Analyst Upgrades AEONTS’s TP to ฿275 in Light of 17% Earnings Growth in 1Q21

KTBST Securities (KTBST) upgraded a rating on Aeon Thana Sinsap (Thailand) Public Company Limited (AEONTS) from HOLD to “BUY” and revised up a target price to ฿275.00/share (previously ฿225.00/share) after re-rating P/BV to reflect a chance for providing lending services through digital platform and earnings growth outlook this year.

 

1Q21 (Dec 2020-Feb 2021) net profit (excluding revenue from bad debt recovery) is estimated to grow 17% YoY and 15% QoQ to 874 million baht from lower operating and administrative expenses and a 10% expected credit loss drop YoY.

 

Maintaining a FY2022E forecast of 4.05 billion baht (+29% YoY) vs. a previous projection of -9% YoY, in expectation of 1) loan income would expand 6% YoY as economy keeps improving, 2) lending services through digital platform is scheduled to launch in the midyear, 3) an efficiently control the operation cost, 4) lower expected credit loss as management overlay has not carry out, and 5) AEONTS’s share price outperformed the SET Index by 9% in 3 months in light of positive operation result prospect. 

 

KTBST believed a joint venture for digital lending service that collaborating with VGI and HUMAN, which is expected to launch in mid-year, would drive AEONTS’s ROAE to 20.8% from 17.5%, and also foresaw that there would be a limited risk from Myanmar political tension.