Analyst Expects SINGER to Maintain Record Earnings in 2Q, Recomm. “BUY” with TP of ฿50

Maybank Kim Eng (Maybank) has given a “BUY” recommendation on Singer Thailand Public Company Limited (SINGER) with a target price of 50.00 baht per share. Maybank believes, after hitting a new record profit in 1Q21, SINGER will repeat it in 2Q21 due to the peak season of hire purchase business driven by the growth of the community sector that saw limited impact by the 3rd wave of outbreaks. In addition, the auto title loan business portfolio is likely to continue to grow as planned. Despite being pressured by many  factors, Maybank still believes SINGER’s fundamentals and competitiveness remain intact. Also, earnings outlook in the next 2 years remains strong with an average growth of 42%, above the sector. 

Maybank estimated the net profit to grow by +30%QoQ and +60%YoY to about 180 million baht, thanks to i) hire purchase business with sales growth of+20%YoY.  Air conditioners (household) and refrigerators (shops) are still the main products in the summer. Given the franchise base that has doubled YoY, the local economy is still stronger than the city, supporting both renewed government aid policies, repatriated labour and sustained high agricultural product prices, these are positive to stable demand and debtor quality. ii) Auto  title loan  business (C4C) sees loan portfolio growth of +15% QoQ to HB4.6b, still as planned. Bad debt is flat QoQ.1H21 earnings forecast is 49% of the target, still within the range of estimates.

Although the market is concerned about the auto title loan business, which is heavily pressured, SINGER will be less affected than others due to i) government policies focusing on helping small-scale customers (B2C), especially motorcycles, which the Company does not have such type of customer base. ii) Interest rate declines. The company currently charges an average interest rate of 15.4%, lower than the industry (18-22%), consequently, the downside is limited. iii) Competition will not intensify as market players remain the same. There is room for more credit growth with a current customer base of only a thousand motorcycles vs the pickup truck-truck market registered more than a million vehicles. Its C4C portfolio was worth only 4 billion baht in 1Q21 vs the market leader at 50-60 billion baht.

As SINGER will continue to produce impressive growth, Maybank reiterated “BUY” rating. The yearly profit in 2021-22 is expected to be 650 million baht and 892 million baht, representing an average growth rate (CAGR) of 42% per year. There are some positive factors awaiting in 2H21. i) The possibility of being included in the SET100 index around mid-year, and ii) unlocking the value of SG Capital (a subsidiary holding a loan portfolio) expected to be listed on the market next year.