Date of Report: 30 September 2024
Broker: UOB Kay Hian

Company Overview
Thanachart Capital is a leading financial services company based in Thailand. The company operates primarily through its subsidiaries, offering a wide range of financial services, including banking, leasing, and investment services.

Stock Information

• Share Price (as of report date): Bt51.00
• Target Price: Bt52.00
• Upside Potential: +2.0%
• Bloomberg Ticker: TCAP TB
• Market Cap: Not specified in the report

Key Highlights

• 3Q24 Results Preview: Thanachart Capital is expected to report its highest credit cost for the year in 3Q24, reflecting the challenging economic environment. Despite the increase in credit cost, the company remains cautiously optimistic about its overall financial performance.

Credit Cost Concerns

• Rising Credit Cost: The company anticipates that credit costs will peak in 3Q24. This rise is due to heightened provisioning needs to cover potential credit losses, driven by ongoing economic uncertainties.
• Financial Impact: The increase in credit cost is likely to weigh on the company’s earnings for the quarter, although this is expected to be a temporary issue as the company adjusts its provisions.

Loan Growth and Profitability

• Loan Growth: Loan growth remains stable, supporting the company’s overall performance despite the challenges posed by higher credit costs.
• Profitability: Thanachart Capital’s profitability remains intact, though it will be partially impacted by the elevated credit cost in the near term.

Valuation and Recommendation

• Target Price: Bt52.00, reflecting a conservative outlook based on the anticipated rise in credit costs and economic uncertainties.
• Recommendation: The stock is rated as HOLD, given the expectation of increased credit costs in 3Q24. Investors are advised to adopt a cautious approach until more clarity emerges on the credit cost situation.

Conclusion
Thanachart Capital faces a challenging environment in 3Q24 due to rising credit costs. However, the company’s loan growth and profitability remain stable, providing some cushion against the impact of increased provisions. The stock is recommended as HOLD until further clarity is obtained on the outlook for credit costs and economic conditions.