Analysts Are Positive on SAWAD-GSB Partnership, Raising TP to ฿68 with “BUY” Rating

Analysts recommended “BUY” on SAWAD at a target price of ฿68.00/share as the executives vowed to advance aggressively in motorcycle-title loan business “Fast Money” in 2021, expecting to set a new loan budget at 20 billion baht through more than 6,000 branches of the Government Saving Bank and Sri Sawad.

 

KTB Securities (Thailand) (KTBST) has a positive view toward Srisawad Corporation Public Company Limited (SAWAD) as its “Fast Money” subsidiary will partner with the Government Saving Bank to introduce motorcycle and vehicle loans in 1Q21E, raising target price to Bt67.00 from Bt66.00. Overall, SAWAD’s total loan continued to grow despite the deteriorated economy and the moratorium accounts have resumed their payment routines.

 

Fast Money targets 2021 total loan of Bt20bn. Fast Money’s financial covenant is 7.0x, while the company’s liabilities are currently Bt6.0bn, including motorcycle and unsecured loans that will gradually reach their maturities.

 

In 2021E, KTBST raise SAWAD’s net profit forecast by 3% to Bt5.14bn, which indicate a rise of +15%, as 1) revise up our loan growth estimate to +25% from +19% in expectation of an additional loan of Bt3.4bn from Fast Money (a similar level to MTC’s additional motorcycle loan of Bt3.5bn per year), which should boost net profit by Bt106mn, 2) raise other revenue estimate by 16% in expectation of higher fee income from insurance products along with loan growth, and 3) cut our loan spread assumption to 15.2% from 15.8% given a potential increase in low-yield loan proportion amid a lower financial cost.

 

KGI Securities (Thailand) (KGI) is also positive about SAWAD-GSB advanced auto-title loans business as it could support a long-term sustainable growth for SAWAD, upgrading  2021E forecast by 12%. KGI raised a rating to BUY on SAWAD with a new target price of Bt68.00 (from BT49.00).

 

In 2021E, KGI assessed motorcycle loans to stand at Bt10bn, while other loans will grow by 7%, driving SAWAD’s overall loans up 32%.