Date: October 21, 2024
Broker: UOB Kay Hian
Company Overview
Krungthai Card (KTC) provides unsecured financial products, credit card products and services, and personal loans to consumers in Thailand.
Stock Data
- Share Price: Bt48.50
- Target Price: Bt60.00
- Upside: +23.7% (Previous TP: Bt58.00)
- Market Capitalization:
- Bt125,693.8 million
- US$3,784.6 million
- Shares Issued: 2,578.3 million
- 3-month Average Daily Turnover: US$6.6 million
- 52-week High/Low: Bt49.75/Bt37.00
Recent Financial Performance
3Q24 Results
- Net Profit: Bt1.92 billion (+3% YoY, +5% QoQ)
- Results are in line with both UOB Kay Hian and consensus estimates.
- Credit Costs: Declined QoQ due to KTC’s focus on maintaining good asset quality.
- NPL Ratio: Decreased QoQ; KTC is not significantly affected by the debt relief measures for flood victims.
- KTC benefits from a recent policy rate cut, improving its asset quality outlook.
Key Financial Metrics
- Total Gross Loans: Bt105,511 million
- Net Interest Income: Bt3,622 million
- Non-interest Income: Bt2,815 million
- Loan Loss Provision: Bt1,611 million
- Non-interest Expenses: Bt2,460 million
- Pre-Provision Operating Profit: Bt3,977 million
- Earnings Per Share (EPS): Bt0.74
Loan Portfolio Overview
- Loan growth in 3Q24 was flat YoY and QoQ.
- The credit card portfolio faced a slowdown due to an increase in minimum repayments.
- The personal loan portfolio continued to expand gradually.
- The company has contracted its loan portfolio by 0.5% in 9M24, indicating a conservative approach focused on asset quality over growth.
Asset Quality Management
- KTC set aside provision expenses of Bt1.61 billion in 3Q24, which is up 9% YoY but down 5% QoQ.
- Reported Credit Cost: 610 basis points in 3Q24, down from 640 basis points in 2Q24.
- NPL Ratio: Declined to 1.9% in 3Q24 from 2.0% in 2Q24, remaining within the 2024 target of less than 2.0%.
Outlook and Strategy
- KTC anticipates no significant impact from the debt relief program for flood victims, focusing instead on asset quality.
- Expected benefits from the recent rate cuts, which are projected to increase net profit by 3.4% and NIM by 11 basis points.
- The company has upwardly revised its 2024-26 earnings forecasts by 0.8%, 1.2%, and 2.1%, respectively.
Investment Recommendation
- Rating: Maintain BUY
- Target Price: Bt60.00, using the Gordon Growth Model with a cost of equity of 11.5% and long-term growth of 3%.
- This target implies a P/B ratio of 3.5x for 2025F, which is around -0.5 standard deviations from its historical five-year mean.
This comprehensive overview consolidates all relevant details about Krungthai Card (KTC) from the provided PDF.
