TMB Bank AWS
TMB Bank Company Update
Underperform (15TP Bt2.40) Close Bt2.26
Banking July 7, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Tough road still lies ahead
FY15
FY16
Consensus EPS (Bt)
0.205
0.245
KT ZMICO vs. consensus Share data
‐12.2%
‐14.3%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,749.50
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000) NVDR (%)
99.00/2,923.00 50.36/37.76 3.24/2.22 181,100.00 8.17
Estimated free float (%)
43.88
Beta
1.24
URL
www.tmbbank.com
CGR
Switch rating to Underperform We switch our rating for TMB to Underperform from Outperform following our earnings downgrade with the new 15E target price of Bt2.40/share. We see a tougher operating environment on the potential of prolonged weak macro fronts, especially with regard to higher asset quality risk on its SME portfolio. Meanwhile, the price catalyst of the M&A theme may not be seen in the medium term given the current higher economic risk. Lowering of 2015 financial targets underway TMB will hold an analyst meeting on 20 July and is expected to lower its financial targets for 2015 like other banks recently. The main revision will be higher credit cost on higher asset quality risk as well as lower NIM and loan growth (Figure 1). Revise down net profit estimates for 15‐16E by 23‐24% We cut our net profit (NP) forecasts for TMB in 2015‐16E by 23‐24% mainly to reflect the bank’s potential new 2015 guidance and the weaker‐than‐expected macro fronts. The main earnings revisions came from a higher provision on higher asset quality risk and lower NIM. Meanwhile, net fee income is the main bright spot and will likely be ahead of our estimate. Following our NP cut, we lowered our 15E target price to Bt2.40 (for an implied target P/BV of 1.4x) from Bt3.40 previously. Expect 2Q15E net profit of Bt2bn (‐21% YoY, +25% QoQ) The main reasons behind the poor earnings YoY for 2Q15E should be 1) a higher provision on poorer asset quality; and 2) weaker NIM on the rate cut impact and higher NPLs. However, the key bright spot remains sound net fee income growth (likely +>20% YoY). Loan growth is likely to be around 2‐3% YTD. Meanwhile, the NPL ratio as of 2Q15E is likely to be higher from the SME portfolio. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%)
2013
2014
2015E
2016E
2017E
12,553
12,846
14,204
15,146
16,913
5,737
9,539
7,810
9,036
11,490
0.13
0.22
0.18
0.21
0.26
353%
66%
‐18%
16%
27%
BV (Bt)
1.42
1.60
1.72
1.87
2.07
Dividend (Bt)
0.04
0.06
0.06
0.07
0.08 2017E
Prapharas Nonthapiboon
FY Ended 31 Dec
2013
2014
2015E
2016E
Analyst, no 17836
PER (x)
17.21
10.35
12.64
10.93
8.59
[email protected]
PBV (x)
1.60
1.42
1.32
1.21
1.09
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
1.77 9.9%
2.65 14.5%
2.65 10.8%
2.93 11.5%
3.49 13.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Lowering of 2015 financial targets underway TMB will hold an analyst meeting on 20 July and will likely lower the bank’s financial targets for 2015 as other banks have done recently. The main revisions will be 1) higher credit cost (likely >100 bps from around 80‐90bps previously); 2) lower NIM on the rate cut impact and weaker asset quality; and 3) lower performing loan growth target to around 6% from 8‐10% previously (see Figure 1). Note that the higher asset quality risk still stems from the small SME segment. Moreover, most of the bank’s small SME portfolio will be booked under the guarantee campaign with TCG, with TCG guaranteeing 18% on any potential loan loss. TMB also aims to keep its reserve‐to‐NPL ratio at >140% vs. its original target of ~150% in line with its prudent risk management and policy. Figure 1: TMB’s financial targets for 2015 vs. our forecasts 2014 Performance Targets
Actual
2015
2015
2015
TMB's Targets* Targets (Revised)** 8‐10% ~6%
KTZ's Forecasts
Performi ng l oa n growth
7.4%
Depos i t growth
8% 3.0%
8‐10%
NA
3.20%
~3%
2% 2.97%
5%
NA
NA
23%
Net Interes t Ma rgi n (NIM) Net fee i ncome growth
NA
Cos t to Income Ra ti o
53.8%
50%
50.9%
ROE
14.5%
14‐15%
NA
10.8%
NPL ra ti o
2.85% 0.65%
2.80% 0.8‐0.9%
>3% ~1%+
3.3%
Provi s i on (% of l oa ns )
1.20%
Loa n Los s Covera ge
157%
~150%
>140%
147%
Source: KT ZMICO Research * 2015 targets were announced in Jan‐15 and based on 15E GDP growth forecasts of 3‐4%. **2015 targets are likely to be announced on 20 July‐15, based on a 15E GDP growth forecast of ~3%.
Figure 2: Key changes in our earnings revision Key assumption changes
2015E
Net profit (Btmn) % Change in net profit from previous forecast % Change in net profit YoY Loan growth (%) Net interest margin (NIM) Fee income growth (%) Provision for loan loss (Btmn) Provision for loan loss (% to loans) Cost to income ratio (%) Source: KT ZMICO Research
New 7,810 ‐23% ‐18% 5% 2.97% 23% 6,683 1.20% 51%
2016E Previous 10,117
8% 3.13% 12% 4,869 0.85% 50%
New 9,036 ‐24% 16% 5% 3.00% 13% 6,432 1.10% 50%
Previous 11,888
10% 3.17% 16% 5,041 0.80% 48%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: 2Q15E earnings preview Statement of Comprehensive Income (Btmn) Fiscal Year-Ended December Net Interest Income Non Interest Income Operating Income Operating Expenses Operating Profit before tax Provision for loan loss (Reversal)
2Q14 5,224 2,034 7,258 3,727 3,413 309 643 2,575 2,770 0.06
Taxes Extraordinary items Net Profit PPOP-after tax EPS (Bt) Key Statistics & Ratios
1Q15 5,704 2,260 7,964 3,558 4,342 2,387 376 1,638 3,966 0.04
2Q14
Gross NPLs (Btmn)
20,778
Gross NPLs/Loans
1Q15 19,190
2Q15E % YoY % QoQ 1H14 1H15E % YoY 5,666 8% -1% 10,261 11,370 11% 2,190 8% -3% 3,826 4,450 16% 7,856 8% -1% 14,086 15,820 12% 3,942 6% 11% 7,490 7,501 0% 3,864 13% -11% 6,442 8,206 27% 1,350 337% -43% 1,470 3,737 154% 513 -20% 36% 942 889 -6% NM NM NM 2,046 -21% 25% 4,177 3,684 -12% 3,351 21% -15% 5,500 7,317 33% 0.05 -21% 25% 0.10 0.08 -12% 2Q15E
1H14
20,078
20,778
2015E 21,509
3.40%
3.01%
3.12%
143.5%
150.0%
148.3%
Tier I/Risk Assets
10.7%
10.9%
10.7%
10.7%
10.7%
C apital Adequacy Ratio Loan to Deposit Ratio
15.4%
17.8%
15.4%
15.4%
15.4%
17.8%
88.9%
92.7%
92.6%
88.9%
92.6%
95.5%
Loan to Deposit & ST borrowing
84.4%
86.8%
86.9%
84.4%
86.9%
90.2%
C ost to Income
53.0%
45.6%
51.2%
54.5%
48.4%
49.7%
Non Interest Income/Total Income
28.0%
28.4%
27.9%
27.2%
28.1%
29.7%
Net Interest Margin
2.85%
3.01%
2.96%
2.85%
2.98%
2.97%
Tax rate
20.0%
18.6%
20.0%
18.4%
19.4%
19.0%
Provision/loans Loan growth YoY
0.2% 9.8%
1.8% 7.6%
1.0% 6.9%
1.2% 9.8%
2.7% 6.9%
1.2% 5.0%
Loan growth QoQ
1.8%
1.6%
1.0%
1.8%
1.0%
Loan Loss Reserve/NPLs
3.40%
1H15E 20,078
2015E % YoY % 1H to 15E 22,846 6% 50% 9,658 16% 46% 32,504 9% 49% 16,153 2% 46% 15,565 15% 53% 6,683 94% 56% 1,837 54% 48% NM NM 7,810 -18% 47% 14,204 11% 52% 0.18 -18% 47%
3.12%
3.33%
143.5% 148.3%
146.7% 11.1%
Source: KTZMICO Research
Figure 4: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 2.5 2.0 1.5 1.0
2015E
PBV (x)
+2 S.D. +1.5 S.D.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+1 S.D.
+2.0SD
2.3
3.92
74
+0.5 S.D. Avg.
+1.5SD
2.1
3.57
58
-0.5 S.D.
+1.0SD
1.9
3.23
43
-1 S.D. -1.5 S.D.
+0.5SD
1.7
2.88
27
Average
1.5
2.53
12
-0.5SD
1.3
2.18
-4
-1.0SD
1.1
1.83
-19
-1.5SD
0.9
1.48
-34
-2.0SD
0.7
1.13
-50
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jun-15
Feb-15
Sep-14
May-14
Jul-13
Dec-13
Mar-13
Oct-12
Jan-12
Jun-12
Apr-11
Sep-11
Jul-10
Feb-10
Oct-09
Jan-09
May-09
0.0
Dec-10
0.5
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec
2013 34,271
Interest Income
2014 35,848
2015E 36,267
2016E 38,111
2017E 42,379
Interest Expenses
14,004
14,253
13,421
14,345
16,687
Net Interest Income
20,267
21,595
22,846
23,766
25,691
Non‐Interest Income
8,265
8,358
9,658
10,758
12,162
Operating Income
28,532
29,953
32,504
34,524
37,854
Operating Expenses
14,550
15,774
16,153
16,902
17,887
Operating Profit
13,849
14,037
16,041
17,272
19,617
Provision (Reversal) for loan loss
7,613
3,437
6,683
6,432
5,736
Taxes
1,297
1,191
1,837
2,126
2,704
Extraordinary Item
675
0
0
0
0
Minority Interests Net Profit
(10)
(13)
(21)
(29)
(37) 11,490
5,737
9,539
7,810
9,036
Pre Provisioning Operating Profit (PPOP)
12,553
12,846
14,204
15,146
16,913
Pre Provisioning Profit (PPP) EPS (Bt)
13,350
12,976
14,493
15,467
17,226
0.13
0.22
0.18
0.21
0.26
2013 16,576
2014 16,428
2015E 16,909
2016E 17,078
2017E 17,249
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash Interbank & Money Market Net Investment
96,437
113,097
106,322
95,690
86,121
103,277
110,859
118,620
124,550
130,778
Loans
499,474
530,360
556,879
584,723
637,354
1,004
1,068
1,114
1,169
1,275
Loan Loss Reserves Net Loans
(31,468)
(28,362)
(31,545)
(34,477)
(36,713)
469,010
503,066
526,448
551,416
601,916
Total Assets
765,732
810,167
824,860
847,179
893,406
Deposits
529,606
571,625
583,058
600,550
639,585
66,038
72,717
74,171
75,654
77,168
38,173
36,249
34,437
32,715
31,079
Total Liabilities
703,899
740,374
749,817
765,494
802,883 41,495
Accrued Interest Receivable
Interbank & Money Market Borrowing
Paid‐up Capital
41,426
41,495
41,495
41,495
Retained Earning
15,204
22,637
27,577
33,741
42,090
Total Equity Source: KTZMICO Research
61,757
69,704
74,944
81,578
90,406
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
EPS
0.13
0.22
0.18
0.21
0.26
DPS
0.040
0.060
0.060
0.066
0.079
BV
1.42
1.60
1.72
1.87
2.07
P/E
17.21
10.35
12.64
10.93
8.59
P/BV
1.60
1.42
1.32
1.21
1.09
Dividend yield (%)
1.77
2.65
2.65
2.93
3.49
Net Profit
354.5%
66.3%
‐18.1%
15.7%
27.2%
EPS
353.2%
66.3%
‐18.1%
15.7%
27.2%
Per/Share Data (Bt)
Multiplier (X)
Percentage Growth (%)
Net Interest Income
18.8%
6.6%
5.8%
4.0%
8.1%
Non Interest Income
8.2%
1.1%
15.6%
11.4%
13.1%
Operating Income
15.5%
5.0%
8.5%
6.2%
9.6%
Operating Expense
8.3%
8.4%
2.4%
4.6%
5.8%
Operating Profit after tax
31.9%
1.4%
14.3%
7.7%
13.6%
Loans
10.3%
6.2%
5.0%
5.0%
9.0%
Deposits
6.7%
7.9%
2.0%
3.0%
6.5%
Gross NPLs
1.4%
‐19.3%
18.9%
9.0%
1.2%
22,421
18,093
21,509
23,448
23,734
3.9%
2.9%
3.3%
3.5%
3.3%
Loan Loss Reserve/NPLs
140.4%
156.8%
146.7%
147.0%
154.7%
Accrued Interest/Loans
0.2%
0.2%
0.2%
0.2%
0.2%
Loan Loss Reserve/Loans
6.3%
5.3%
5.7%
5.9%
5.8%
Property Foreclosed/Loans
0.4%
0.4%
0.3%
0.3%
0.2%
Asset Quality Ratio Gross NPLs (Btmn) Gross NPL/Loans
Capital & Liquidity Ratio Equity/Asset
8.1%
8.6%
9.1%
9.6%
10.1%
Tier I to Risk Assets
10.6%
11.0%
11.1%
11.8%
12.4%
Total Capital Adequacy Ratio
15.9%
18.3%
17.8%
18.0%
18.0%
Loan to Deposit Ratio (LDR)
94.3%
92.8%
95.5%
97.4%
99.7%
Loan to Deposit and ST Borrowings
88.0%
87.2%
90.2%
92.3%
95.0%
0.8%
1.2%
1.0%
1.1%
1.3%
Profitability Ratio ROA ROE
9.9%
14.5%
10.8%
11.5%
13.4%
Cost to Income
52.0%
53.8%
50.9%
50.2%
48.5%
Non Interest Income/Total Income
29.0%
27.9%
29.7%
31.2%
32.1%
Net Interest Margin
2.99%
2.97%
2.97%
3.00%
3.10%
Key Assumptions
2013
2014
2015E
2016E
2017E
Loan Growth ‐ Net
10.3%
6.2%
5.0%
5.0%
9.0%
Cost to Income
52.0%
53.8%
50.9%
50.2%
48.5%
Net Interest Margin
2.99%
2.97%
2.97%
3.00%
3.10%
7,613
3,437
6,683
6,432
5,736
1.52%
0.65%
1.20%
1.10%
0.90%
Provision expenses (Btmn) Provision to loans (%) 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,
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 Bt2.40) Close Bt2.26
Banking July 7, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Tough road still lies ahead
FY15
FY16
Consensus EPS (Bt)
0.205
0.245
KT ZMICO vs. consensus Share data
‐12.2%
‐14.3%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,749.50
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000) NVDR (%)
99.00/2,923.00 50.36/37.76 3.24/2.22 181,100.00 8.17
Estimated free float (%)
43.88
Beta
1.24
URL
www.tmbbank.com
CGR
Switch rating to Underperform We switch our rating for TMB to Underperform from Outperform following our earnings downgrade with the new 15E target price of Bt2.40/share. We see a tougher operating environment on the potential of prolonged weak macro fronts, especially with regard to higher asset quality risk on its SME portfolio. Meanwhile, the price catalyst of the M&A theme may not be seen in the medium term given the current higher economic risk. Lowering of 2015 financial targets underway TMB will hold an analyst meeting on 20 July and is expected to lower its financial targets for 2015 like other banks recently. The main revision will be higher credit cost on higher asset quality risk as well as lower NIM and loan growth (Figure 1). Revise down net profit estimates for 15‐16E by 23‐24% We cut our net profit (NP) forecasts for TMB in 2015‐16E by 23‐24% mainly to reflect the bank’s potential new 2015 guidance and the weaker‐than‐expected macro fronts. The main earnings revisions came from a higher provision on higher asset quality risk and lower NIM. Meanwhile, net fee income is the main bright spot and will likely be ahead of our estimate. Following our NP cut, we lowered our 15E target price to Bt2.40 (for an implied target P/BV of 1.4x) from Bt3.40 previously. Expect 2Q15E net profit of Bt2bn (‐21% YoY, +25% QoQ) The main reasons behind the poor earnings YoY for 2Q15E should be 1) a higher provision on poorer asset quality; and 2) weaker NIM on the rate cut impact and higher NPLs. However, the key bright spot remains sound net fee income growth (likely +>20% YoY). Loan growth is likely to be around 2‐3% YTD. Meanwhile, the NPL ratio as of 2Q15E is likely to be higher from the SME portfolio. Financials and Valuation FY Ended 31 Dec PPOP (Btm) Net profit (Btmn) EPS (Bt) EPS growth (%)
2013
2014
2015E
2016E
2017E
12,553
12,846
14,204
15,146
16,913
5,737
9,539
7,810
9,036
11,490
0.13
0.22
0.18
0.21
0.26
353%
66%
‐18%
16%
27%
BV (Bt)
1.42
1.60
1.72
1.87
2.07
Dividend (Bt)
0.04
0.06
0.06
0.07
0.08 2017E
Prapharas Nonthapiboon
FY Ended 31 Dec
2013
2014
2015E
2016E
Analyst, no 17836
PER (x)
17.21
10.35
12.64
10.93
8.59
[email protected]
PBV (x)
1.60
1.42
1.32
1.21
1.09
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
1.77 9.9%
2.65 14.5%
2.65 10.8%
2.93 11.5%
3.49 13.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 6
Lowering of 2015 financial targets underway TMB will hold an analyst meeting on 20 July and will likely lower the bank’s financial targets for 2015 as other banks have done recently. The main revisions will be 1) higher credit cost (likely >100 bps from around 80‐90bps previously); 2) lower NIM on the rate cut impact and weaker asset quality; and 3) lower performing loan growth target to around 6% from 8‐10% previously (see Figure 1). Note that the higher asset quality risk still stems from the small SME segment. Moreover, most of the bank’s small SME portfolio will be booked under the guarantee campaign with TCG, with TCG guaranteeing 18% on any potential loan loss. TMB also aims to keep its reserve‐to‐NPL ratio at >140% vs. its original target of ~150% in line with its prudent risk management and policy. Figure 1: TMB’s financial targets for 2015 vs. our forecasts 2014 Performance Targets
Actual
2015
2015
2015
TMB's Targets* Targets (Revised)** 8‐10% ~6%
KTZ's Forecasts
Performi ng l oa n growth
7.4%
Depos i t growth
8% 3.0%
8‐10%
NA
3.20%
~3%
2% 2.97%
5%
NA
NA
23%
Net Interes t Ma rgi n (NIM) Net fee i ncome growth
NA
Cos t to Income Ra ti o
53.8%
50%
50.9%
ROE
14.5%
14‐15%
NA
10.8%
NPL ra ti o
2.85% 0.65%
2.80% 0.8‐0.9%
>3% ~1%+
3.3%
Provi s i on (% of l oa ns )
1.20%
Loa n Los s Covera ge
157%
~150%
>140%
147%
Source: KT ZMICO Research * 2015 targets were announced in Jan‐15 and based on 15E GDP growth forecasts of 3‐4%. **2015 targets are likely to be announced on 20 July‐15, based on a 15E GDP growth forecast of ~3%.
Figure 2: Key changes in our earnings revision Key assumption changes
2015E
Net profit (Btmn) % Change in net profit from previous forecast % Change in net profit YoY Loan growth (%) Net interest margin (NIM) Fee income growth (%) Provision for loan loss (Btmn) Provision for loan loss (% to loans) Cost to income ratio (%) Source: KT ZMICO Research
New 7,810 ‐23% ‐18% 5% 2.97% 23% 6,683 1.20% 51%
2016E Previous 10,117
8% 3.13% 12% 4,869 0.85% 50%
New 9,036 ‐24% 16% 5% 3.00% 13% 6,432 1.10% 50%
Previous 11,888
10% 3.17% 16% 5,041 0.80% 48%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 6
Figure 3: 2Q15E earnings preview Statement of Comprehensive Income (Btmn) Fiscal Year-Ended December Net Interest Income Non Interest Income Operating Income Operating Expenses Operating Profit before tax Provision for loan loss (Reversal)
2Q14 5,224 2,034 7,258 3,727 3,413 309 643 2,575 2,770 0.06
Taxes Extraordinary items Net Profit PPOP-after tax EPS (Bt) Key Statistics & Ratios
1Q15 5,704 2,260 7,964 3,558 4,342 2,387 376 1,638 3,966 0.04
2Q14
Gross NPLs (Btmn)
20,778
Gross NPLs/Loans
1Q15 19,190
2Q15E % YoY % QoQ 1H14 1H15E % YoY 5,666 8% -1% 10,261 11,370 11% 2,190 8% -3% 3,826 4,450 16% 7,856 8% -1% 14,086 15,820 12% 3,942 6% 11% 7,490 7,501 0% 3,864 13% -11% 6,442 8,206 27% 1,350 337% -43% 1,470 3,737 154% 513 -20% 36% 942 889 -6% NM NM NM 2,046 -21% 25% 4,177 3,684 -12% 3,351 21% -15% 5,500 7,317 33% 0.05 -21% 25% 0.10 0.08 -12% 2Q15E
1H14
20,078
20,778
2015E 21,509
3.40%
3.01%
3.12%
143.5%
150.0%
148.3%
Tier I/Risk Assets
10.7%
10.9%
10.7%
10.7%
10.7%
C apital Adequacy Ratio Loan to Deposit Ratio
15.4%
17.8%
15.4%
15.4%
15.4%
17.8%
88.9%
92.7%
92.6%
88.9%
92.6%
95.5%
Loan to Deposit & ST borrowing
84.4%
86.8%
86.9%
84.4%
86.9%
90.2%
C ost to Income
53.0%
45.6%
51.2%
54.5%
48.4%
49.7%
Non Interest Income/Total Income
28.0%
28.4%
27.9%
27.2%
28.1%
29.7%
Net Interest Margin
2.85%
3.01%
2.96%
2.85%
2.98%
2.97%
Tax rate
20.0%
18.6%
20.0%
18.4%
19.4%
19.0%
Provision/loans Loan growth YoY
0.2% 9.8%
1.8% 7.6%
1.0% 6.9%
1.2% 9.8%
2.7% 6.9%
1.2% 5.0%
Loan growth QoQ
1.8%
1.6%
1.0%
1.8%
1.0%
Loan Loss Reserve/NPLs
3.40%
1H15E 20,078
2015E % YoY % 1H to 15E 22,846 6% 50% 9,658 16% 46% 32,504 9% 49% 16,153 2% 46% 15,565 15% 53% 6,683 94% 56% 1,837 54% 48% NM NM 7,810 -18% 47% 14,204 11% 52% 0.18 -18% 47%
3.12%
3.33%
143.5% 148.3%
146.7% 11.1%
Source: KTZMICO Research
Figure 4: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X) 2.5 2.0 1.5 1.0
2015E
PBV (x)
+2 S.D. +1.5 S.D.
Implied market
Upside/ Downside
price (Bt)
to current price (%)
+1 S.D.
+2.0SD
2.3
3.92
74
+0.5 S.D. Avg.
+1.5SD
2.1
3.57
58
-0.5 S.D.
+1.0SD
1.9
3.23
43
-1 S.D. -1.5 S.D.
+0.5SD
1.7
2.88
27
Average
1.5
2.53
12
-0.5SD
1.3
2.18
-4
-1.0SD
1.1
1.83
-19
-1.5SD
0.9
1.48
-34
-2.0SD
0.7
1.13
-50
-2 S.D.
Source: Bloomberg, KT ZMICO Research
Jun-15
Feb-15
Sep-14
May-14
Jul-13
Dec-13
Mar-13
Oct-12
Jan-12
Jun-12
Apr-11
Sep-11
Jul-10
Feb-10
Oct-09
Jan-09
May-09
0.0
Dec-10
0.5
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 6
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec
2013 34,271
Interest Income
2014 35,848
2015E 36,267
2016E 38,111
2017E 42,379
Interest Expenses
14,004
14,253
13,421
14,345
16,687
Net Interest Income
20,267
21,595
22,846
23,766
25,691
Non‐Interest Income
8,265
8,358
9,658
10,758
12,162
Operating Income
28,532
29,953
32,504
34,524
37,854
Operating Expenses
14,550
15,774
16,153
16,902
17,887
Operating Profit
13,849
14,037
16,041
17,272
19,617
Provision (Reversal) for loan loss
7,613
3,437
6,683
6,432
5,736
Taxes
1,297
1,191
1,837
2,126
2,704
Extraordinary Item
675
0
0
0
0
Minority Interests Net Profit
(10)
(13)
(21)
(29)
(37) 11,490
5,737
9,539
7,810
9,036
Pre Provisioning Operating Profit (PPOP)
12,553
12,846
14,204
15,146
16,913
Pre Provisioning Profit (PPP) EPS (Bt)
13,350
12,976
14,493
15,467
17,226
0.13
0.22
0.18
0.21
0.26
2013 16,576
2014 16,428
2015E 16,909
2016E 17,078
2017E 17,249
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash Interbank & Money Market Net Investment
96,437
113,097
106,322
95,690
86,121
103,277
110,859
118,620
124,550
130,778
Loans
499,474
530,360
556,879
584,723
637,354
1,004
1,068
1,114
1,169
1,275
Loan Loss Reserves Net Loans
(31,468)
(28,362)
(31,545)
(34,477)
(36,713)
469,010
503,066
526,448
551,416
601,916
Total Assets
765,732
810,167
824,860
847,179
893,406
Deposits
529,606
571,625
583,058
600,550
639,585
66,038
72,717
74,171
75,654
77,168
38,173
36,249
34,437
32,715
31,079
Total Liabilities
703,899
740,374
749,817
765,494
802,883 41,495
Accrued Interest Receivable
Interbank & Money Market Borrowing
Paid‐up Capital
41,426
41,495
41,495
41,495
Retained Earning
15,204
22,637
27,577
33,741
42,090
Total Equity Source: KTZMICO Research
61,757
69,704
74,944
81,578
90,406
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
EPS
0.13
0.22
0.18
0.21
0.26
DPS
0.040
0.060
0.060
0.066
0.079
BV
1.42
1.60
1.72
1.87
2.07
P/E
17.21
10.35
12.64
10.93
8.59
P/BV
1.60
1.42
1.32
1.21
1.09
Dividend yield (%)
1.77
2.65
2.65
2.93
3.49
Net Profit
354.5%
66.3%
‐18.1%
15.7%
27.2%
EPS
353.2%
66.3%
‐18.1%
15.7%
27.2%
Per/Share Data (Bt)
Multiplier (X)
Percentage Growth (%)
Net Interest Income
18.8%
6.6%
5.8%
4.0%
8.1%
Non Interest Income
8.2%
1.1%
15.6%
11.4%
13.1%
Operating Income
15.5%
5.0%
8.5%
6.2%
9.6%
Operating Expense
8.3%
8.4%
2.4%
4.6%
5.8%
Operating Profit after tax
31.9%
1.4%
14.3%
7.7%
13.6%
Loans
10.3%
6.2%
5.0%
5.0%
9.0%
Deposits
6.7%
7.9%
2.0%
3.0%
6.5%
Gross NPLs
1.4%
‐19.3%
18.9%
9.0%
1.2%
22,421
18,093
21,509
23,448
23,734
3.9%
2.9%
3.3%
3.5%
3.3%
Loan Loss Reserve/NPLs
140.4%
156.8%
146.7%
147.0%
154.7%
Accrued Interest/Loans
0.2%
0.2%
0.2%
0.2%
0.2%
Loan Loss Reserve/Loans
6.3%
5.3%
5.7%
5.9%
5.8%
Property Foreclosed/Loans
0.4%
0.4%
0.3%
0.3%
0.2%
Asset Quality Ratio Gross NPLs (Btmn) Gross NPL/Loans
Capital & Liquidity Ratio Equity/Asset
8.1%
8.6%
9.1%
9.6%
10.1%
Tier I to Risk Assets
10.6%
11.0%
11.1%
11.8%
12.4%
Total Capital Adequacy Ratio
15.9%
18.3%
17.8%
18.0%
18.0%
Loan to Deposit Ratio (LDR)
94.3%
92.8%
95.5%
97.4%
99.7%
Loan to Deposit and ST Borrowings
88.0%
87.2%
90.2%
92.3%
95.0%
0.8%
1.2%
1.0%
1.1%
1.3%
Profitability Ratio ROA ROE
9.9%
14.5%
10.8%
11.5%
13.4%
Cost to Income
52.0%
53.8%
50.9%
50.2%
48.5%
Non Interest Income/Total Income
29.0%
27.9%
29.7%
31.2%
32.1%
Net Interest Margin
2.99%
2.97%
2.97%
3.00%
3.10%
Key Assumptions
2013
2014
2015E
2016E
2017E
Loan Growth ‐ Net
10.3%
6.2%
5.0%
5.0%
9.0%
Cost to Income
52.0%
53.8%
50.9%
50.2%
48.5%
Net Interest Margin
2.99%
2.97%
2.97%
3.00%
3.10%
7,613
3,437
6,683
6,432
5,736
1.52%
0.65%
1.20%
1.10%
0.90%
Provision expenses (Btmn) Provision to loans (%) 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.
