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.