Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>KTX has revised its outlook on the policy interest rate, anticipating a potential 25 bps cut in 4Q24E, following the sharp appreciation of the baht, while rates are expected to remain steady in 2025E.</li><li>This anticipated cut could negatively impact profit estimates for the banking sector in 2025-26E by approximately 2.1%.</li><li>When valuing bank stocks using the earnings yield method, the advantages of lower interest rates are insufficient to offset the increase in the assumed market risk premium (MRP), as most banks have a high beta. </li></ul>

KTX has revised its outlook on the policy interest rate, anticipating a potential 25 bps cut in 4Q24E, following the sharp appreciation of the baht, while rates are expected to remain steady in 2025E.This anticipated cut could negatively impact profit estimates for the banking sector in 2025-26E by approximately 2.1%.When valuing bank stocks using the earnings yield method, the advantages of lower interest rates are insufficient to offset the increase in the assumed market risk premium (MRP), as most banks have a high beta. 

Banking - Small Banks Likely to Gain from Rate Cuts - October 1, 2024

Equity Bottom-Up

<ul><li>We initiate our coverage on TISCO with a Neutral rating and a 12M FV of Bt98.73, based on the earnings yield and a required return of 8.1%.</li><li>The required return being lower than the dividend yield suggests that the share price may move in the range of Bt90-100/share, as in the past, with the high dividend yield helping to limit the downside risk to the share price.</li><li>Meanwhile, the long-term growth prospects remain weak, unless external supporting factors emerge, such as bond yields or the equity risk premium (ERP).</li></ul>

We initiate our coverage on TISCO with a Neutral rating and a 12M FV of Bt98.73, based on the earnings yield and a required return of 8.1%.The required return being lower than the dividend yield suggests that the share price may move in the range of Bt90-100/share, as in the past, with the high dividend yield helping to limit the downside risk to the share price.Meanwhile, the long-term growth prospects remain weak, unless external supporting factors emerge, such as bond yields or the equity risk premium (ERP).

Tisco Financial Group - Lack of Growth Catalysts but Attractive Dividend

<ul><li>The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.</li><li>Overall, loan growth remained stagnant as banks continued to operate cautiously.</li><li>Meanwhile, net interest margins (NIM) faced pressure, albeit to a lesser extent, from the repricing of fixed deposits. </li></ul>

The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.Overall, loan growth remained stagnant as banks continued to operate cautiously.Meanwhile, net interest margins (NIM) faced pressure, albeit to a lesser extent, from the repricing of fixed deposits. 

Cross Asset Strategy

<ul><li>KTX expects the MPC to maintain the policy interest rate at 2.50% throughout the rest of this year based on the latest resolution of the MPC, with support increasing from 5 to 6 votes to maintain the current rate.</li><li>This interest rate level aligns with the overall economic conditions.</li><li>The Thai economy has shown signs of improvement, particularly in terms of state investment and private consumption.</li></ul>

KTX expects the MPC to maintain the policy interest rate at 2.50% throughout the rest of this year based on the latest resolution of the MPC, with support increasing from 5 to 6 votes to maintain the current rate.This interest rate level aligns with the overall economic conditions.The Thai economy has shown signs of improvement, particularly in terms of state investment and private consumption.

Economic Update: MPC Voted 6:1 to Maintain Rates at 2.50%

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

<ul>
<li>Maintain BUY for TISCO with a target price of Bt108.00. Despite moderate growth, we like its high dividend payment, resilient balance sheet, and higher ROE prospects. TISCO’s net profit came</li>
<li>Analyst meeting We are neutral after attending the analyst meeting on 12 Oct.Loan growth will reach the target of 3-5%YoY in 2022 and likely continue to rise by 5-9%YoY in2023</li>
<li>TISCO continued to focus on its auto title loans and business lending (corporate and SME) charged with floating rates. This was to mitigate the impacts of elevated funding costs.</li>
</ul>


Maintain BUY for TISCO with a target price of Bt108.00. Despite moderate growth, we like its high dividend payment, resilient balance sheet, and higher ROE prospects. TISCO’s net profit came
Analyst meeting We are neutral after attending the analyst meeting on 12 Oct.Loan growth will reach the target of 3-5%YoY in 2022 and likely continue to rise by 5-9%YoY in2023
TISCO continued to focus on its auto title loans and business lending (corporate and SME) charged with floating rates. This was to mitigate the impacts of elevated funding costs.


Thailand

Tisco Financial Group Pcl is a bank holding company.  The Company's banking subsidiary offers working capital, project, term, automobile and home loans; custodian services; securities brokerage; mutual funds; and private banking; and advises on equity and debt capital markets, privatizations, debt restructuring, project finance, and mergers and acquisitions.

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Tisco Financial Group (TISCO TB)

Banking - Small Banks Likely to Gain from Rate Cuts - October 1, 2024

KTX has revised its outlook on the policy interest rate, anticipating a potential 25 bps cut in 4Q24E, following the sharp appreciation of the...

Krungthai XSpring

Tisco Financial Group - Lack of Growth Catalysts but Attractive Dividend

We initiate our coverage on TISCO with a Neutral rating and a 12M FV of Bt98.73, based on the earnings yield and a required return of 8.1%.

Krungthai XSpring

Industry Update - Banking: Jul 23, 2024

The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.

Krungthai XSpring

Economic Update: MPC Voted 6:1 to Maintain Rates at 2.50%

This interest rate level aligns with the overall economic conditions. The Thai economy has shown signs of improvement, particularly in terms of...

Krungthai XSpring

TISCO : The Best Is yet to Come

Maintain BUY for TISCO with a target price of Bt108.00. Despite moderate growth, we like its high dividend payment, resilient balance sheet, and...

Pi Securities PCL, Thailand

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