20140602-Maybank_KERPL-Credit_quality_to_normalize_in_1H15_12页_435kb

报告摘要

KKP TB Summary

Core Content

Kiatnakin Bank (KKP TB) is a Thai bank with a current share price of THB43.00 and a target price of THB42.00, representing a -2% adjustment. The bank has a market capitalization of USD1.1B and an average daily trading volume of USD2M. The research recommends a HOLD rating with a target price of THB42.00, implying an 8x 2014F PE, 0.9x P/BV, and a 5.8% dividend yield.

Key Financial Metrics

Metric	FY12A	FY13A	FY14E	FY15E	FY16E
Operating Income (THB m)	11,518.0	14,210.6	14,272.1	16,191.8	17,842.3
Pre-Provision Profit (THB m)	5,588.0	7,631.1	7,363.6	8,592.5	9,483.1
Core Net Profit (THB m)	3,391.0	4,418.2	4,183.0	4,939.4	5,459.1
Core EPS (THB)	4.9	5.3	5.0	5.9	6.5
Core P/E (x)	8.8	8.1	8.6	7.3	6.6
P/BV (x)	1.1	1.0	1.0	0.9	0.8
Net Dividend Yield (%)	5.6	6.2	5.8	6.9	7.6
Book Value (THB)	39.51	41.66	44.15	47.10	50.36
ROAE (%)	11.9	13.0	11.6	12.9	13.4
ROAA (%)	1.6	1.8	1.6	1.8	1.8

Main Points

Credit Quality: The bank expects a normalization of credit quality in 1H15, with a gradual improvement in 2H14. NPLs are expected to remain high in 2Q14 due to weak auto loans from 2012.
Credit Cost: Credit costs are estimated at 125bps for 2014, higher than the normalized 100bps, due to weak asset quality.
Dividend Yield: The stock offers a 5.8% dividend yield in 2014F, with a target payout ratio of 50%.
Loan Growth: KKP targets 8-10% credit growth in 2014, led by corporate and SME loans. Auto loans account for 68% of the total loan book, with a 54:46 ratio of new to used car loans.
Net Interest Margin: The bank aims to maintain a 3.8% NIM in 2014, with upside risks from higher CASA mix and rate cuts, and downside risks from rising NPLs.
Non-Interest Income: Non-interest income is expected to decline by 10% YoY in 2014 due to a weak capital market, offset by gains from NPA sales.
Capital Adequacy: KKP has a Tier-I capital ratio of 12.8% and a CAR ratio of 13.3% in 1Q14, which is sufficient for Basel III compliance and business growth.
Valuation: The current valuation is considered attractive with a 0.9x P/BV and 11.6% ROE, but the bank warns of potential earnings pressure from asset quality issues.

Key Information

Investor Sentiment: Mixed feedback from the NDR in Hong Kong, with optimism about diversification into corporate lending and the "Car Quick Cash" business.
Share Price Performance: The stock has underperformed in the last 12 months, with a -29.9% return. It has a 52-week high of THB62.50 and a low of THB35.00.
Recommendation: Hold for now, with a recommendation to start accumulating at below THB38.
Asset Quality: The bank has tightened lending policies and increased down payments for auto loans to control asset quality. However, the impact of the military coup remains a concern.
Strategic Focus: Diversification into corporate lending and SMEs is a key part of the strategy, with a target corporate loan book of THB30b in the next three years.
Earnings Outlook: Earnings are expected to decline by 5% in 2014F due to negative growth in fee income and flat credit cost.

Valuation Insights

Target Price: THB42.00, implying an 8.4x 2014 PE and 0.9x P/BV.
Dividend Yield: 5.9% based on the current market price.
ROE: Targeting 13-15% over the next three years, with a 13% ROE in 2013.
Cost/Income: Expected to rise to 48% in 2014 from 46% in 2013.

Additional Notes

The bank is currently facing challenges due to the military coup, which has impacted asset quality.
The "Car Quick Cash" business is expected to be a high-yield segment, with a yield of 8-9%.
Non-interest income is expected to drop due to the weak capital market, but the bank anticipates offsetting this with gains from NPA sales.
The bank has a strong capital adequacy ratio, which supports its business growth plans.
The recommendation is to start accumulating at below THB38, considering the current valuation and potential earnings recovery in 1H15.

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