THAILAND EQUITY RESEARCH
Page | 1 | PHILLIP SECURITIES (THAILAND)
Krungthai Card Major revamp on organization and strategy in motion THAILAND | SET | FIN | COMPANY VISIT BLOOMBERG KTC TB l REUTERS KTC.BK Major revamp on organization and business strategy seen in 2016 KTC said the company aims to increase effectiveness, reduce expenses and capture more market share in 2016. To achieve its goals, KTC has laid down huge changes of its organizational structure and business strategy. KTC shifted focus from profitability‐oriented drive to increasing market share, particularly in credit card and personal loan. The company has targeted to maintain its profit at Bt2bn, the same level to last year, while revenue has been forecast to grow y‐y but marketing campaign KTC plans to launch in a bid to increase market share will likely push marketing expense higher. Loan growth target set at high level amid concern over slow economic recovery Despite concern over slow economic recovery and high household debt, KTC set its loan growth target as high as 15% for 2016 as the company intends to increase market share in credit card and to add more retail customers. KTC management is quite optimistic about loan growth, which would exceed its target level after its January loan grew by roughly 15%. Loan‐loss reserve level to cut back as loan‐loss provision is excessively high amid very low NPL Although economic sluggishness pushed the country’s NPL level higher in 2015, KTC in turn registered a decrease in its NPL to 2.1% of total loan (vs 2.4% in 2014). Of notes, KTC said it is very challenging to push NPL further lower, and thus the company has kept its FY16 NPL target at the same level to the prior year. But the company has a plan to cut back is loan‐loss provision level this year since its NPL coverage ration of 400% is deemed excessively high. OPEX cut and loan‐loss provision drawdown as key catalyst to boost profit in 2016 Even though KTC has forecast a flat growth in its 2016 net profit as a portion of revenue, which has been projected to climb, would be used for creating marketing campaigns to grab more market share in credit card and personal loan, we think the company’s plans to cut back operating expense and to lower its loan‐loss provision level should move the needle on profit. We project FY16 net profit to grow 9.9% to Bt2.3bn and an annual dividend is expected at Bt3.60/share vs Bt3.25 KTC declared for 2015 performance—the stock will trade ex‐dividend on February 19. ‘BUY’ rating maintained with target price of Bt106 We keep our target price at Bt106. A decent upside and its bright future prospect which the company compromises its FY16 earnings growth with, are convincing enough KTC deserves a ‘BUY’ rating.
Ref. No.: CO2015_0146
Closing Price(Bt) 86.75Target Price(Bt) 106.00 (+26.34%)
COMPANY DATA
O/S Shares (mn) : 258 Market Cap. (Btmn) :Market Cap. (USDmn) :52‐WK Hi/Lo (Bt) : 111/773M Average Daily T/O (mn) : 0.78Par Value (Bt) : 10.00
MAJOR SHAREHOLDERS (%)
1. Krungthai Bank 49.52. Mr. Mongkol Prakitchaiwattana 8.53. Thai NVDR. Co.LTD. 8.1
PRICE PERFORMANCE (%)
1MTH 3MTH 1YRABS ‐1% ‐17% 15%REL TO SET INDEX 23% 2% 18%
PRICE VS SET INDEX
Source: Bloomberg, PSR
KEY FINANCIALS
FYE Dec FY14 FY15 FY16E FY17ERevenue(Btmn) 12,572 13,938 15,108 15,649Net Profit(Btmn) 1,755 2,073 2,285 2,537EPS (Bt) 6.81 8.04 8.86 9.84P/E (X) 12.7 10.8 9.8 8.8BVPS (Bt) 28.58 33.87 39.04 44.79P/B (X) 3.0 2.6 2.2 1.9DPS (Bt) 2.75 3.25 3.60 3.95Dividend Yield (%) 3.2 3.7 4.1 4.6ROE (%) 26.01 25.75 24.31 23.48Debt/Equity (X) 7.40 6.89 6.57 6.16
Source: Company, PSR Est.**Multiples and yields are based on latest closing price
VALUATION METHOD
P/E'16 (12x)
Adisorn MungparnchonSecurities Investment Analyst # 18577Tel: 66 2 635 1700 # 497
628
03 March 2015
Buy (Maintain)
17 February 2016
22,367
0
50
100
150
Feb‐13 Feb‐14 Feb‐15 Feb‐16
KTC TB EQUITY SETI (rebased)
THAILAND EQUITY RESEARCH
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Corporate Governance ‐2015
ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTCEASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCEKKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPSPS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMART SAMTELSAT SC SCB SCC SE‐ED SIM SNC SPALI THCOM TISCOTKT TMB TOP VGI WACOAL
AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIPASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLABMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNTCOL CPF CPI CSL DCC DELTA DEMCO ECF EE ERWGBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHIINET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBKMC MEGA MFEC NBC NCH NINE NSI NTV OCC OGCOISHI OTO PAP PDI PE PG PJW PM PPP PRPRANDA PREB PT PTG Q‐CON QH RS S & J SABINA SAMCOSCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMTSNP SPI SSF SSI SSSC SST STA STEC SVI SWCSYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANITHIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILLTMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUETSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFPTWS UAC UT UV VNT WAVE WINNER YUASA ZMICO
2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAHAMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTYBEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGDCHG CHOW CI CITY CKP CNS CPALL CPL CSC CSPCSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIREFOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLANDGLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCPITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTISKWC KYE L&E LALIN LHK LIT LIVE LST M MAJORMAKRO MATCH MATI MBKET M‐CHAI MFC MILL MJD MK MODERNMOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYTOCEAN PACE PATO PB PCA PCSGH PDG PF PICO PLPLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCIRCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCNSCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCGSPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEXTAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIWTLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMIUP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WINXO
Score Range
< 50%
50‐59%
60‐69%
70‐79%
80‐89%
90‐100%
The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the public and able to be accessed by a general public investor. The results, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.
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 data. Phil l ip Securities (Thailand) of securities company does not confirm nor certify the accuracy of such survey result.
No logo given
Number of Logo
Results Presentation
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Anti‐corruption indicators
Level 5 (Extended)BCP CPN GYT PE PM PPP PT PTT PTTGC SAT sccTHANI TOP
Level 4 (Certified) DCC DTC DRT EASTW ECL EGCO ERW FSS GCAP HANA HTCINTUCH IRPC IVL KBANK KCE KGI KKP KTB LANNA LHBANK MTINKI PSL PTG PTTEP SABINA SCB SNC SNP SSF SSSC TCAP
THCOM TISCO TMB TMD TNITY TOG
Level 3 (Established)
Level 3A: Declaration to join CAC, etcABC ACAP ADVANC AGE AH AMANAH ANAN AP APCS APURE ASASIA ASIAN ASIMAR BIGC BROOK BTS BWG CEN CENTEL CFRESH CHARANCHO CHOTI CM CNT COL CPF CPI CPL DELTA DEMCO DIMETDNA DTAC EA ECF EE EVER FPI GBX GC GFPT GLOWHMPRO HOTPOT ICC ICHI IFEC INOX INSURE IRC JAS JTS JUBILEKC KTC KYE LHK LPN LRH MAKRO MC MCOT MFC MFECMINT MJD MONO MOONG NBC MSC NDR NINE NMG NSI NTVOGC PACE PCSGH PDI PG PHOL PLAT PPS PR PRANDA PREBPS QLT RATCH RML ROBINS ROJNA RWI SAMCO SCCC SCG SEAOILSE‐ED SENA SINGER SITHAI SMK SMPC SPALI SPC SPCG SPI SRICHASSI STANLY SUPER SVI SYMC SYNEX SYNTEC TASCO TCMC TFI THAITHRE THREL TICON TKT TLUXE TMILL TMT TNL TPCORP TSTE TSTH
TTCL TU TVI UOBKH UREKA VGI VNT WACOAL WHA ZMICO
Level 3B: Organization's statement but no declaration to join CAC, etcAAV AHC AIT AKR ARROW ASK BA BDMS BEC BJCHI BUICGH CHG CHOW CIG CITY CK CKP COLOR CWT EARTH EASONEPG F&D FANCY FIRE FMT FORTH GENCO GL GOLD GPSC GRAMMYHYDRO IRCP IT JCT KCM KWC LH LIT LOXLEY MACO MANRINMATI MODERN MSC NOBLE NOK NPK NUSA OISHI OTO PAF PAPPATO PF PJW PLANB PLE POLAR PRG PTL Q‐CON QTC RCIS11 SALEE SAM SAMART SAMTEL SAPPE SC SCP SFP SIM SLPSMT SPA SPORT SSC SST STEC STPI SUC SUTHA SVI TTBSP TAE TCC TFD TGCI TGPRO THANA THIP TIW TK TMWTNDT TOPP TPC TPCH TPIPL TSR TT TYCN UAC UBIS UECUMI UP UPF UT UV VPO WAVE WINNER YUASA
Level 2 (Declared)2S ABICO AF AKP AMARIN AMATA AOT APCO AYUD BEAUTY BFITBH BKD BLAND BTNC CCP CI CSR CSS EFORL EPCO FEFNS FVC GEL GLOBAL HEMRAJ IEC IFS INET JUTHA KASET KCARKKC KSL L&E LALIN LTX M MALEE MBK MBKET MEGA MKMPG MTLS NCH NCL NPP OCC OCEAN PB PCA PRINC QHROCK RPC S & J SGP SIAM SIS SKR SMG SMIT SORKON SUSCOTAKUNI TEAM TF TIC TIP TIPCO TMC TMI TPP TRT TRUTRUE TSC TSI TTW TVD TVO UKEM UNIQ UWC VNG WIIKWIN XO
Level 1 (Committed)ACD AEONTS AFC AIRA AJ ALUCON AMC AQUA ARIP AUCT BAT‐3KBIG BJC BOL BRR BSBM CBG CCET CCN CGD CMR CPHCSC CSP CTW DCON DRACO DSGT DTCI E EMC ESSO FOCUSFSMART GIFT GLAND GRAND GUNKUL HFT HTECH ILINK ITD JSP IHLKDH KTIS KTP LEE LST MAJOR MAX M‐CHAI MDX MIDA MATCHML MPIC NC NEP NNCL OHTL PICO PK PL PPM NWRPRAKIT PRECHA PRIN PSTC RAM RICH RS SANKO SAUCE SAWAD PYLONSAWANG SCN SEAFCO SHANG SIRI SMART SMM SOLAR SPACK SPG SFSPPT SPVI STAR SVH SVOA SWC TAPAC TC TCCC TCJ STATCOAT TKS TNH TNPC TPA TPAC TPOLY TRC TRUBB TSE TTATTI TTL TTTM TWP TWZ U UMS UPA UPOIC UVAN UTPVARO VI VIBHA VIH VTE WG
Data not available/No policyA ACC AJD AQ BCH BGT BROCK BSM BTC CHUO CRANECPR EIC FER JMART JMT KAMART KBS KIAT LDC MCS METCOMBAX NEW NEWS NYT PAE PDG PERM PMTA RCL RICHY ROHPOST S SIMAT TCB TR TSF TVT
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Anti‐corruption indicators
Level 5 : Extended
Anti‐corruption policies extend to business partners, dealers, and distributors.
Level 4 : Certified
Anti‐corruption policies can be engaged by audit committee and auditors approved by the SEC.
Anti‐corruption policies are certified by CAC and independent assurance providers.
Level 3 : Established
Anti‐corruption corruption policies cover anti‐bribery, and communications and educating all employees anti‐corruption policies.
Level 3A Public out statement to join CAC, etc.
Level 3B Declare statement and organization’s anti‐corruption policies but no intention to join CAC, etc.
Level 2 : Declared
Declare statement to participate CAC against corruption.
Level 1 : Committed
Organization and Board of Directors’ statements against corruption and not getting involve in any malpractices.
AssessmentAnti‐corruption progress indicator for listed companies is a part of SEC’s commitment to create sustainability in anti‐corruption and to become a role model to any
related business. The progress indicators comprise of five levels: 1) Committed, 2) Declared, 3) Established, 4) Certified, and 5) Extended. These indicators will
encourage listed firms to formulate anti‐corruption policies to opt out of corruption, and investors can determine their investment based on anti‐corruption indicator
or avoid investment in listed firms that could get involve in corruption.
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Industry Group Name Sector Name Sector IndexAgro & Food Industry[AGRO] Agribusiness AGRI
Food & Beverage FOODConsumer Products[CONSUMP] Fashion FASHION
Home & Office Products HOMEPersonal Products & Pharmaceuticals PERSON
Financials [FINCIAL] Banking BANKFinance & Securities FINInsurance INSUR
Industrials [INDUS] Automotive AUTOIndustrial Materials & Machinery IMMPackaging PKGPaper & Printing Materials PAPERPetrochemicals & Chemicals PETROSteel STEEL
Property & Construction[PROPCON] Construction Materials CONMATConstruction Services CONS Property Development PROPProperty Fund & REITs PF&REIT
Resources [RESOURC] Energy & Util ities ENERGMining MINE
Services [SERVICE] Commerce COMMMedia & Publishing MEDIAHealth Care Services HELTHTourism & Leisure TOURISMProfessional Services PROFTransportation & Logistics TRANS
Technology [TECH] Electronic Components ETRONInformation & Communication Technology ICT
PSR Rating SystemCapital Gain Recommendation> 15% BUY> 5% ‐ 15% ACCUMULATE / TRADING BUY> 0% ‐ 5% NEUTRAL0 <= SELL
RemarksWe do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors l ike (but not l imited to) a stock's risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation
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