Negative Sentiment from BFIT’s 1Q Earnings Drags SAWAD Down 4.5%

Srisawad Corporation Public Company Limited (SAWAD) traded lower since the opening on April 22, 2021. The share price dropped ฿4.00/share or 4.53% to ฿84.25/share as of 15:31 local time in Thailand.

 

The decline might be due to negative sentiment in the market, caused by lower-than-expected earnings of its subsidiary, Srisawad Finance Public Company Limited (BFIT), as investors expected loan growth to expand, following the recovery in Thai economy from the coronavirus outbreak.

 

BFIT reported a net profit of 303 million baht in 1Q21, decreased 18.19% from a net profit of 371 million baht in 1Q20, mainly due to a decrease of net interest income by 336.98 million baht, largely from a decline in loans to customers.

 

Earlier, KGI Securities cited the guidance from SAWAD’s management, which indicated the new platform being set up will enable the company to cope with intensifying yield competition and help it improve loan yield.

SAWAD sold its 49% equity stake in subsidiary Ngern-Sod-Tun-Jai to Government Savings Bank (GSB) to form a JV lending platform for GSB’s customer base. The company is likely to book an investment gain of around Bt300mn in 1Q21 and lending on the new platform could begin around 2Q21. The investment gain will boost SAWADs earnings growth around 4% in 2021.

In addition, KGI raised its 2021/2022 earnings forecasts 5% each year and re-rate PE multiple to 20x (up from 18.5x) of 2022F earnings, reaching a new target price of Bt101, from Bt71.00, maintaining a rating of Outperform.