TMB Bank - Global Alliance Partners
TMB Bank Company Update
Buy (16TP Bt3.00) Close Bt2.44
Banking
Earnings upgrade/Earnings downgrade/Overview unchanged
January 22, 2016
2016 outlook to be well manageable Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.224
0.272
KT ZMICO vs. consensus Share data
2.7%
2.9%
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 (%)
107.00/2,942.00 50.36/36.91 3.22/2.16 120,368.00 8.64
Estimated free float (%)
43.88
Beta
1.13
URL
www.tmbbank.com
CGR
Upgrade to Buy on stronger balance sheet and profitability vs. peers We switch our rating for TMB to Buy after we previously put the Underperform rating under review for a possible upgrade. We still expect TMB to be able to handle the headwinds backed by its much stronger balance sheet and especially its reserve positions, as well as its outpacing profitability improvement vs. peers. 2016 financial targets highlight comfortable operating environment TMB provided the bank’s key business targets for 2016, which highlight a comfortable operating environment based on its GDP growth forecast of 3.5% for 2016E. The main targets are: 1) continued solid performing loan growth of 8‐10%; 2) stable or higher NIM at 3.0‐3.3%; 3) still quite aggressive net fee income growth of 25‐30% (a challenging target in our view); and 4) a continued high provision level. 2016 strategic intents to focus on creating a digital platform The bank’s main strategies for 2016E are to continue its six medium‐term strategic intents set earlier, especially with regard to the following: 1) to continue focusing on a deposit‐led strategy and quality deposits with the main mechanism of enhancing fee income and cross‐selling transactions; 2) to improve its transaction banking excellence base; and 3) to build up the non‐interest income base. Moreover, from 2016 onwards, the bank’s key strategic intents are to specifically strengthen its digital banking channel and innovate with respect to digital financial tools, allowing customers to operate accounts efficiently, remotely and securely. To facilitate this, it will launch a mobile app for SME customers as well as an ME app this year after launching one for retail customers in 2015. Revise up net profit estimates for 16‐17E by 5‐13% We raised our net profit forecasts for TMB by 13% for 2016E and 5% for 2017E, mainly to fine‐tune with TMB’s 2016 guidance and the stronger‐ than‐expected 2015 results, especially the much higher‐than‐expected fee income and loan growth. We still expect the bank to show continued solid fee income and loan growth and we also should see a high provision (110bps) for 2016E. Following our NP revision, we raised our 16E target price from Bt2.80/share to Bt3.0/share for an implied target P/BV of 1.57x, based on L‐T ROE of 14% and an L‐T growth rate of 11%. Financials and Valuation FY Ended 31 Dec
Anti‐corruption
Level 4 (Certified)
PPOP (Btm) Net profit (Btmn) EPS (Bt)
2014
2015
2016E
2017E
2018E
12,846
14,665
16,955
18,701
20,570
9,539
9,333
10,234
12,050
13,996
0.22
0.21
0.23
0.28
0.32
EPS growth (%)
66%
‐2%
10%
18%
16%
BV (Bt)
1.60
1.75
1.92
2.13
2.37
0.060
0.065
0.070
0.083
0.096 2018E
Dividend (Bt)
Prapharas Nonthapiboon
FY Ended 31 Dec
2014
2015
2016E
2017E
Analyst, no 17836
PER (x)
11.17
11.44
10.43
8.86
7.63
[email protected]
PBV (x)
1.53
1.40
1.27
1.15
1.03
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
2.46 14.5%
2.67 12.8%
2.88 12.8%
3.39 13.6%
3.93 14.2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: TMB’s financial targets for 2016 vs. our forecasts Performance Targets Loa n growth Depos i t growth Net Interes t Ma rgi n (NIM) Net fee i ncome growth
2015
2015
2016
2016
TMB's Targets 6‐8%** NA ~3% 30%
Actual
KTZ's forecasts
9.5% 12.8% 3.00% 36.4%
TMB's Targets* 8‐10%** 8‐10% 3.0‐3.3% 25‐30%
140%
142%
140‐145%
Cos t to Income Ra ti o ROE NPL ra ti o Provi s i on (% of l oa ns ) Loa n Los s Covera ge
8.0% 7.0% 3.04% 17.8%
1.10% 142%
Source: KT ZMICO Research * 2016 targets were announced in Jan‐16 and based on a 16E GDP growth forecast of 3.5%. ** Performing loan growth
Figure 2: Key changes in our earnings revision Key assumption changes
2016E New 10,234 13% 10% 8% 3.04% 18% 6,900 1.10% 47.8%
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
2017E Previous 9,036
5% 3.00% 13% 6,432 1.10% 50.2%
New 12,050 5% 18% 9% 3.10% 13% 6,837 1.00% 46.8%
Previous 11,477
9% 3.10% 15% 5,730 0.90% 48.5%
Figure 3: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2016E
2.5
PBV (x) Implied market
+2 S.D. 2.0 1.5 1.0
+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.
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
0.0
Jan-09
0.5
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
2.2
4.08
67
+1.5SD
2.0
3.72
52
+1.0SD
1.8
3.36
38
+0.5SD
1.6
3.00
23
Average
1.4
2.64
8
-0.5SD
1.2
2.28
-7
-1.0SD
1.0
1.92
-21
-1.5SD
0.8
1.56
-36
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Interest Income
2014 35,848
2015 36,430
2016E 39,063
2017E 43,063
2018E 48,806
Interest Expenses
14,253
13,210
14,063
15,785
19,070
Net Interest Income
21,595
23,220
25,000
27,277
29,736
Non‐Interest Income
8,358
10,230
11,755
13,076
14,553
Operating Income
29,953
33,450
36,756
40,354
44,289
Operating Expenses
15,774
16,467
17,189
18,500
20,071
Operating Profit
14,037
16,818
19,362
21,629
23,973
Provision (Reversal) for loan loss
3,437
5,479
6,900
6,837
6,769
Taxes
3,403
1,191
2,153
2,407
2,928
Extraordinary Item
0
0
0
0
0
Minority Interests Net Profit
(13)
(18)
(26)
(38)
(50)
9,539
9,333
10,234
12,050
13,996
Pre Provisioning Operating Profit (PPOP)
12,846
14,665
16,955
18,701
20,570
Pre Provisioning Profit (PPP) EPS (Bt)
12,976
14,812
17,134
18,887
20,765
0.22
0.21
0.23
0.28
0.32
2014 16,428
2015 17,290
2016E 17,463
2017E 17,638
2018E 17,814
Interbank & Money Market Net Investment
113,097
115,758
119,231
113,269
107,606
110,859
98,260
103,173
110,395
118,123
Loans
530,360
580,776
627,238
683,702
752,059
1,068
1,068
1,405
1,531
1,684
Loan Loss Reserves Net Loans
(28,362)
(29,025)
(31,926)
(34,114)
(35,769)
503,066
552,819
596,717
651,119
717,975
Total Assets
810,167
838,937
890,962
947,719
1,017,737
Deposits
571,625
644,694
689,822
739,490
800,867
72,717
36,217
36,941
37,680
38,433
36,249
30,184
33,202
31,542
29,965
740,374
762,339
807,005
854,565
913,974
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash
Accrued Interest Receivable
Interbank & Money Market Borrowing Total Liabilities Paid‐up Capital
41,495
41,562
41,562
41,562
41,562
Retained Earning
22,637
29,023
36,161
44,891
55,022
69,704
76,491
83,841
93,029
103,628
Total Equity
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Valuation and Ratio Analysis Year‐end 31 Dec
2014
2015
2016E
2017E
2018E
Per/Share Data (Bt) EPS
0.22
0.21
0.23
0.28
0.32
DPS
0.060
0.065
0.070
0.083
0.096
BV
1.60
1.75
1.92
2.13
2.37
Multiplier (X) P/E
11.17
11.44
10.43
8.86
7.63
P/BV
1.53
1.40
1.27
1.15
1.03
Dividend yield (%)
2.46
2.67
2.88
3.39
3.93
Percentage Growth (%) Net Profit
66.3%
‐2.2%
9.7%
17.7%
16.1%
EPS
16.1%
66.3%
‐2.3%
9.7%
17.7%
Net Interest Income
6.6%
7.5%
7.7%
9.1%
9.0%
Non Interest Income
1.1%
22.4%
14.9%
11.2%
11.3%
Operating Income
5.0%
11.7%
9.9%
9.8%
9.8%
Operating Expense
8.4%
4.4%
4.4%
7.6%
8.5%
Operating Profit after tax
1.4%
19.8%
15.1%
11.7%
10.8%
Loans
6.2%
9.5%
8.0%
9.0%
10.0%
7.9%
12.8%
7.0%
7.2%
8.3%
‐19.3%
13.2%
9.5%
‐1.1%
‐1.7%
Deposits Gross NPLs Asset Quality Ratio Gross NPLs (Btmn)
18,093
Gross NPL/Loans
20,473
22,427
22,187
21,820
2.9%
3.0%
3.1%
2.9%
2.6%
Loan Loss Reserve/NPLs
156.8%
141.8%
142.4%
153.8%
163.9%
Accrued Interest/Loans
0.2%
0.2%
0.2%
0.2%
0.2%
Loan Loss Reserve/Loans
5.3%
5.0%
5.1%
5.0%
4.8%
Property Foreclosed/Loans
0.4%
0.2%
0.2%
0.2%
0.1%
Capital & Liquidity Ratio Equity/Asset
8.6%
9.1%
9.4%
9.8%
10.2%
Tier I to Risk Assets
11.0%
11.3%
11.7%
12.0%
12.3%
Total Capital Adequacy Ratio
18.3%
16.7%
16.6%
16.4%
16.2%
Loan to Deposit Ratio (LDR)
92.8%
90.1%
90.9%
92.5%
93.9%
Loan to Deposit and ST Borrowings
87.2%
86.1%
86.8%
88.7%
90.5%
Profitability Ratio ROA
1.2%
1.1%
1.2%
1.3%
1.4%
ROE
14.5%
12.8%
12.8%
13.6%
14.2%
Cost to Income
53.8%
50.3%
47.8%
46.8%
46.2%
Non Interest Income/Total Income
27.9%
30.6%
32.0%
32.4%
32.9%
Net Interest Margin
2.97%
3.00%
3.04%
3.10%
3.15%
2014
2015
2016E
2017E
2018E
Key Assumptions Loan Growth ‐ Net
6.2%
9.5%
8.0%
9.0%
10.0%
Cost to Income
53.8%
50.3%
47.8%
46.8%
46.2%
Net Interest Margin
2.97%
3.00%
3.04%
3.10%
3.15%
Provision expenses (Btmn) Provision to loans (%) Source: KTZMICO Research
3,437 0.65%
5,479 0.94%
6,900 1.10%
6,837
6,769
1.00%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
0.90%
Note: KT ZMICO is a partnership between KTB and ZMICO. 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. 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, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, TFG. KT ZMICO is a co‐underwriter of TKN.
Anti‐corruption Progress Indicator
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 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 returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to 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 5 of 5
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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.
Buy (16TP Bt3.00) Close Bt2.44
Banking
Earnings upgrade/Earnings downgrade/Overview unchanged
January 22, 2016
2016 outlook to be well manageable Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.224
0.272
KT ZMICO vs. consensus Share data
2.7%
2.9%
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 (%)
107.00/2,942.00 50.36/36.91 3.22/2.16 120,368.00 8.64
Estimated free float (%)
43.88
Beta
1.13
URL
www.tmbbank.com
CGR
Upgrade to Buy on stronger balance sheet and profitability vs. peers We switch our rating for TMB to Buy after we previously put the Underperform rating under review for a possible upgrade. We still expect TMB to be able to handle the headwinds backed by its much stronger balance sheet and especially its reserve positions, as well as its outpacing profitability improvement vs. peers. 2016 financial targets highlight comfortable operating environment TMB provided the bank’s key business targets for 2016, which highlight a comfortable operating environment based on its GDP growth forecast of 3.5% for 2016E. The main targets are: 1) continued solid performing loan growth of 8‐10%; 2) stable or higher NIM at 3.0‐3.3%; 3) still quite aggressive net fee income growth of 25‐30% (a challenging target in our view); and 4) a continued high provision level. 2016 strategic intents to focus on creating a digital platform The bank’s main strategies for 2016E are to continue its six medium‐term strategic intents set earlier, especially with regard to the following: 1) to continue focusing on a deposit‐led strategy and quality deposits with the main mechanism of enhancing fee income and cross‐selling transactions; 2) to improve its transaction banking excellence base; and 3) to build up the non‐interest income base. Moreover, from 2016 onwards, the bank’s key strategic intents are to specifically strengthen its digital banking channel and innovate with respect to digital financial tools, allowing customers to operate accounts efficiently, remotely and securely. To facilitate this, it will launch a mobile app for SME customers as well as an ME app this year after launching one for retail customers in 2015. Revise up net profit estimates for 16‐17E by 5‐13% We raised our net profit forecasts for TMB by 13% for 2016E and 5% for 2017E, mainly to fine‐tune with TMB’s 2016 guidance and the stronger‐ than‐expected 2015 results, especially the much higher‐than‐expected fee income and loan growth. We still expect the bank to show continued solid fee income and loan growth and we also should see a high provision (110bps) for 2016E. Following our NP revision, we raised our 16E target price from Bt2.80/share to Bt3.0/share for an implied target P/BV of 1.57x, based on L‐T ROE of 14% and an L‐T growth rate of 11%. Financials and Valuation FY Ended 31 Dec
Anti‐corruption
Level 4 (Certified)
PPOP (Btm) Net profit (Btmn) EPS (Bt)
2014
2015
2016E
2017E
2018E
12,846
14,665
16,955
18,701
20,570
9,539
9,333
10,234
12,050
13,996
0.22
0.21
0.23
0.28
0.32
EPS growth (%)
66%
‐2%
10%
18%
16%
BV (Bt)
1.60
1.75
1.92
2.13
2.37
0.060
0.065
0.070
0.083
0.096 2018E
Dividend (Bt)
Prapharas Nonthapiboon
FY Ended 31 Dec
2014
2015
2016E
2017E
Analyst, no 17836
PER (x)
11.17
11.44
10.43
8.86
7.63
[email protected]
PBV (x)
1.53
1.40
1.27
1.15
1.03
66 (0) 2695‐5872
Dividend yield (%) ROE (%)
2.46 14.5%
2.67 12.8%
2.88 12.8%
3.39 13.6%
3.93 14.2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: TMB’s financial targets for 2016 vs. our forecasts Performance Targets Loa n growth Depos i t growth Net Interes t Ma rgi n (NIM) Net fee i ncome growth
2015
2015
2016
2016
TMB's Targets 6‐8%** NA ~3% 30%
Actual
KTZ's forecasts
9.5% 12.8% 3.00% 36.4%
TMB's Targets* 8‐10%** 8‐10% 3.0‐3.3% 25‐30%
140%
142%
140‐145%
Cos t to Income Ra ti o ROE NPL ra ti o Provi s i on (% of l oa ns ) Loa n Los s Covera ge
8.0% 7.0% 3.04% 17.8%
1.10% 142%
Source: KT ZMICO Research * 2016 targets were announced in Jan‐16 and based on a 16E GDP growth forecast of 3.5%. ** Performing loan growth
Figure 2: Key changes in our earnings revision Key assumption changes
2016E New 10,234 13% 10% 8% 3.04% 18% 6,900 1.10% 47.8%
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
2017E Previous 9,036
5% 3.00% 13% 6,432 1.10% 50.2%
New 12,050 5% 18% 9% 3.10% 13% 6,837 1.00% 46.8%
Previous 11,477
9% 3.10% 15% 5,730 0.90% 48.5%
Figure 3: TMB's P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2016E
2.5
PBV (x) Implied market
+2 S.D. 2.0 1.5 1.0
+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.
Source: Bloomberg, KT ZMICO Research
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
0.0
Jan-09
0.5
Upside/ Downside
price (Bt)
to current price (%)
+2.0SD
2.2
4.08
67
+1.5SD
2.0
3.72
52
+1.0SD
1.8
3.36
38
+0.5SD
1.6
3.00
23
Average
1.4
2.64
8
-0.5SD
1.2
2.28
-7
-1.0SD
1.0
1.92
-21
-1.5SD
0.8
1.56
-36
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Statement of Comprehensive Income (Btmn) Year‐end 31 Dec Interest Income
2014 35,848
2015 36,430
2016E 39,063
2017E 43,063
2018E 48,806
Interest Expenses
14,253
13,210
14,063
15,785
19,070
Net Interest Income
21,595
23,220
25,000
27,277
29,736
Non‐Interest Income
8,358
10,230
11,755
13,076
14,553
Operating Income
29,953
33,450
36,756
40,354
44,289
Operating Expenses
15,774
16,467
17,189
18,500
20,071
Operating Profit
14,037
16,818
19,362
21,629
23,973
Provision (Reversal) for loan loss
3,437
5,479
6,900
6,837
6,769
Taxes
3,403
1,191
2,153
2,407
2,928
Extraordinary Item
0
0
0
0
0
Minority Interests Net Profit
(13)
(18)
(26)
(38)
(50)
9,539
9,333
10,234
12,050
13,996
Pre Provisioning Operating Profit (PPOP)
12,846
14,665
16,955
18,701
20,570
Pre Provisioning Profit (PPP) EPS (Bt)
12,976
14,812
17,134
18,887
20,765
0.22
0.21
0.23
0.28
0.32
2014 16,428
2015 17,290
2016E 17,463
2017E 17,638
2018E 17,814
Interbank & Money Market Net Investment
113,097
115,758
119,231
113,269
107,606
110,859
98,260
103,173
110,395
118,123
Loans
530,360
580,776
627,238
683,702
752,059
1,068
1,068
1,405
1,531
1,684
Loan Loss Reserves Net Loans
(28,362)
(29,025)
(31,926)
(34,114)
(35,769)
503,066
552,819
596,717
651,119
717,975
Total Assets
810,167
838,937
890,962
947,719
1,017,737
Deposits
571,625
644,694
689,822
739,490
800,867
72,717
36,217
36,941
37,680
38,433
36,249
30,184
33,202
31,542
29,965
740,374
762,339
807,005
854,565
913,974
Statement of Financial Position (Btmn) Year‐end 31 Dec Cash
Accrued Interest Receivable
Interbank & Money Market Borrowing Total Liabilities Paid‐up Capital
41,495
41,562
41,562
41,562
41,562
Retained Earning
22,637
29,023
36,161
44,891
55,022
69,704
76,491
83,841
93,029
103,628
Total Equity
Source: KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Valuation and Ratio Analysis Year‐end 31 Dec
2014
2015
2016E
2017E
2018E
Per/Share Data (Bt) EPS
0.22
0.21
0.23
0.28
0.32
DPS
0.060
0.065
0.070
0.083
0.096
BV
1.60
1.75
1.92
2.13
2.37
Multiplier (X) P/E
11.17
11.44
10.43
8.86
7.63
P/BV
1.53
1.40
1.27
1.15
1.03
Dividend yield (%)
2.46
2.67
2.88
3.39
3.93
Percentage Growth (%) Net Profit
66.3%
‐2.2%
9.7%
17.7%
16.1%
EPS
16.1%
66.3%
‐2.3%
9.7%
17.7%
Net Interest Income
6.6%
7.5%
7.7%
9.1%
9.0%
Non Interest Income
1.1%
22.4%
14.9%
11.2%
11.3%
Operating Income
5.0%
11.7%
9.9%
9.8%
9.8%
Operating Expense
8.4%
4.4%
4.4%
7.6%
8.5%
Operating Profit after tax
1.4%
19.8%
15.1%
11.7%
10.8%
Loans
6.2%
9.5%
8.0%
9.0%
10.0%
7.9%
12.8%
7.0%
7.2%
8.3%
‐19.3%
13.2%
9.5%
‐1.1%
‐1.7%
Deposits Gross NPLs Asset Quality Ratio Gross NPLs (Btmn)
18,093
Gross NPL/Loans
20,473
22,427
22,187
21,820
2.9%
3.0%
3.1%
2.9%
2.6%
Loan Loss Reserve/NPLs
156.8%
141.8%
142.4%
153.8%
163.9%
Accrued Interest/Loans
0.2%
0.2%
0.2%
0.2%
0.2%
Loan Loss Reserve/Loans
5.3%
5.0%
5.1%
5.0%
4.8%
Property Foreclosed/Loans
0.4%
0.2%
0.2%
0.2%
0.1%
Capital & Liquidity Ratio Equity/Asset
8.6%
9.1%
9.4%
9.8%
10.2%
Tier I to Risk Assets
11.0%
11.3%
11.7%
12.0%
12.3%
Total Capital Adequacy Ratio
18.3%
16.7%
16.6%
16.4%
16.2%
Loan to Deposit Ratio (LDR)
92.8%
90.1%
90.9%
92.5%
93.9%
Loan to Deposit and ST Borrowings
87.2%
86.1%
86.8%
88.7%
90.5%
Profitability Ratio ROA
1.2%
1.1%
1.2%
1.3%
1.4%
ROE
14.5%
12.8%
12.8%
13.6%
14.2%
Cost to Income
53.8%
50.3%
47.8%
46.8%
46.2%
Non Interest Income/Total Income
27.9%
30.6%
32.0%
32.4%
32.9%
Net Interest Margin
2.97%
3.00%
3.04%
3.10%
3.15%
2014
2015
2016E
2017E
2018E
Key Assumptions Loan Growth ‐ Net
6.2%
9.5%
8.0%
9.0%
10.0%
Cost to Income
53.8%
50.3%
47.8%
46.8%
46.2%
Net Interest Margin
2.97%
3.00%
3.04%
3.10%
3.15%
Provision expenses (Btmn) Provision to loans (%) Source: KTZMICO Research
3,437 0.65%
5,479 0.94%
6,900 1.10%
6,837
6,769
1.00%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
0.90%
Note: KT ZMICO is a partnership between KTB and ZMICO. 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. 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, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, TFG. KT ZMICO is a co‐underwriter of TKN.
Anti‐corruption Progress Indicator
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 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 returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to 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 5 of 5
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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.
