Industry update Tue, Nov 5, 2019
Micro Finance
SET FIN index Close: 4/11/2019 4,453.90 +55.64 / +1.26% Bt1,427mn Bloomberg ticker: SETFIN
Still good but valuations demanding
We initiate coverage of MTC and SAWAD as Neutral because valuations Valuation summary Rating Price TP ETR P/E (x) P/BV (x) (2020F PER of 24x for MTC and 20x for SAWAD) are demanding and already (Bt) (Bt) (%) 19F 20F 19F 20F price in the expected good earnings for the next three years. We expect AEONTS Buy 200.0 250.0 27.8 12.4 10.7 2.4 2.1 KTC Neutral 42.5 42.0 0.9 19.7 17.5 5.5 4.6 loan growth at MTC and SAWAD to decelerate but remain robust at an MTC Neutral 62.5 64.0 2.9 30.7 24.4 8.2 6.4 SAWAD Neutral 65.5 72.0 9.9 24.6 20.0 4.8 3.9 average CAGR of 21% over 2020-2022, accompanied by good earnings Average 21.8 18.2 5.2 4.2 growth at an average CAGR of 24% over 2020-2022 as they continue to Source: SCBS Investment Research gain market share in the vastly underserved low-income market; they Price performance Absolute Relative to SET will also benefit from easing cost of funds despite a rise credit cost. (%) 1M 3M 12M 1M 3M 12M AEONTS (3.4) (8.7) 1.0 (4.4) (6.2) 4.0 Decelerating loan growth but still robust. We expect loan growth at MTC and KTC 1.8 (6.6) 19.7 0.8 (4.1) 23.3 MTC 8.2 5.9 16.8 7.1 8.8 20.3 SAWAD 14.9 24.2 54.9 13.8 27.5 59.6 SAWAD to slow from a 46% CAGR over 2014-2018 to 26% in 2019 and 21% (21% for MTC and 20% for SAWAD) over 2020-2022 as base rises and expansion slows. This Source: SET, SCBS Investment Research segment is the only one with good growth in the financial market and we see ample room to grow as the low-income segment is vast and is hugely underserved. The ongoing economic slowdown and relief from the drought and floods will up demand for microfinance loans.
Improving NIM ahead. We expect NIM for MTC and SAWAD to bottom out in 2H19. The fall in their loan yield in 1H19 was mainly due to a change in calculation of interest rate charged to an effective rate instead of a fixed rate, a one-off effect. We believe loan yield this year will be the new normal and expect no further fall next year. Their loans are fixed-rate, which means net interest margin (NIM) benefits from lower interest rates by reducing cost of funds. In addition, credit ratings for both companies were upgraded in 2Q19, which should shave 20- 30 bps off their cost of bond issuance. Higher credit cost under TFRS9 with rising asset quality risk. We factor in a rise in MTC and SAWAD’s credit cost in 2020 as a result of the implementation of TFRS9. Amidst the ongoing economic slowdown, we see rising risk to their asset quality. We thus forecast a substantial rise in credit cost for both MTC (by 40 bps) and SAWAD (by 75 bps) in 2020. Key downside risks. Micro finance companies by nature face some downside risks: 1) risk on asset quality, which is rising with the economic slowdown, 2) regulatory risk, which is easing after the regulation of vehicle title loans by the BoT in February this year, 3) interest rate risk, though not expected to rise for the next 12 months and 4) competition risk, which is rising from commercial banks but easing from informal operators. Rate Neutral; prefer SAWAD to MTC. We initiate coverage of MTC with a TP of Bt64 (6.5x PBV and 25x PER for 2020F) and SAWAD with a TP of Bt72 (4.25x PBV and 22x PER for 2020F) and rate both Neutral as valuations are currently demanding (2020F PER of 24x for MTC and 20x for SAWAD) and pretty much price in the expected good earnings over 2020-2022 (25% CAGR for MTC and 22% CAGR for SAWAD). We prefer SAWAD to MTC as its valuation is less demanding.
Comparison of PEG and PBV/ROE Analyst (x) Kittima Sattayapan, CFA MTC SAWAD 1.0 Fundamental Investment Analyst on Securities 0.8 (66-2) 949-1003 [email protected] 0.6
0.4
0.2
- 2020F PEG 2020F PBV/ROE Source: SCBS Investment Research
See the end of this report for disclaimer 1
Finance
Decelerating but still good loan growth We expect loan growth at micro finance companies (MTC, Ngern Tid Lor and SAWAD) to slow from a 41% CAGR over 2014-2018 to 26% in 2019 and 20% in 2020-2022 as the base rises. At the same time, we see this segment as the only one in the financial market able to grow well. We see large room to grow in this market given the vast numbers of low-incomers who are hugely underserved. The ongoing economic slowdown and relief from floods will also raise demand for microfinance loans. Business model: The central business model is to provide fast cash (with an approval time of no more than 30 minutes) to low-tier clients who have no access to other financial institutions (particularly commercial banks) but have assets (i.e. car, motorcycle and home and land) to pledge as collateral. They charge all-in rates (interest plus fee) at the regulatory cap of 28% for vehicle title loans. MTC and SAWAD also offer unsecured personal loans, where the cap is 28% for personal loans and 36% for “nano finance” loans which are for business purposes. For secured personal loans, underwriting standard depends on the appraised value of collateral with a low loan to value (LTV) of 30-70%. Figure 1: MTC’s loan mix Figure 2: SAWAD’s loan mix Nano & Nano & personal loans, 11% personal Car & truck loans, 20% title loans, Agricultural 32% vehicle title loans, 2% Agricultural vehicle title Home & land loans, 4% title loans, 19% Car & truck Home & land title loans, title loans, 59% 10%
Motorcycle title loans, 9% Motorcycle title loans, 34% Source: The companies and SCBS Investment Research
Market size and position: Vehicle title loan data has only been available since February this year after the BoT began regulating this business. As of July 2019, vehicle title loans under the BoT regulation amounted to Bt100bn, Bt69.6bn (69%) of which were from non-banks and Bt30.7bn were from banks. There are 2mn vehicle title loan accounts, of which 1.85mn are non-bank. In terms of total outstanding loans (both secured and unsecured), MTC ranks #1, Ngern Tid Lor (50% owned by BAY) is #2 and SAWAD is #3. We estimate that MTC captures a market share of 39% and SAWAD has 24% of the overall vehicle title loan market at 2Q19. Commercial banks are increasingly getting into car title loans to obtain high loan yield, but currently focus on a higher tier than micro finance companies. We see rising competition in the car title loan market, which is SAWAD’s focus. With its market niche in motorcycle title loans, MTC has less competition risk than SAWAD, whose focus is car title loans. Figure 3: Top 3 players’ micro finance loans Figure 4: Top 3 players’ micro finance loan growth 100% Bt bn MTC SAWAD Ngern Tid Lor 80 90% 70 MTC 80% 60 SAWAD 70% 50 Ngern Tid Lor 60% 40 50% 30 40% 20 30% 10 20%
- 10%
2013 2014 2015 2016 2017 2018 2019F 2020F 0%
2013 2014 2015 2016 2017 2018 2019F 2020F
Source: The companies and SCBS Investment Research
Tue, Nov 5, 2019 2
Finance
Figure 5: Vehicle title loans under BoT regulation as of July 2019 No. of accounts Loan outstanding Avg. loans per account NPL ratio (Btmn) (Bt) Banks 153,453 30,695 200,029 4.37% Non-banks 1,851,031 69,564 37,581 0.92% Total 2,004,484 100,259 50,017 2.01% Source: The companies and SCBS Investment Research Vast potential market: We assess the potential clients for micro finance by looking at the labor force and dividing it into monthly income, number of registered vehicles and then breaking down the labor force by the value of the vehicle owned. We believe the potential market for micro finance is represented by the combination of 1) laborers with monthly income of >Bt5,000-15,000, estimated to be around 19mn; 2) post-financed vehicles aged 5-8 years, numbering around 10mn units; and 3) laborers with vehicles valued at Bt10,000- 100,000, estimated to be 18mn. Based on our channel check, the majority of low-income people need to access financing to cover living expenses and by nature will revolve their loans. Figure 6: Estimated labor force breakdown by monthly income Household breakdown Estimated labor force by monthly income by monthly income (mn) < Bt5,000 31% 12 Bt5,001-10,000 34% 13 Bt10,001-15,000 17% 6 Bt15,001-30,000 14% 5 > Bt30,001 5% 2 Source: National Statistical Office and SCBS Investment Research Figure 7: Estimated labor force breakdown by value of vehicle owned Household breakdown by Estimated labor force by value of vehicle owned value of vehicle owned (mn) Less than Bt10,000 6% 2 Bt10,000 to 30,000 28% 11 Bt30,001 to 50,000 12% 5 Bt50,001 to 100,000 8% 3 Bt100,001 to 500,000 28% 11 Bt500,001 to 1,000,000 14% 5 More than Bt1mn 5% 2 Source: National Statistical Office and SCBS Investment Research Figure 8: No. of registered vehicles by age as of August, 2019 Unit: mn <1 to 4 years 5 to 8 years >8 years Sedan, van & pick up 4.01 4.07 8.48 Motorcycle 7.61 5.85 7.83 Tractor & farm vehicle 0.25 0.20 0.22 Total 11.87 10.12 16.53 Source: Department of Land Transport and SCBS Investment Research Figure 9: Registered motorcycles Figure 10: Registered sedans, vans & pickups, farm vehicles (mn) No. of registered sedan, van, pick up & farm vehicles (LHS) (mn) No. of registered motorcycles (LRH) 20 14% 25 Growth (RHS) 6% Growth (RHS) 3% CAGR 5% 12% 20 16 3% CAGR 4% 10% 12 8% 15 3% 8 6% 10 2% 4% 1% 4 5 2% 0% - 0%
- -1% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2018
Source: Department of Land Transport and SCBS Investment Research Source: Department of Land Transport and SCBS Investment Research
Tue, Nov 5, 2019 3
Finance
Figure 11: Household debt 2009 2011 2013 2015 2017 Debt per household (Bt) 133,293 134,900 163,087 156,770 178,994 - Formal (Bt) 127,152 130,930 159,816 153,425 174,714 - Informal (Bt) 6,141 3,970 3,271 3,346 4,280 Breakdown by source of loans: Formal loans only 82.4% 87.5% 91.7% 91.4% 90.0% Informal loans only 7.9% 6.1% 4.6% 4.9% 5.8% Both formal and informal loans 9.7% 6.4% 3.7% 3.7% 4.2% Source: National Statistical Office and SCBS Investment Research Expect slower branch expansion in 2021. MTC has the largest branch coverage with 3,739 branches at 2Q19, followed by SAWAD with 3,235 branches. At YE2018, Ngern Tid Lor had 813 branches. The three lead players have a total of 7,787 branches. This exceeds the 7,435 subdistricts (Tambon) in Thailand and the 2016 peak of 7,061 commercial bank branches. Assuming this represents coverage of commercially feasible areas, the number of branches suggests expansion will be slowing down. With the largest branch network, MTC appears to have a competitive advantage by getting into prime areas ahead of competitors. MTC plans to expand to 3,900 branches by YE2019 and 4,500 by YE2020. SAWAD hopes to end 2019 with 3,400 branches and plans to add 200-300 branches in 2020. We expect branch expansion to slow for both companies from 2021. Figure 12: No. of branches Figure 13: Loans per branch 9,000 Bt mn 8,000 MTC SAWAD Total 18 MTC SAWAD 7,000 16 6,000 14 5,000 12 4,000 10 3,000 8 2,000 6 4 1,000 2
0
2011
2012
2013
2014
2015
2016
2017
2018 2019F 2020F -
2012
2013
2014
2015
2016
2017
2018
2019F
2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Improving NIM ahead We expect NIM for MTC and SAWAD to bottom out in 2H19 and improve slightly in 2020 for two reasons. Bottoming loan yield. Both MTC and SAWAD saw a fall in loan yield in 1H19 because the BoT regulation of their business led to a change in the calculation of interest rate charged to an effective rate instead of fixed rate as of February, 2019, which was a one-off effect. We expect loan yield to set a new normal this year and expect no further fall next year. We anticipate a small improvement in MTC’s yield on loans due to its expansion into hire-purchase loans for new motorcycles, which have yield of 28%, higher than its current loan yield of around 22%. Easing cost of funds. By nature, net interest margin (NIM) on fixed-rate loans benefits from a downtrend in interest rates via reducing cost of funds. Cost of funds will also get a boost by the upgrade in credit rating for both companies in 2Q19, which will shave 20-30 bps off the cost of issuing bonds.
Tue, Nov 5, 2019 4
Finance
Figure 14: Net interest margin Figure 15: Yield on loans 30% 31% 29% MTC SAWAD 25% 27% 20% 25% 23% 15% MTC SAWAD 21% 10% 19% 17%
5%
2014
2015
2016
2017
2018
2019F
2020F 2021F 2022F 15%
2014
2015
2016
2017
2018
2019F
2020F
2021F
2022F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Figure 16: Cost of funds Figure 17: Funding mix 8% Short term Long term 7% 100% 6% MTC SAWAD 5% 80% 4% 58% 62% 3% 60% 2% 40% 1%
0%
2014
2015
2016
2017
2018
2019F
2020F 2021F 2022F 20% 42% 38% 0% MTC SAWAD Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Rising credit cost We forecast a substantial rise in credit cost for both MTC (by 40 bps to 1.6%) and SAWAD (by 75 bps to 2.5%) in 2020 on two factors. TFRS9. Implementation of TFRS9 will raise MTC and SAWAD’s credit cost in 2020. Under TFRS9, loans 31-90 days overdue will require a high reserve to reflect expected credit loss based on probability of default (PD) and loss given default (LGD). Micro finance companies typically have a high proportion of loans that are 31-90 days overdue because that is the nature of the low-income segment. With a conservative LTV of no more than 50%, MTC and SAWAD should have low LGD but the economic slowdown and rising economic uncertainties will likely lead to higher PD. We see a potential release of excess LLR from MTC, which has high LLR coverage. We expect SAWAD to see a larger rise in credit cost than MTC and to have a higher credit cost than MTC because SAWAD has a higher exposure to loans that are 31-90 days overdue than does MTC and SAWAD also has lower LLR coverage than MTC. Figure 18: % of loans 31-90 days overdue at 2Q19 Figure 19: LLR coverage at 2Q19 20% 300% 18% 250% 16% 14% 200% 12% 10% 150% 8% 100% 6% 4% 50% 2% 0% 0% MTC SAWAD MTC SAWAD
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Tue, Nov 5, 2019 5
Finance
Economic slowdown raising asset quality risk. Amidst the current economic slowdown, we see rising risk to asset quality, which is being damaged by the combination of the economic slowing and falling farm income in 2Q19, as evident by a substantial hike in credit cost. A decrease in household monthly income net expenditure in 2015 and 2017 suggests lower ability to service debt. This will be further eroded by the economic slowdown, which is likely to run through next year. Figure 20: Farm income growth Figure 21: Household income and expenditure 45 (%) (Bt) Monthly income per household 30,000 Monthly expenditure per household 35 Monthly income net expenditure per household
25 25,000 20,000 15 15,000 5 10,000 (5) 5,000 (15) 0
1996
1998
1999
2000
2001
2002
2004
2006
2007
2009
2011
2013
2015
(25) 2017
Jul-15
Jan-18
Oct-16
Apr-14
Apr-19
Jun-18
Feb-15
Sep-14
Sep-19
Mar-17
Dec-15
Nov-13 Nov-18 Aug-17 May-16 Source: Office of Agricultural Economics and SCBS Investment Research Source: National Statistical Office and SCBS Investment Research
Figure 22: Credit cost Figure 23: NPL ratio 3.0% MTC SAWAD 2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2013
2014
2015
2016
2017
2018
1Q19
2Q19
2019F 2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Figure 24: Delinquency rate Figure 25: Write-off rate 35% 2.0% MTC SAWAD 30% MTC SAWAD 1.5% 25% 20% 1.0% 15% 0.5% 10% 5% 0.0% 2013 2014 2015 2016 2017 2018 2Q19 0% -0.5% 2013 2014 2015 2016 2017 2018 2Q19
-1.0% Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Tue, Nov 5, 2019 6
Finance
Continued good earnings growth We expect MTLS and SAWAD to see good earnings growth of an average of 24% CAGR over 2020-2022, with a decelerating but still robust loan growth at an average of 21% CAGR over 2020-2022 from continued gains in market share in this vastly underserved low-income market plus easing cost of funds despite rising credit cost. MTC: Resuming higher earnings growth than loan growth in 2020. We expect MTC to resume reporting higher earnings growth than loan growth in 2020 after loan yield and fee income was disrupted by the new regulations in 2019. We expect rising leverage from its large branch network to improve cost to income ratio. Its penetration into hire-purchase for new motorcycles will help enhance loan yield. We forecast earnings growth to accelerate from 16% in 2019F to 26% per year in 2021F and 2022F. We see upside from a potential release of excess LLR from MTC in 2019 prior to the adoption of TFRS9. SAWAD: Resuming normal good growth in 2020 after dilution in 2019. We expect SAWAD earnings growth to ease from 28% in 2019F to 23% in 2020F due to an expected rise in credit cost as a result of TFRS9 and the economic slowdown. However, we expect SAWAD’s EPS growth to accelerate from 11% in 2019F to 23% per year in 2021F and 2020F after being diluted by a capital injection by its partner. Figure 26: Earnings growth Figure 27: EPS growth MTC's earnings (LHS) SAWAD's earnings (LHS) (Bt mn) (Bt) MTC's EPS (LHS) MTC's earnings growth (RHS) SAWAD's earnings growth (RHS) 9,000 90% 6 SAWAD's EPS (LHS) 100% MTC's EPS growth (RHS) 8,000 80% 5 80% 7,000 70% 60% 6,000 60% 4 40% 5,000 50% 3 4,000 40% 20% 2 3,000 30% 0% 2,000 20% 1 -20% 1,000 10% - -40% - 0% 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F Source: SCBS Investment Research Source: SCBS Investment Research
Tue, Nov 5, 2019 7
Finance
Demanding valuations We initiate MTLS and SAWAD as Neutral because their current valuations are demanding (2020F PER of 24x for MTC and 20x for SAWAD) and have pretty much priced in the expectation of continued good earnings over the next three years. We prefer SAWAD to MTLS as we see its valuation as less demanding. MTC TP = Bt64. MTC’s target price of Bt64 is based on 6.5x BVPS for 2020F, assuming ROE of 28%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 25x EPS for 2020, assigning 1x PEG for 2020-2022. SAWAD TP = Bt72. SAWAD’s target price of Bt72 is based on 4.25 x BVPS for 2020F, assuming ROE of 21%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 22x EPS for 2020, assigning 1x PEG for 2020-2022. Figure 28: PER valuation map Figure 29: PBV valuation map 30.0 7.0 2020F PE (x) 2020FPBV (x) MTC 25.0 6.0 MTC
5.0 20.0 KTC KTC SAWAD SAWAD 4.0 15.0 AEONTS 3.0 10.0 2.0 AEONTS
5.0 1.0 2020F EPS Growth (%) 2020F ROE (%) 0.0 0.0 10.0 15.0 20.0 25.0 30.0 10.0 15.0 20.0 25.0 30.0 35.0 Source: SCBS Investment Research Source: SCBS Investment Research
Figure 30: Valuation summary (price as of Nov 4, 2019) Rating Price Target ETR P/E (x) EPS growth (%) P/BV (x) ROE (%) Div. Yield (%) (Bt/Sh) (Bt/Sh) (%) 18A 19F 20F 18A 19F 20F 18A 19F 20F 18A 19F 20F 18A 19F 20F AEONTS Buy 200.00 250.0 27.8 14.3 12.4 10.7 18 15 16 2.8 2.4 2.1 21 21 21 2.4 2.8 3.3 KTC Neutral 42.50 42.0 0.9 21.3 19.7 17.5 56 8 12 6.7 5.5 4.6 36 31 29 1.9 2.0 2.3 MTC Neutral 62.50 64.0 2.9 35.7 30.7 24.4 48 16 26 10.8 8.2 6.4 35 30 29 0.4 0.5 0.6 SAWAD Neutral 65.50 72.0 9.9 27.2 24.6 20.0 (2) 10 23 6.3 4.8 3.9 26 24 21 0.0 0.0 0.0 Average 24.6 21.8 18.2 30 13 19 6.6 5.2 4.2 29 26 25 1.2 1.3 1.5
Source: SCBS Investment Research
Downside risk We assess potential downside risk for MTLS and SAWAD below. Asset quality risk – rising but preempted by our forecast of credit cost hike. We see rising asset quality risk, triggered by the prolonged sluggish economy, falling farm income and drought. However, we have preempted this risk by factoring in a substantial hike in credit cost in 2020. Regulatory risk – easing. We see substantially lower regulatory risk after the BoT began regulating vehicle title loans in February this year and its clarification that it will not enforce a cap on debt service ratio (DSR) on consumer loans. Interest rate risk – unlikely in near future. We see low interest rate risk from a reversion to an uptrend in interest rates in the near future, i.e. within one year. Competition risk – rising from banks but easing from informal and small operators. Competition from commercial banks, which have greater competitive advantage in terms of cost of funds, is rising. Commercial banks are increasingly penetrating into car-pledged personal loans. However, commercial banks have not yet expanded to the low-income groups targeted by micro finance companies. The enforcement of the Excessive Interest Rate Prohibition Act in 2017 has eased informal lending and discouraged small operators that are not eligible to obtain licenses from the regulator.
Tue, Nov 5, 2019 8
Initiate coverage Tue, Nov 5, 2019
Muangthai Capital MTC
Muangthai Capital Bloomberg MTC TB Public Company Limited Reuters MTC.BK
Good growth outlook priced in NEUTRAL
We initiate MTC as Neutral with a TP of Bt64. We expect MTC to report Stock data good earnings growth of 25% CAGR in 2020F-2022F off an estimated 21% Last close (Nov 4) (Bt) 62.50 CAGR loan growth and NIM expansion, plus upside from the release of 12-m target price (Bt) 64.00 Upside (Downside) to TP (%) 2.40 excess LLR before a provision hike in 2020. However, this is already priced Mkt cap (Btbn) 132.50 in in its demanding valuation of 6.4x PBV and 24.5x PER for 2020 after a Mkt cap (US$mn) 4,389 26% YTD share price rally. Risk rating M Slowing but still robust loan growth. We expect MTC’s loan growth to slow Mkt cap (%) SET 0.78 from 52% CAGR in 2014-2018 to 27% in 2019 (29% YoY in 1H19) and 20% in 2020- Sector % SET 3.02 2022, as the base becomes higher and expansion slows. Our forecast of 21% CAGR Shares issued (mn) 2,120 Par value (Bt) 1.00 for 2020-2022 is supported by: 1) its strong niche in motorcycle-backed loans, 2) a 12-m high / low (Bt) 64.5 / 42.5 vast underserved market for micro finance loans, 3) its expansion into hire- Avg. daily 6m (US$mn) 15.02 purchase loans for new motorcycles in June this year and 4) easing competition Foreign limit / actual (%) 49 / 12 from small and informal competitors due to the tougher regulations. Free float (%) 32.1 Dividend policy (%) ≥ 50
NIM expansion ahead. We expect MTC to see a NIM expansion of 16 bps in 2020, Price performance driven by improvement in both cost of funds and loan yield. We expect cost of funds to ease in 2H19 and 2020 on: 1) benefit from policy rate cuts, with another 70 (Bt) 60 25 bps expected in 4Q19 and another 25 bps in 1H20 and 2) an upgrade in credit 50 rating to “BBB+” from “BBB” by TRIS Rating, which is expected to shave 20-30 bps 40 off cost of funds. We expect better loan yield in 2H19 and 2020 from: 1) the 30 expansion into hire-purchase loans for new motorcycles, which has yield of 28%, 20 MTC — Stock Price well above current yield of 22% and 2) a normalization of loan yield after February’s 10 MTC — Rel. to SET (rebased)
change in calculation of effective rate from flat rate. 0 Feb-18
Upside from release of excess LLR before credit cost hike. MTC had LLR Feb-19
Nov-17
Nov-18
Nov-19
Aug-18
Aug-19 May-18 May-19 coverage of 276% against NPLs at 2Q19, providing an upside for release of excess Source: SET, SCBS Investment Research LLR before the adoption of TFRS9 in January 2020. The TFRS9 will no longer allow Share performance general provisions, as it uses the expected credit loss (ECL) model that includes (%) 1M 3M 12M more forward-looking information than the existing incurred loss model. Due to Absolute 8.2 5.9 16.8 the current economic slowdown and adoption of TFRS9, we expect its credit cost Relative to SET 7.1 8.8 20.3 to rise from 1.2% in 2019 to 1.6% in 2020. Source: SET, SCBS Investment Research
Back to higher earnings growth than loan growth in 2020. We expect MTC Expected total return (ETR) to resume higher earnings growth than loan growth in 2020 after moving past the Target price (Bt) 64.00 disruption in loan yield and fee income from the new regulation in 2019. We 12-month dividend (Bt) 0.31 expect rising leverage from its large branch network to lead to an improvement in Capital gain (%) 2.40 Dividend yield (%) 0.49 cost to income ratio. We forecast its earnings growth to accelerate from 16% in Total return (%) 2.89
2019F to 26% in each of 2020F and 2021F. Source: SET, SCBS Investment Research
Neutral with TP of Bt64. We rate MTC as a Neutral with a TP of Bt64, based on 6.5x BVPS in 2020F, assuming ROE of 28%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 25x EPS in 2020, assigning 1x PEG in 2020-2022.
Forecasts and valuation Analyst Year to 31 Dec Unit 2017 2018 2019F 2020F 2021F Kittima Sattayapan, CFA Pre-provision profit (Btmn) 3,785 5,213 6,112 7,968 9,970 Fundamental Investment Net profit (Btmn) 2,501 3,713 4,313 5,419 6,822 Analyst on Securities PPP/share (Bt) 1.79 2.46 2.88 3.76 4.70 (66-2) 949-1003 EPS (Bt) 1.18 1.75 2.03 2.56 3.22 [email protected] BVPS (Bt) 4.22 5.80 7.58 9.83 12.67 DPS (Bt) 0.18 0.26 0.31 0.38 0.48 P/PPP (x) 35.00 25.42 21.68 16.63 13.29 PPP growth (%) 76.54 37.71 17.24 30.37 25.13 PER (x) 52.99 35.68 30.72 24.45 19.42 EPS growth (%) 70.79 48.50 16.15 25.65 25.88 PBV (x) 14.82 10.77 8.24 6.36 4.93 ROE (%) 31.99 34.96 30.40 29.35 28.60 Dividend yields (%) 0.29 0.42 0.49 0.61 0.77
Source: SCBS Investment Research
See the end of this report for disclaimer 9
Muangthai Capital PLC
Financial statement Profit and Loss Statement FY December 31 Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Interest & dividend income (Btmn) 1,567 2,225 4,019 6,795 9,544 11,818 14,794 17,952 Interest expense (Btmn) 266 228 328 673 1,100 1,436 1,733 2,054 Net interest income (Btmn) 1,301 1,998 3,691 6,122 8,444 10,381 13,061 15,898 Non-interest income (Btmn) 289 334 453 676 872 823 992 1,162 Non-interest expenses (Btmn) 896 1,275 2,000 3,013 4,103 5,093 6,086 7,090 Earnings before tax & provision (Btmn) 694 1,056 2,144 3,785 5,213 6,112 7,968 9,970 Tax (Btmn) 136 207 348 605 913 1,078 1,355 1,705 Equities & minority interest (Btmn) 0 0 0 0 0 0 0 0 Core pre-provision profit (Btmn) 558 850 1,796 3,180 4,300 5,034 6,613 8,265 Provision (Btmn) 14 25 332 679 586 720 1,194 1,443 Core net profit (Btmn) 544 825 1,464 2,501 3,713 4,313 5,419 6,822 Extra item (Btmn) 0 0 0 0 0 0 0 0 Net profit (Btmn) 544 825 1,464 2,501 3,713 4,313 5,419 6,822 EPS (Bt) (Bt) 0.26 0.39 0.69 1.18 1.75 2.03 2.56 3.22 DPS (Bt) (Bt) 0.13 0.20 0.10 0.18 0.26 0.31 0.38 0.48
Balance Sheet FY December 31 Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Cash (Btmn) 706 153 539 1,154 880 906 909 911 Gross loans (Btmn) 7,448 12,630 23,541 34,897 47,245 60,041 74,601 90,162 Loan loss reserve (Btmn) 325 336 646 1,171 1,499 1,859 2,456 3,178 Net loans (Btmn) 7,123 12,295 22,896 34,452 46,548 58,984 72,948 87,787 Total assets (Btmn) 8,777 13,083 24,426 36,953 49,146 61,652 75,665 90,554 S-T borrowings (Btmn) 3,117 3,787 12,650 10,482 11,042 13,647 16,419 19,083 L-T borrowings (Btmn) 368 3,368 4,599 16,619 24,463 30,588 37,056 43,272 Total liabilities (Btmn) 3,671 7,431 17,733 28,010 36,847 45,577 54,817 63,697 Paid-up capital (Btmn) 2,120 2,120 2,120 2,120 2,120 2,120 2,120 2,120 Total Equities (Btmn) 5,106 5,652 6,692 8,943 12,299 16,075 20,848 26,857 BVPS (Bt) (Bt) 2.41 2.67 3.16 4.22 5.80 7.58 9.83 12.67
Key Financial Ratios Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Yield on earn'g assets (%) 23.60 22.16 22.22 23.25 23.24 22.04 22.11 22.11 Cost on int-bear'g liab (%) 7.19 4.28 2.69 3.04 3.51 3.60 3.55 3.55 Spread (%) 16.41 17.89 19.54 20.22 19.72 18.44 18.57 18.57 Net interest margin (%) 19.60 19.90 20.41 20.95 20.56 19.36 19.52 19.58 Cost to income ratio (%) 48.28 49.82 44.72 40.32 39.39 40.29 38.55 37.09 Provision expense/Total loans (%) 0.19 0.20 1.41 1.95 1.24 1.20 1.60 1.60 NPLs/ Total Loans (%) 1.37 0.92 1.07 1.26 1.14 1.16 1.19 1.21 LLR/NPLs (%) 318.04 287.61 257.35 265.41 277.71 265.90 277.25 290.18 ROA (%) 7.36 7.55 7.81 8.15 8.63 7.79 7.89 8.21 ROE (%) 15.45 15.34 23.72 31.99 34.96 30.40 29.35 28.60
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Muangthai Capital PLC
Financial statement Profit and Loss Statement FY December 31 Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Interest & dividend income (Btmn) 1,796 1,984 2,140 2,314 2,478 2,612 2,665 2,862 Interest expense (Btmn) 189 213 230 258 293 319 331 363 Net interest income (Btmn) 1,607 1,771 1,910 2,056 2,185 2,293 2,334 2,500 Non-interest income (Btmn) 172 191 208 222 233 208 193 209 Non-interest expenses (Btmn) 805 869 920 986 1,060 1,138 1,154 1,232 Earnings before tax & provision (Btmn) 974 1,093 1,198 1,293 1,358 1,364 1,373 1,476 Tax (Btmn) 154 183 208 223 233 250 251 266 Equities & minority interest (Btmn) 0 0 0 0 0 0 0 0 Core pre-provision profit (Btmn) 819 910 990 1,070 1,125 1,114 1,122 1,210 Provision (Btmn) 169 167 156 158 160 112 117 189 Core net profit (Btmn) 650 743 834 912 965 1,002 1,005 1,021 Extra item (Btmn) 0 0 0 0 0 0 0 0 Net profit (Btmn) 650 743 834 912 965 1,002 1,005 1,021 EPS (Bt) (Bt) 0.31 0.35 0.39 0.43 0.46 0.47 0.47 0.48
Balance Sheet FY December 31 Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Cash (Btmn) 728 1,154 707 1,025 706 880 960 948 Gross loans (Btmn) 32,332 34,897 38,012 41,469 43,974 47,245 49,835 53,639 Loan loss reserve (Btmn) 1,041 1,171 1,282 1,381 1,462 1,499 1,550 1,641 Net loans (Btmn) 31,292 34,452 36,730 40,088 43,316 46,548 49,042 52,782 Total assets (Btmn) 33,300 36,953 38,882 42,632 45,650 49,146 51,946 55,813 S-T borrowings (Btmn) 8,656 10,482 7,585 10,902 10,195 11,042 13,377 17,017 L-T borrowings (Btmn) 15,804 16,619 20,473 20,424 23,240 24,463 23,798 23,778 Total liabilities (Btmn) 25,062 28,010 29,102 32,315 34,362 36,847 38,640 42,037 Paid-up capital (Btmn) 2,120 2,120 2,120 2,120 2,120 2,120 2,120 2,120 Total Equities (Btmn) 8,238 8,943 9,780 10,317 11,287 12,299 13,306 13,776 BVPS (Bt) (Bt) 3.89 4.22 4.61 4.87 5.32 5.80 6.28 6.50
Key Financial Ratios Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Yield on earn'g assets (%) (%) 23.31 23.61 23.48 23.29 23.20 22.91 21.96 22.13 Cost on int-bear'g liab (%) (%) 3.26 3.31 3.34 3.47 3.62 3.70 3.64 3.72 Spread (%) (%) 20.05 20.31 20.14 19.82 19.58 19.21 18.32 18.41 Net interest margin(%) (%) 20.86 21.08 20.95 20.70 20.46 20.11 19.24 19.33 Cost to income ratio (%) (%) 40.91 39.96 39.17 38.86 39.10 40.33 40.38 40.12 Provision expense/Total loans (%) (%) 2.09 1.91 1.64 1.52 1.46 0.95 0.94 1.41 NPLs/ Total Loans(%) (%) 1.17 1.26 1.29 1.35 1.29 1.14 1.06 1.11 LLR/NPLs(%) (%) 274.72 265.41 260.93 247.07 258.54 277.71 294.32 275.85 ROA (%) (%) 8.21 8.46 8.79 8.95 8.75 8.46 7.96 7.58 ROE (%) (%) 32.88 34.59 35.62 36.31 35.74 34.00 31.41 30.15
Tue, Nov 5, 2019 11
Muangthai Capital PLC
Slowing, but still robust loan growth We expect MTC’s loan growth to decelerate from 52% CAGR in 2014-2018 to 27% in 2019 (29% YoY in 1H19) and 21% in 2020-2022 (24% in 2020, 21% in 2021 and 19% in 2022) as the base becomes higher and branch expansion slows. Our forecast of 21% CAGR in 2020-2022 is supported by: 1) its strong niche in motorcycle-backed loans, which is an area that is still untouched by banks which see the ticket size as too small, as well as the need for expertise in used motorcycle appraisal as a major barrier to entry, 2) a vast underserved market for micro finance loans, 3) its expansion into hire-purchase loans for new motorcycles in June this year, and 4) easing competition from small and informal competitors due to the tougher regulations. As the #1 play with the largest branch network among micro finance companies, MTC appears to have a competitive advantage in winning prime areas ahead of competitors. It plans to lift the number of branches to 3,900 by YE2019 and 4,500 by YE2020. We expect MTC and SAWAD to both gear down their branch expansion from 2021. The three lead players have a total of more than 7,787 branches – exceeding Thailand’s 7,435 subdistricts (Tambon) and the 2016 peak of 7,061 commercial bank branches. Assuming this represents coverage of commercially feasible areas, we expect branch expansion to slow over the next few years as there is increasingly less room in which to place economically feasible branches. Figure 1: Top 3 players’ micro finance loans Figure 2: Top 3 players’ micro finance loan growth 100% Bt bn MTC SAWAD Ngern Tid Lor 80 90% 70 MTC 80% 60 SAWAD 70% 50 Ngern Tid Lor 60% 40 50% 30 40% 20 30% 10 20%
- 10%
2013
2014
2015
2016
2017
2018
2019F 2020F
0%
2013
2014
2015
2016
2017
2018
2019F 2020F
Source: The companies and SCBS Investment Research
Figure 3: No. of branches Figure 4: Loans per branch 9,000 Bt mn 8,000 MTC SAWAD Total 18 MTC SAWAD 7,000 16 6,000 14 5,000 12 4,000 10 3,000 8 2,000 6 4 1,000 2
0
2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2011 -
2012 2013 2014 2015 2016 2017 2018 2019F 2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
NIM expansion ahead We expect MTC to see a NIM expansion of 16 bps in 2020 after a 120 bps contraction in 2019, driven by an improvement in both cost of funds and loan yield. We expect its cost of funds to ease in 2H19 and 2020 on: 1) benefit from policy rate cuts, expected to come down a further 25 bps in December this year and 25 bps in 1Q19 and 2) an upgrade in credit rating to “BBB+” from “BBB” by TRIS Rating in June, which is expected to shave 20-30 bps off of cost of funds. We expect improvement in loan yield in 2H19 and 2020 on the back of: 1) expansion into hire- purchase loans for new motorcycles, which have yield of 28%, higher than its current loan Tue, Nov 5, 2019 12
Muangthai Capital PLC
yield of 22% and 2) a normalization of loan yield after the change in calculation of effective rate from flat rate in February. Figure 5: Net interest margin Figure 6: Yield on loans 30% 31% 29% MTC SAWAD 25% 27% 20% 25% 23% 15% MTC SAWAD 21% 10% 19% 17%
5%
2014
2015
2016
2017
2018
2019F
2020F 2021F
2022F 15%
2014
2015
2016
2017
2018
2019F
2020F
2021F 2022F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Figure 7: Cost of funds Figure 8: Funding mix 8% Short term Long term 7% 100% 6% MTC SAWAD 5% 80% 4% 58% 62% 3% 60% 2% 40% 1%
0%
2014
2015
2016
2017
2018
2019F
2020F 2021F 2022F 20% 42% 38% 0% MTC SAWAD Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Upside from release of excess LLR before credit cost hike MTC had LLR coverage of 276% against NPLs at 2Q19, providing upside for release of excess LLR before adoption of TFRS9 in January 2020. The TFRS9 will no longer allow general provisions, as IFRS9 uses the expected credit loss (ECL) model that includes more forward- looking information compared to the existing incurred loss model. Due to the current economic slowdown and adoption of TFRS9, we forecast credit cost to rise from 1.2% in 2019 to 1.6% in 2020. Under TFRS9, loans 31-90 days overdue will need high reserve to reflect expected credit loss based on probability of default (PD) and loss given default (LGD). For MTC, 8% of its loans are 31-90 days overdue. With a conservative LTV of no more than 50%, MTC should have low LGD but the economic slowdown and rising economic uncertainties are likely to lead to higher PD. Figure 9: % of loans overdue 31-90 days at 2Q19 Figure 10: LLR coverage at 2Q19 20% 300% 18% 16% 250% 14% 200% 12% 10% 150% 8% 100% 6% 4% 50% 2% 0% 0% MTC SAWAD MTC SAWAD
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Tue, Nov 5, 2019 13
Muangthai Capital PLC
Figure 11: Credit cost Figure 12: NPL ratio 3.0% MTC SAWAD 2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2013
2014
2015
2016
2017
2018
1Q19
2Q19
2019F 2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Back to higher earnings growth than loan growth in 2020 We expect MTC to resume reporting higher earnings growth than loan growth in 2020 after the disruption to loan yield and fee income from the new regulation in 2019. We expect rising leverage from its large branch network to improve cost to income ratio. We forecast its earnings growth to accelerate from 16% in 2019F to 26% in each of 2021F and 2022F. 3Q19 preview: We expect earnings to reach a new high of Bt1.1bn, up 14% YoY and 8% QoQ, with a seasonal acceleration in loan growth, slight improvement in NIM and QoQ stable provisions. Figure 13: Earnings growth Figure 14: EPS growth MTC's earnings (LHS) SAWAD's earnings (LHS) (Bt mn) (Bt) MTC's EPS (LHS) MTC's earnings growth (RHS) SAWAD's earnings growth (RHS) 9,000 90% 6 SAWAD's EPS (LHS) 100% MTC's EPS growth (RHS) 8,000 80% 5 80% 7,000 70% 60% 6,000 60% 4 40% 5,000 50% 3 4,000 40% 20% 2 3,000 30% 0% 2,000 20% 1 -20% 1,000 10% - -40% - 0% 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F Source: SCBS Investment Research Source: SCBS Investment Research Neutral with TP of Bt64 We rate MTC as Neutral. We expect MTC to have good earnings growth of 25% CAGR in 2020F- 2022F on an expected 21% CAGR loan growth and NIM expansion, plus upside from the release of excess LLR before a provision hike in 2020. However, this is already priced in in its demanding valuation of 6.3x PBV and 24x PER for 2020 after a 26% YTD share price rally. We assign a TP of Bt64, based on 6.5x BVPS for 2020F, assuming ROE of 28%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 25x EPS for 2020, assigning 1x PEG for 2020- 2022.
Tue, Nov 5, 2019 14
Muangthai Capital PLC
Figure 15: PER valuation map Figure 16: PBV valuation map 30.0 7.0 2020F PE (x) 2020FPBV (x) MTC 25.0 6.0 MTC
5.0 20.0 KTC KTC SAWAD SAWAD 4.0 15.0 AEONTS 3.0 10.0 2.0 AEONTS
5.0 1.0 2020F EPS Growth (%) 2020F ROE (%) 0.0 0.0 10.0 15.0 20.0 25.0 30.0 10.0 15.0 20.0 25.0 30.0 35.0 Source: SCBS Investment Research Source: SCBS Investment Research
Muangthai Capital PLC Company background Established in 1992 by the Petaumpai family (which still holds 71%), MTC is the largest micro finance service company, providing vehicle title loans (with a niche market in motorcycle title loans), land title loans, personal loans and Nano Finance mainly to low income individuals that have no access to financial services from commercial banks but own a vehicle and land, which serve as collateral.
Source: MTC and SCBS Investment Research Investment thesis We rate MTC as a Neutral. We expect MTC to have good earnings growth of 25% CAGR in 2020F-2022F on an expected 21% CAGR loan growth and NIM expansion, plus upside from the release of excess LLR before a provision hike in 2020. However, this is already priced in in its demanding valuation at 6.3x PBV and 24x PER for 2020 after a 26% YTD share price rally. Valuation We assign a TP of Bt64, based on 6.5x BVPS for 2020F, assuming ROE of 28%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 25x EPS for 2020, assigning 1x PEG for 2020- 2022. Risks 1) Asset quality risk - which is rising from the current economic slowdown, 2) regulation risk - which is easing after the regulation of vehicle title loans by the BoT in February this year, 3) interest rate risk – we see a low chance of a rise in interest rate in the next 12 months and 4) competition risk - which is rising from commercial banks but easing from informal operators.
Tue, Nov 5, 2019 15
Initiate coverage Tue, Nov 5, 2019
Srisawad Corporation SAWAD
Srisawad Corporation Bloomberg SAWAD TB Public Company Limited Reuters SAWAD.BK
Lead microfinance choice but need lower price NEUTRAL
We initiate SAWAD as Neutral with a TP of Bt72. We expect SAWAD to Stock data have good earnings growth at 22% CAGR for 2020F-2022F on expected 20% Last close (Nov 4) (Bt) 65.50 CAGR loan growth and NIM expansion, despite a provision hike in 2020. 12-m target price (Bt) 72.00 Upside (Downside) to TP (%) 9.92 However, this is already priced in in its demanding valuation of 3.9x PBV Mkt cap (Btbn) 66.81 and 20x PER for 2020 after a 60% YTD share price rally. We prefer SAWAD to Mkt cap (US$mn) 2,213 MTC as we see valuation as less demanding but price needs to come down. Risk rating M Decelerate but still robust loan growth. We expect SAWAD’s loan growth to Mkt cap (%) SET 0.51 decelerate from 40% CAGR in 2014-2018 to 27% in 2019 (29% YoY for 1H19) and 23% Sector % SET 3.02 in 2020-2022, supported by: 1) its focus on a vast and underserved market of micro Shares issued (mn) 1,325 Par value (Bt) 1.00 finance loans with rising demand amidst the current economic slowdown due to 12-m high / low (Bt) 67 / 39.3 their countercyclical nature and 2) easing competition from small and illegal Avg. daily 6m (US$mn) 13.75 competitors as a result of tougher regulations. Foreign limit / actual (%) 49 / 33 Free float (%) 43.2 NIM expansion rides a downtrending interest rate. We expect SAWAD’s NIM Dividend policy (%) ≥ 40 to expand in 2H19 and 2020, driven by a Bt2.6bn capital injection from Cathay Price performance Financial Holding Co., Ltd. (Cathay) in February and lower cost of funds. Cost of
80 (Bt) funds is expected to come down in 2H19 and 2020 on: 1) benefit from the policy 70 rate cuts, with an expected further cut of 25 bps in 4Q19 and 25 bps in 1H20, 2) an 60 upgrade in credit rating to “BBB+” from “BBB” by TRIS Rating in June, which could 50 shave 20-30 bps off of cost of funds, and 3) a shift in funding mix more toward 40 30 deposits via BFIT after raising its stake in BFIT to 82.04% in Aug from 45.34%. 20 SAWAD — Stock Price 10 Higher credit cost under TFRS9 with rising asset quality risk. We factor in a SAWAD — Rel. to SET (rebased) 0
75 bps rise in SAWAD’s credit cost in 2020 to accommodate the implementation of
Feb-18
Feb-19
Nov-17
Nov-18
Nov-19 Aug-18
TFRS9 and rising risk on asset quality from the economic slowdown. Aug-19 May-18 May-19 Source: SET, SCBS Investment Research Rising opportunity for non-NII. The ongoing economic slowdown is likely to bring more opportunities to purchase distressed assets from financial institutions Share performance at favorable prices for its debt collection business. SAWAD had distressed assets (%) 1M 3M 12M under management of Bt3.1bn at 2Q19 and plans to acquire more in 4Q19. This will Absolute 14.9 24.2 54.9 Relative to SET 13.8 27.5 59.6 raise its non-interest income. We forecast decent growth in non-NII of 15% in Source: SET, SCBS Investment Research 2020F. Expected total return (ETR) Resuming normal good growth in 2020 after dilution in 2019. We expect Target price (Bt) 72.00 earnings growth to ease from 28% in 2019F to 23% in 2020F due to an expected rise 12-month dividend (Bt) 0.01 in credit cost as a result of TFRS9 and the economic slowdown. However, we Capital gain (%) 9.92 expect SAWAD’s EPS growth to accelerate from 11% for 2019F to 23% in each of Dividend yield (%) 0.02 Total return (%) 9.94 2020F and 2021F after being hit by dilution from the capital injection by its partner. Source: SET, SCBS Investment Research Neutral with TP of Bt72. We rate SAWAD as Neutral with a TP of Bt72 based on 4.25x BVPS for 2020F, assuming ROE of 21%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 22x EPS for 2020 at 1x PEG for 2020-2022.
Forecasts and valuation Analyst Year to 31 Dec Unit 2017 2018 2019F 2020F 2021F Kittima Sattayapan, CFA Pre-provision profit (Btmn) 3,724 4,114 5,156 6,644 8,118 Fundamental Investment Net profit (Btmn) 2,667 2,768 3,531 4,330 5,322 Analyst on Securities PPP/share (Bt) 3.43 3.58 3.89 5.01 6.13 (66-2) 949-1003 EPS (Bt) 2.45 2.41 2.66 3.27 4.02 [email protected] BVPS (Bt) 8.67 10.34 13.63 16.89 20.89 DPS (Bt) 0.01 0.01 0.01 0.02 0.02 P/PPP (x) 19.12 18.27 16.84 13.06 10.69 PPP growth (%) 34.18 4.65 8.53 28.87 22.17 PER (x) 26.71 27.16 24.58 20.05 16.31 EPS growth (%) 27.90 (1.65) 10.47 22.64 22.90 PBV (x) 7.56 6.34 4.80 3.88 3.14 ROE (%) 32.78 26.01 23.60 21.41 21.26 Dividend yields (%) 0.01 0.02 0.02 0.02 0.03
Source: SCBS Investment Research
See the end of this report for disclaimer 16
Srisawad Corporation PLC
Financial statement Profit and Loss Statement
FY December 31 Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Interest & dividend income (Btmn) 1,955 2,814 4,008 4,944 5,797 7,188 8,876 10,739 Interest expense (Btmn) 219 281 369 608 721 836 907 1,041 Net interest income (Btmn) 1,736 2,534 3,639 4,335 5,076 6,352 7,969 9,698 Non-interest income (Btmn) 735 963 1,327 2,055 2,085 2,280 2,622 2,884 Non-interest expenses (Btmn) 1,220 1,678 2,298 2,666 3,046 3,476 3,947 4,463 Earnings before tax & provision (Btmn) 1,251 1,818 2,669 3,724 4,114 5,156 6,644 8,118 Tax (Btmn) 207 314 502 615 725 897 1,095 1,343 Equities & minority interest (Btmn) 0 0 (4) (49) (233) (58) (50) (50) Core pre-provision profit (Btmn) 1,043 1,504 2,167 3,109 3,389 4,258 5,549 6,775 Provision (Btmn) 189 168 158 394 388 669 1,169 1,403 Core net profit (Btmn) 855 1,336 2,009 2,715 3,001 3,589 4,380 5,372 Minority interest (Btmn) 0 0 4 49 233 58 50 50 Net profit (Btmn) 855 1,336 2,005 2,667 2,768 3,531 4,330 5,322 EPS (Bt) 0.85 1.31 1.92 2.45 2.41 2.66 3.27 4.02 DPS (Bt) 0.00 0.00 0.01 0.01 0.01 0.01 0.02 0.02
Balance Sheet
FY December 31 Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Cash (Btmn) 348 333 713 1,853 2,410 2,576 2,648 2,819 Gross loans (Btmn) 7,816 11,568 17,469 23,827 30,567 38,248 46,760 56,112 Loan loss reserve (Btmn) 273 355 389 912 997 1,232 1,641 2,133 Net loans (Btmn) 7,543 11,213 17,080 22,917 29,573 37,016 45,119 53,979 Total assets (Btmn) 8,592 13,640 22,237 33,377 39,217 46,108 54,521 63,801 S-T borrowings (Btmn) 4,270 2,544 8,535 6,721 8,386 8,386 8,386 8,386 L-T borrowings (Btmn) 500 5,755 5,990 8,298 8,422 8,522 11,822 14,922 Total liabilities (Btmn) 5,160 8,868 15,379 22,202 25,589 26,277 30,377 34,357 Paid-up capital (Btmn) 1,000 1,020 1,045 1,087 1,148 1,325 1,325 1,325 Total Equities (Btmn) 3,432 4,766 6,842 9,427 11,863 18,066 22,378 27,679 BVPS (Bt) 3.43 4.67 6.54 8.67 10.34 13.63 16.89 20.89
Key Financial Ratios
Unit 2014 2015 2016 2017 2018 2019F 2020F 2021F Yield on earn'g assets (%) 28.88 29.03 27.61 24.96 22.47 21.70 21.70 21.70 Cost on int-bear'g liab (%) 4.64 4.29 2.55 2.84 3.06 3.31 3.26 3.26 Spread (%) (%) 24.24 24.74 25.05 22.12 19.41 18.39 18.44 18.44 Net interest margin (%) 25.65 26.14 25.07 21.88 19.68 19.18 19.48 19.60 Cost to income ratio (%) 45.37 44.42 43.07 38.09 38.65 36.71 34.33 32.77 Provision expense/Total loans (%) 2.42 1.45 0.91 1.65 1.27 1.75 2.50 2.50 NPLs/ Total Loans (%) 5.71 4.86 3.63 4.71 3.69 3.69 3.69 3.69 LLR/NPLs (%) 61.18 63.26 61.27 81.26 88.46 87.30 95.13 103.05 ROA (%) 11.68 12.02 11.18 9.59 7.63 8.28 8.61 9.00 ROE (%) 37.46 32.60 34.54 32.78 26.01 23.60 21.41 21.26
Tue, Nov 5, 2019 17
Srisawad Corporation PLC
Financial statement Profit and Loss Statement (Btmn) FY December 31 Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Interest & dividend income (Btmn) 1,248 1,255 1,244 1,384 1,532 1,637 1,658 1,742 Interest expense (Btmn) 160 179 166 171 184 199 197 204 Net interest income (Btmn) 1,087 1,076 1,077 1,213 1,348 1,437 1,461 1,539 Non-interest income (Btmn) 562 177 500 489 575 520 491 602 Non-interest expenses (Btmn) 720 557 714 727 780 825 810 843 Earnings before tax & provision (Btmn) 929 696 863 976 1,142 1,133 1,142 1,298 Tax (Btmn) 168 95 147 177 200 201 209 219 Equities & minority interest (Btmn) (43) 58 (75) (58) (61) (38) (29) (10) Core pre-provision profit (Btmn) 762 601 716 798 943 932 933 1,079 Provision (Btmn) 97 186 76 133 115 64 61 196 Core net profit (Btmn) 665 414 640 665 827 868 872 883 Minority interest (Btmn) 43 (58) 75 58 61 38 29 10 Net profit (Btmn) 622 472 565 607 766 831 843 874 EPS (Bt) (Bt) 5.72 4.34 5.19 5.29 6.68 7.24 7.00 6.59
Balance Sheet (Btmn) FY December 31 Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Cash (Btmn) 2,776 1,853 2,839 2,583 2,561 2,410 2,966 3,106 Gross loans (Btmn) 22,512 23,827 24,472 25,805 28,162 30,567 31,988 33,222 Loan loss reserve (Btmn) 1,019 912 1,010 1,022 1,136 997 980 1,055 Net loans (Btmn) 21,500 22,917 23,467 24,788 27,030 29,573 31,011 32,170 Total assets (Btmn) 33,078 33,377 32,950 34,474 36,793 39,217 41,171 44,263 S-T borrowings (Btmn) 8,716 6,721 6,715 7,660 6,711 8,386 7,616 6,637 L-T borrowings (Btmn) 8,603 8,298 7,280 7,752 10,118 8,422 7,623 10,745 Total liabilities (Btmn) 23,086 22,202 21,139 21,968 24,032 25,589 24,099 26,382 Paid-up capital (Btmn) 1,087 1,087 1,087 1,148 1,148 1,148 1,205 1,325 Total Equities (Btmn) 8,643 9,427 9,989 10,608 11,034 11,863 15,277 15,860 BVPS (Bt) (Bt) 79 87 92 92 96 103 127 120
Key Financial Ratios Unit 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Yield on earn'g assets (%) 22.63 21.67 21.34 22.03 22.71 22.29 21.59 21.38 Cost on int-bear'g liab (%) 2.97 3.32 3.15 3.36 3.36 3.39 3.34 3.44 Spread (%) 19.67 18.35 18.19 18.67 19.34 18.90 18.26 17.94 Net interest margin (%) 19.73 18.58 18.49 19.30 19.98 19.58 19.02 18.88 Cost to income ratio (%) 39.80 38.88 40.95 38.79 37.03 38.25 37.69 35.96 Provision expense/Total loans (%) 1.72 3.13 1.25 2.06 1.64 0.83 0.76 2.36 NPLs/ Total Loans (%) 4.88 4.71 8.03 5.45 5.02 3.69 4.35 4.32 LLR/NPLs (%) 92.71 81.26 51.40 72.64 80.31 88.46 70.44 73.45 ROA (%) 7.67 5.68 6.81 7.20 8.60 8.74 8.39 8.18 ROE (%) 29.80 20.90 23.26 23.57 28.33 29.02 24.85 22.45
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Srisawad Corporation PLC
Decelerating but still robust loan growth We expect SAWAD’s loan growth to decelerate from 40% CAGR in 2014-2018 to 27% in 2019 (29% YoY for 1H19) and 23% in 2020-2022, supported by: 1) a vast underserved market for micro finance loans with rising demand amidst the current economic slowdown due to their countercyclical nature and 2) easing competition from small and illegal competitors as a result of tougher regulation. SAWAD targets an increase in the number of branches to 3,400 by YE2019 and plans to add 200-300 branches in 2020. We expect expansion to shift into lower gear from 2021. The three lead players have a total of more than 7,787 branches – exceeding Thailand’s 7,435 subdistricts (Tambon) and the 2016 peak of 7,061 commercial bank branches. Assuming this represents coverage of commercially feasible areas, we expect branch expansion to slow over the next few years as there is increasingly less room in which to place economically feasible branches. Figure 1: Top 3 players’ micro finance loans Figure 2: Top 3 players’ micro finance loan growth 100% Bt bn MTC SAWAD Ngern Tid Lor 80 90% 70 MTC 80% 60 SAWAD 70% 50 Ngern Tid Lor 60% 40 50% 30 40% 20 30% 10 20%
- 10%
2013
2014
2015
2016
2017
2018
2019F 2020F 0%
2013
2014
2015
2016
2017
2018
2019F
2020F
Source: The companies and SCBS Investment Research
Figure 3: No. of branches Figure 4: Loans per branch 9,000 Bt mn 8,000 MTC SAWAD Total 18 MTC SAWAD 7,000 16 6,000 14 5,000 12 4,000 10 3,000 8 2,000 6 4 1,000 2
0
2011
2012
2013
2014
2015
2016
2017
2018 2019F 2020F -
2012
2013
2014
2015
2016
2017
2018
2019F
2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
NIM expansion riding with downtrending interest rate We expect NIM to expand in 2H19 and 2020, driven by a Bt2.6bn capital injection from Cathay Financial Holding Co., Ltd. (Cathay) in February and lower cost of funds. We expect cost of funds to fall in 2H19 and 2020 on: 1) benefit from policy rate cuts, expected to come down a further 25 bps in December this year and 25 bps in 1Q19, 2) an upgrade in credit rating to “BBB+” from “BBB” by TRIS Rating in June, which is expected to shave 20-30 bps off of cost of funds, and 3) a shift in funding mix more toward deposits via BFIT after increasing its holding in BFIT to 82.04% in August from 45.34%. We expect loan yield to stop falling from 2H19 as it moves past the effect of a change in calculation of effective rate from flat rate in February. We expect NIM to rise HoH in 2H19, but expect a 50 bps fall in full-year NIM after a substantial fall in NIM in 1H19 (56 bps QoQ in 1Q19 and 80 bps QoQ in 2Q19) from a lower loan yield as a result of a change in calculation of effective rate from flat rate in February We forecast its NIM to increase 31 bps in 2020 after a 50 bps fall in 2019. Tue, Nov 5, 2019 19
Srisawad Corporation PLC
Figure 5: Net interest margin Figure 6: Yield on loans 30% 31% 29% MTC SAWAD 25% 27% 20% 25% 23% 15% MTC SAWAD 21% 10% 19% 17%
5%
2014
2015
2016
2017
2018
2019F
2020F 2021F 2022F 15%
2014
2015
2016
2017
2018
2019F
2020F
2021F
2022F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
Figure 7: Cost of funds Figure 8: Funding mix 8% Short term Long term 7% 100% 6% MTC SAWAD 5% 80% 4% 58% 62% 60% 3% 2% 40% 1%
0% 20% 42%
2014
2015
2016
2017
2018
2019F
2020F 2021F 2022F 38%
0% MTC SAWAD Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Higher credit cost under TFRS9 with rising asset quality risk. We factor in a 75 bps rise in SAWAD’s credit cost in 2020 as a result of implementation of TFRS9. Amidst the current economic slowdown, we see rising risk to asset quality. Under TFRS9, loans 31-90 days overdue will need high reserve to reflect expected credit loss based on probability of default (PD) and loss given default (LGD). SAWAD reports 19% of its loans are 31-90 days overdue, which is the nature of the low-income segment. With a conservative LTV of no more than 50%, SAWAD should have low LGD but the economic slowdown and rising economic uncertainties will likely lead to higher PD. Figure 9: % of loans 31-90 days overdue at 2Q19 Figure 10: LLR coverage at 2Q19 20% 300% 18% 250% 16% 14% 200% 12% 10% 150% 8% 100% 6% 4% 50% 2% 0% 0% MTC SAWAD MTC SAWAD
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research
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Srisawad Corporation PLC
Figure 11: Credit cost Figure 12: NPL ratio 3.0% MTC SAWAD 2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2013
2014
2015
2016
2017
2018
1Q19
2Q19
2019F 2020F
Source: The companies and SCBS Investment Research Source: The companies and SCBS Investment Research Rising opportunity for non-NII The ongoing economic slowdown is likely to bring more opportunities to purchase distressed assets from financial institutions at favorable prices for its debt collection business. SAWAD had distressed assets under management of Bt3.1bn at 2Q19. This will pave the way to a rise in non-interest income. We forecast a decent growth in non-NII of 15% in 2020F and 10% in 2021F vs. 9% in 2019F. Figure 13: Distressed assets under management Figure 14: Non-NII (Bt (Bt mn) Distressed assets under management Growth Non-NII (LHS) Growth (RHS) 4,500 90% 3,500 60%
4,000 80% 3,000 50% 3,500 70% 2,500 40% 3,000 60% 2,000 2,500 50% 30% 1,500 2,000 40% 20% 1,500 30% 1,000 1,000 20% 500 10% 500 10% - 0% - 0% 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2015 2016 2017 2018 2019F 2020F 2021F 2022F
Source: SCBS Investment Research Source: SCBS Investment Research
Resuming normal good growth in 2020 after dilution in 2019 We expect earnings growth to ease from 28% in 2019F to 23% in 2020F on an expected rise in credit cost as a result of TFRS9 and the economic slowdown. However, we expect SAWAD’s EPS growth to accelerate from 11% in 2019F to 23% in each of 2021F and 2020F after being eroded by dilution from the capital injection by its partner. Preview of 3Q19: We expect SAWAD’s earnings to be a new high of Bt900mn, up 17% YoY and 3% QoQ. We expect a seasonal acceleration in loan growth in 3Q19, a slight improvement in NIM and a QoQ stable provisions. Figure 15: Earnings growth Figure 16: EPS growth MTC's earnings (LHS) SAWAD's earnings (LHS) (Bt mn) (Bt) MTC's EPS (LHS) MTC's earnings growth (RHS) SAWAD's earnings growth (RHS) 9,000 90% 6 SAWAD's EPS (LHS) 100% MTC's EPS growth (RHS) 8,000 80% 5 80% 7,000 70% 60% 6,000 60% 4
5,000 50% 40% 3 4,000 40% 20% 3,000 30% 2 0% 2,000 20% 1 1,000 10% -20%
- 0% - -40% 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F
Source: SCBS Investment Research Source: SCBS Investment Research
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Srisawad Corporation PLC
Neutral with TP of Bt72 We rate SAWAD as Neutral. We expect SAWAD to have a good earnings growth of 22% CAGR in 2020F-2022F, fueled by an expected 20% CAGR loan growth and NIM expansion, despite a provision hike in 2020. However, this is already priced in in its demanding valuation of 3.9x PBV and 20x PER for 2020 after a 60% YTD share price rally. We assign a TP of Bt72, based on 4.25x BVPS for 2020F, assuming ROE of 21%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 22x EPS for 2020, assigning 1x PEG for 2020- 2022. Figure 17: PER valuation map Figure 18: PBV valuation map 30.0 7.0 2020F PE (x) 2020FPBV (x) MTC 25.0 6.0 MTC
5.0 20.0 KTC KTC SAWAD SAWAD 4.0 15.0 AEONTS 3.0 10.0 2.0 AEONTS
5.0 1.0 2020F EPS Growth (%) 2020F ROE (%) 0.0 0.0 10.0 15.0 20.0 25.0 30.0 10.0 15.0 20.0 25.0 30.0 35.0 Source: SCBS Investment Research Source: SCBS Investment Research
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Srisawad Corporation PLC
Srisawad Corporation PLC Company background Established by the Kaewbootta family, who has over 30 years of experience in the microfinance business, SAWAD focuses on providing secured loans, collateralized by vehicles and property. The company also provides unsecured loans under personal loans and Nano finance licenses.
Source: SAWAD and SCBS Investment Research Investment thesis We rate SAWAD as Neutral. We expect SAWAD to have good earnings growth of 22% CAGR for 2020F-2022F on an expected 20% CAGR loan growth and NIM expansion, despite a provision hike in 2020. However, this is already priced in in its demanding valuation of 3.9x PBV and 20x PER for 2020 after a 60% YTD share price rally. Valuation We assign a TP of Bt72, based on 4.25x BVPS in 2020F, assuming ROE of 21%, cost of equity of 10.2% and L-T growth of 7%. This is also based on 22x EPS for 2020 at 1x PEG for 2020-2022. Risks 1) Asset quality risk - which is rising from the current economic slowdown, 2) regulation risk - which is easing after the regulation of vehicle title loans by the BoT in February this year, 3) interest rate risk – we see a low chance of a rise in interest rate in the next 12 months and 4) competition risk - which is rising from commercial banks but easing from informal operators.
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Srisawad Corporation PLC
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Srisawad Corporation PLC
CG Rating 2019 Companies with CG Rating
AAV, ADVANC, AIRA, AKP, AKR, AMA, AMATA, AMATAV, ANAN, AOT, AP, ARROW, BAFS, BANPU, BAY, BCP, BCPG, BOL, BRR, BTS, BTW, BWG, CFRESH, CHEWA, CHO, CK, CKP, CM, CNT, COL, COMAN, CPALL, CPF, CPI, CPN, CSS, DELTA, DEMCO, DRT, DTAC, DTC, EA, EASTW, ECF, EGCO, GBX, GC, GCAP, GEL, GFPT, GGC, GOLD, GPSC, GRAMMY, GUNKUL, HANA, HARN, HMPRO, ICC, ICHI, III, ILINK, INTUCH, IRPC, IVL, JKN, JSP, K, KBANK, KCE, KKP, KSL, KTB, KTC, KTIS, LH, LHFG, LIT, LPN, MAKRO, MALEE, MBK, MBKET, MC, MCOT, MFEC, MINT, MONO*, MTC, NCH, NCL, NKI, NSI, NVD, NYT, OISHI, OTO, PAP, PCSGH, PDJ, PG, PHOL, PJW, PLANB, PLANET, PORT, PPS, PR9, PREB, PRG, PRM, PSH, PSL, PTG, PTT, PTTEP, PTTGC, PYLON, Q-CON, QH, QTC, RATCH, ROBINS, RS, S, S & J, SABINA, SAMART, SAMTEL, SAT, SC, SCB, SCC, SCCC, SCN, SDC, SEAFCO, SEAOIL, SE-ED, SELIC, SENA, SIS, SITHAI, SNC, SORKON, SPALI, SPI, SPRC, SSSC, STA, STEC, SVI, SYNTEC, TASCO, TCAP, THAI, THANA, THANI, THCOM, THIP, THREL, TIP, TISCO, TK, TKT, TMB, TMILL, TNDT, TOA, TOP, TRC, TRU, TRUE, TSC, TSR, TSTH, TTA, TTCL, TTW, TU, TVD, TVO, U, UAC, UV, VGI, VIH, WACOAL, WAVE, WHA, WHAUP, WICE, WINNER
2S, ABM, ADB, AF, AGE, AH, AHC, AIT, ALLA, ALT, AMANAH, AMARIN, APCO, APCS, AQUA, ARIP, ASAP, ASIA, ASIAN, ASIMAR, ASK, ASN, ASP, ATP30, AUCT, AYUD, B, BA, BBL, BDMS, BEC, BEM, BFIT, BGC, BGRIM, BIZ, BJC, BJCHI, BLA, BPP, BROOK, CBG, CEN, CENTEL, CGH, CHG, CHOTI, CHOW, CI, CIMBT, CNS, COLOR, COM7, COTTO, CRD, CSC, CSP, DCC, DCON, DDD, DOD, EASON, ECL, EE, EPG, ERW, ESTAR, ETE, FLOYD, FN, FNS, FORTH, FPI, FPT, FSMART, FSS, FVC, GENCO, GJS, GL, GLOBAL, GLOW, GULF, HPT, HTC, HYDRO, ICN, IFS, INET, INSURE, IRC, IRCP, IT, ITD*, ITEL, J, JAS*, JCK, JCKH, JMART, JMT, JWD, KBS, KCAR, KGI, KIAT, KOOL, KWC, KWM, L&E, LALIN, LANNA, LDC, LHK, LOXLEY, LRH, LST, M, MACO, MAJOR, MBAX, MEGA, METCO, MFC, MK, MODERN, MOONG, MPG, MSC, MTI, NEP, NETBAY, NEX, NINE, NOBLE, NOK, NTV, NWR, OCC, OGC, ORI, OSP, PATO, PB, PDG, PDI, PL, PLAT, PM, PPP, PRECHA, PRIN, PRINC, PSTC, PT, QLT, RCL, RICHY, RML, RWI, S11, SAAM, SALEE, SAMCO, SANKO, SAPPE, SAWAD, SCG, SCI, SCP, SE, SFP, SIAM, SINGER, SIRI, SKE, SKR, SKY, SMIT, SMK, SMPC, SMT, SNP, SONIC, SPA, SPC, SPCG, SPVI, SR, SRICHA, SSC, SSF, SST, STANLY, STPI, SUC, SUN, SUSCO, SUTHA, SWC, SYMC, SYNEX, T, TACC, TAE, TAKUNI, TBSP, TCC, TCMC, TEAM, TEAMG, TFG, TFMAMA, THG, THRE, TIPCO, TITLE, TIW, TKN, TKS, TM, TMC, TMD, TMI, TMT, TNITY, TNL, TNP, TNR, TOG, TPA, TPAC, TPBI, TPCORP, TPOLY, TRITN, TRT, TSE, TSTE, TVI, TVT, TWP, TWPC, UBIS, UEC, UMI, UOBKH, UP, UPF, UPOIC, UT, UWC, VNT, WIIK, XO, YUASA, ZEN, ZMICO
A, ABICO, ACAP*, AEC, AEONTS, AJ, ALUCON, AMC, APURE, AS, ASEFA, AU, B52, BCH, BEAUTY, BGT, BH, BIG, BLAND, BM, BR, BROCK, BSBM, BSM, BTNC, CCET, CCP, CGD, CHARAN, CHAYO, CITY, CMAN, CMC, CMO, CMR, CPL, CPT, CSR, CTW, CWT, D, DIMET, EKH, EMC, EPCO, ESSO, FE, FTE, GIFT, GLAND, GLOCON, GPI, GREEN, GTB, GYT, HTECH, HUMAN, IHL, INGRS, INOX, JTS, JUBILE, KASET, KCM, KKC, KWG, KYE, LEE, LPH, MATCH, MATI, M-CHAI, MCS, MDX, META, MGT, MJD, MM, MVP, NC, NDR, NER, NNCL, NPK, NUSA, OCEAN, PAF, PF, PICO, PIMO, PK, PLE, PMTA, POST, PPM, PROUD, PTL, RCI, RJH, ROJNA, RPC, RPH, SF, SGF, SGP, SKN, SLP, SMART, SOLAR, SPG, SQ, SSP, STI, SUPER, SVOA, TCCC, THE, THMUI, TIC, TIGER, TNH, TOPP, TPCH, TPIPP, TPLAS, TQM, TTI, TYCN, UTP, VCOM, VIBHA, VPO, WIN, WORK, WP, WPH, ZIGA Corporate Governance Report The material contained in this publication is for general information only and is not intended as advice on any of the matters discussed herein. Readers and others should perform their own independent analysis as to the accuracy or completeness or legality of such information. The Thai Institute of Directors, its officers, the authors and editor make no representation or warranty as to the accuracy, completeness or legality of any of the information contained herein. By accepting this document, each recipient agrees that the Thai Institute of Directors Association, its officers, the authors and editor shall not have any liability for any information contained in, or for any omission from, this publication. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. SCB Securities Company Limited does not conform nor certify the accuracy of such survey result. To recognize well performers, the list of companies attaining “Good”, “Very Good” and “Excellent” levels of recognition (Not including listed companies qualified in the "no announcement of the results" clause from 1 January 2018 to 25 October 2019) is publicized. * บริษัทหรือกรรมการหรือผู ้บริหารของบริษัททีมีขา่ วดา้ นการก ากับดแู ลกจิ การ เชน่ การกระท าผดิ เกยี่ วกับหลักทรัพย ์ การทจุ รติ คอรร์ ัปชนั เป็ นตน้ ซงึ การใชข้ อ้ มลู CGR ควรตระหนักถึง ข่าวดังกล่าวประกอบด ้วย
Anti-corruption Progress Indicator Certified (ได้รับการรับรอง) ADVANC, AIE, AKP, AMANAH, AP, APCS, AQUA, ARROW, ASK, ASP, AYUD, BAFS, BANPU, BAY, BBL, BCH, BCP, BCPG, BGRIM, BJCHI, BKI, BLA, BROOK, BRR, BSBM, BTS, BWG, CEN, CENTEL, CFRESH, CGH, CHEWA, CIG, CIMBT, CM, CNS, COM7, CPALL, CPF, CPI, CPN, CSC, DCC, DEMCO, DIMET, DRT, DTAC, DTC, EASTW, ECL, EGCO, FE, FNS, FSS, GBX, GC, GCAP, GEL, GFPT, GGC, GJS, GLOW, GOLD, GPSC, GSTEEL, GUNKUL, HANA, HARN, HMPRO, HTC, ICC, IFS, INET, INSURE, INTUCH, IRPC, IVL, K, KASET, KBANK, KBS, KCAR, KCE, KGI, KKP, KSL, KTB, KTC, KWC, L&E, LANNA, LHK, LPN, LRH, M, MAKRO, MALEE, MBAX, MBK, MBKET, MC, MCOT, MFC, MINT, MONO, MOONG, MSC, MTI, NBC, NINE, NKI, NMG, NNCL, NSI, OCC, OCEAN, OGC, PAP, PATO, PB, PCSGH, PDG, PDI, PDJ, PE, PG, PHOL, PL, PLANB, PLANET, PLAT, PM, PPP, PPS, PREB, PRG, PRINC, PSH, PSTC, PT, PTG, PTT, PTTEP, PTTGC, PYLON, Q-CON, QH, QLT, QTC, RATCH, RML, ROBINS, S & J, SABINA, SAT, SC, SCB, SCC, SCCC, SCG, SCN, SE-ED, SELIC, SENA, SGP, SIRI, SIS, SITHAI, SMIT, SMK, SMPC, SNC, SNP, SORKON, SPACK, SPC, SPI, SPRC, SRICHA, SSF, SSI, SSSC, SST, STA, SUSCO, SVI, SYNTEC, TASCO, TCAP, TFG, TFI, TFMAMA, THANI, THCOM, THIP, THRE, THREL, TIP, TIPCO, TISCO, TKT, TMB, TMD, TMILL, TMT, TNITY, TNL, TNP, TNR, TOG, TOP, TPA, TPCORP, TRU, TRUE, TSC, TSTH, TTCL, TU, TVD, TVI, TWPC, U, UBIS, UEC, UKEM, UOBKH, VGI, VIH, VNT, WACOAL, WHA, WICE, WIIK Declared (ประกาศเจตนารมณ์) 2S, ABICO, AF, AI, AIRA, ALT, AMA, AMARIN, AMATA, ANAN, B, BM, BPP, BUI, CHG, CHO, CHOTI, CHOW, CI, CMC, COL, DDD, DELTA, EFORL, EPCO, ESTAR, ETE, FPI, FTE, ICHI, INOX, IRC, ITEL, JAS, JSP, JTS, KWG, LDC, LIT, META, MFEC, MPG, NEP, NOK, NWR, ORI, PRM, PSL, ROJNA, RWI, SAAM, SAPPE, SCI, SEAOIL, SHANG, SKR, SPALI, STANLY, SYNEX, TAE, TAKUNI, TMC, TOPP, TPP, TRITN, TVO, UV, UWC, WHAUP, XO, YUASA, ZEN N/A 7UP, A, A5, AAV, ABM, ACAP, ACC, ACG, ADB, AEC, AEONTS, AFC, AGE, AH, AHC, AIT, AJ, AJA, AKR, ALL, ALLA, ALUCON, AMATAV, AMC, AOT, APCO, APEX, APURE, AQ, ARIN, ARIP, AS, ASAP, ASEFA, ASIA, ASIAN, ASIMAR, ASN, ATP30, AU, AUCT, AWC, B52, BA, BAT-3K, BCT, BDMS, BEAUTY, BEC, BEM, BFIT, BGC, BGT, BH, BIG, BIZ, BJC, BKD, BLAND, BLISS, BOL, BR, BROCK, BSM, BTNC, BTW, CAZ, CBG, CCET, CCP, CGD, CHARAN, CHAYO, CHUO, CITY, CK, CKP, CMAN, CMO, CMR, CNT, COLOR, COMAN, COTTO, CPH, CPL, CPR, CPT, CPW, CRANE, CRD, CSP, CSR, CSS, CTW, CWT, D, DCON, DCORP, DOD, DOHOME, DTCI, EA, EASON, ECF, EE, EIC, EKH, EMC, EPG, ERW, ESSO, EVER, F&D, FANCY, FLOYD, FMT, FN, FORTH, FPT, FSMART, FVC, GENCO, GIFT, GL, GLAND, GLOBAL, GLOCON, GPI, GRAMMY, GRAND, GREEN, GSC, GTB, GULF, GYT, HFT, HPT, HTECH, HUMAN, HYDRO, ICN, IFEC, IHL, III, ILINK, ILM, INGRS, INSET, IRCP, IT, ITD, J, JCK, JCKH, JCT, JKN, JMART, JMT, JUBILE, JUTHA, JWD, KAMART, KC, KCM, KDH, KIAT, KKC, KOOL, KTECH, KTIS, KUMWEL, KWM, KYE, LALIN, LEE, LH, LHFG, LOXLEY, LPH, LST, MACO, MAJOR, MANRIN, MATCH, MATI, MAX, M-CHAI, MCS, MDX, MEGA, METCO, MGT, MIDA, MILL, MITSIB, MJD, MK, ML, MM, MODERN, MORE, MPIC, MTC, MVP, NC, NCH, NCL, NDR, NER, NETBAY, NEW, NEWS, NEX, NFC, NOBLE, NPK, NTV, NUSA, NVD, NYT, OHTL, OISHI, OSP, OTO, PACE, PAE, PAF, PERM, PF, PICO, PIMO, PJW, PK, PLE, PMTA, POLAR, POMPUI, PORT, POST, PPM, PPPM, PR9, PRAKIT, PRECHA, PRIME, PRIN, PRO, PROUD, PTL, RAM, RBF, RCI, RCL, RICH, RICHY, RJH, ROCK, ROH, RP, RPC, RPH, RS, RSP, S, S11, SAFARI, SALEE, SAM, SAMART, SAMCO, SAMTEL, SANKO, SAUCE, SAWAD, SAWANG, SCP, SDC, SE, SEAFCO, SEG, SF, SFP, SGF, SIAM, SIMAT, SINGER, SISB, SKE, SKN, SKY, SLP, SMART, SMT, SOLAR, SONIC, SPA, SPCG, SPG, SPORT, SPVI, SQ, SR, SSC, SSP, STAR, STARK, STEC, STHAI, STI, STPI, SUC, SUN, SUPER, SUTHA, SVH, SVOA, SWC, SYMC, T, TACC, TAPAC, TBSP, TC, TCC, TCCC, TCJ, TCMC, TCOAT, TEAM, TEAMG, TGPRO, TH, THAI, THANA, THE, THG, THL, THMUI, TIGER, TITLE, TIW, TK, TKN, TKS, TM, TMI, TMW, TNDT, TNH, TNPC, TOA, TPAC, TPBI, TPCH, TPIPL, TPIPP, TPLAS, TPOLY, TQM, TR, TRC, TRT, TRUBB, TSE, TSF, TSI, TSR, TSTE, TTA, TTI, TTT, TTW, TVT, TWP, TWZ, TYCN, UAC, UMI, UMS, UNIQ, UP, UPA, UPF, UPOIC, UREKA, UT, UTP, UVAN, VARO, VCOM, VI, VIBHA, VL, VNG, VPO, VRANDA, WAVE, WG, WIN, WINNER, WORK, WORLD, WP, WPH, WR, YCI, ZIGA, ZMICO Explanations Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of November 30, 2018) are categorised into: companies that have declared their intention to join CAC, and companies certified by CAC.
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