
3.70
3.90
4.00
Book value (Bt)
35.09
38.96
43.26
48.43
54.15
FY Ended 31 Dec
2015
2016
2017E
2018E
2019E
EPS (Bt) EPS growth (%) Dividend (Bt)
Prapharas Nonthapiboon Analyst, no 17836
PER (X)
13.75
11.68
9.47
8.32
7.67
[email protected]
PBV (X)
2.08
1.87
1.69
1.51
1.35
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
3.01 15.8%
4.79 16.9%
5.07 18.8%
5.34 19.1%
5.48 18.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
Figure 1: 2Q17 earnings results Statement of Comprehensive Income 2Q16
1Q17
2Q17 % YoY % QoQ
1H16
1H17 % YoY
Fiscal Year‐Ended December Net Interes t Income
2,691
2,764
2,761
3%
0% 5,383
5,525
Non Interes t Income
1,409
1,705
1,615
15%
‐5% 2,922
3,320
Opera ti ng Income
4,099
4,469
4,376
7%
‐2% 8,305
8,845
2016
2017E % YoY % 1H to 17E
3% 10,920 11,618 14%
6,140
6%
48%
6,695
9%
50%
6% 17,060 18,313
7%
48% 50%
Opera ti ng Expens es
1,676
1,867
1,956
17%
5% 3,335
3,823
15%
6,844
7,712
13%
Opera ti ng Profi t
2,137
2,226
2,045
‐4%
‐8% 4,366
4,272
‐2%
8,983
9,020
0%
47%
Provi s i on (Revers a l )
926
753
542
‐41%
‐28% 1,907
1,295
‐32%
3,972
2,908
‐27%
45%
Ta xes
289
351
370
28%
5% 598
721
21%
1,221
1,500
23%
48%
Net Profi t PPOP EPS (Bt)
1,208 2,136 1.51
1,491 2,218 1.86
1,505 2,042 1.88
25% ‐4% 25%
1% 2,463 ‐8% 4,362 1% 3.08
2,996 4,260 3.74
22% ‐2% 22%
5,005 8,965 6.25
6,173 9,001 7.71
23% 0% 23%
49% 47% 49%
Key Statistics & Ratios
2Q16 1Q17 2Q17 7,000 5,221 5,199
Gros s NPLs (Btmn)
Gros s NPLs /Loa ns 3.03% Loa n Los s Res erve/NPLs 97.0% LLR/BoT requi red res erve 143.7% Ti er I/Ri s k As s et 14.6% Ca pi ta l Adequa cy Ra ti o 18.6% Loa n to Depos i t Ra ti o 151.9% Loa n to Depos i ts a nd Borrowi ngs 105.4% Cos t to Income 40.9% Non Interes t Income/Tota l Income 33.2% Ta x ra te 19.3% Net Interes t Ma rgi n 3.82% Interes t Sprea d 4.36% Provi s i on/Loa ns 1.60% Provi s i on to a vera ge l oa ns 1.60% Loa n growth YoY ‐7.4% Loa n growth QoQ ‐1.0% Source: Bloomberg and KTZMICO Research
2.37% 2.41% 164.0% 172.4% 194.6% 201.5% 14.9% 15.6% 19.8% 20.5% 141.4% 138.7% 101.0% 96.5% 41.8% 44.7% 37.2% 34.7% 19.0% 19.7% 4.07% 4.11% 4.70% 4.78% 1.36% 1.00% 1.35% 0.99% ‐5.4% ‐6.4% ‐2.0% ‐2.0%
1H16 1H17 7,000 5,199
2016 2017E 5,710 6,054
3.03% 2.41% 97.0% 172.4% 143.7% 201.5% 14.6% 15.6% 18.6% 20.5% 151.9% 138.7% 105.4% 96.5% 40.1% 43.2% 35.2% 37.5% 19.5% 19.3% 3.78% 4.09% 3.87% 4.74% 2.82% 1.18% 1.63% 1.17% ‐7.4% ‐6.4% ‐1.0% ‐2.0%
2.54% 2.33% 139.8% 138.6% 172.6% N.A. 15.2% 15.4% 19.3% 18.8% 145.1% 140.0% 99.8% 100.9% 40.1% 42.1% 36.0% 36.6% 19.6% 19.5% 3.98% 4.02% 3.79% 2.54% 1.77% 1.20% 1.72% 1.20% ‐5.6% 15.5%
Figure 2: TISCO's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 2.4 +2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg.
2.0 1.6
-0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
1.2 0.8
Jul-17
Jan-17
Jul-16
Jul-15
Jan-16
Jul-14
Jan-15
Jul-13
Jan-14
Jul-12
Jan-13
Jul-11
Jan-12
Jul-10
Jan-11
Jul-09
Jan-10
Jan-09
0.4
Source: Bloomberg, KT ZMICO Research
2017E
PBV (x)
Implied market Upside/ Downside price (Bt) to current price (%)
+2.0SD
2.0
87
19
+1.5SD
1.9
81
11
+1.0SD
1.7
74
2
+0.5SD
1.6
68
-7
Average
1.4
61
-16
-0.5SD
1.3
55
-25
-1.0SD
1.1
48
-34
-1.5SD
1.0
42
-43
-2.0SD
0.8
35
-52
Figure 3: TISCO's PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 12 11 10 9 8 7
2017E
PER (x)
+2.0SD
10.6
82
+1.5SD
9.9
77
5
+1.0SD
9.3
71
-2
+2 S.D. +1.5 S.D. +1 S.D. +0.5 S.D. Avg. -0.5 S.D. -1 S.D. -1.5 S.D. -2 S.D.
Implied market Upside/ Downside price (Bt) to current price (%) 12
41
-44
Jan-10
Jul-09
Jan-09
Source: Bloomberg, KT ZMICO Research
Jul-17
5.3
Jan-17
-37
-2.0SD
Jul-16
46
Jan-16
5.9
Jul-15
-30
-1.5SD
Jul-14
-23
51
Jan-15
56
6.6
Jul-13
7.3
-1.0SD
Jan-14
-0.5SD
3
Jan-13
4
Jul-12
-16
Jul-11
-9
61
Jan-12
66
7.9
Jul-10
8.6
Average
5
Jan-11
+0.5SD
6
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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, TTL, NMG, SAWAD, TFD. KT ZMICO is a co‐underwriter of the IPO of BGRIM.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 3
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
