Analysts Rate “BUY” on SAWAD over Its Potential to Maintain Growth amid Economic Slowdown

Analysts have given Srisawad Corporation Public Company Limited (SAWAD) a “BUY” recommendation since it is one of those companies that can generate a healthy profit and maintain growth amid the economic slowdown.

They believe the partnership with Government Savings Bank (GSB) will accelerate the loan portfolio growth. Additionally, financial risks have been minimized because SAWAD derives support from GSB’s low cost of capital. Meanwhile, SAWAD has benefited from GSB’s sizable customer base and nationwide branch network. 

Analysts also predicted that SAWAD’s operational outcomes will strengthen if a significant portion of a population received the Covid-19 vaccine until herd immunity is achieved.

KGI Securities (KGI) said SAWAD has reported 1Q21 earnings of 1.4 billion baht (+5% QoQ and 32% YoY), higher consensus estimate by 8%/5%. SAWAD removed a loan under subsidiary (Fast  Money) of around 7 billion baht out of booked after reducing equity stake to 49% in order to partner with GBS. Furthermore, the company acquired a new subsidiary, S Leasing, for doing leasing business. These moves changed many accounting items; loan to portfolio reduction, gain on investment, and loan subsidiary. KGI thinks these strategic moves reflect its attempt to balance loan mix and profitability under industry landscape change and the situation should be more balanced in 2Q21. KGI maintained Outperform rating with TP-22F of ฿101.00 per share (PE  20x).

Asia Plus Securities (ASPS) stated that SAWAD’s 1Q21 net profit has grown as expected due to reversal of debt provision. 2021 net profit is expected to grow 23% thanks to branch expansion and loan growth. SAWAD fell  22% in one month, already absorbing fierce competition. Thus maintaining a “BUY” recommendation with a target price of ฿95.00 per share.

ASPS maintained forecast. 2021 net profit is estimated to grow 23.0% YoY thanks to branch  expansion and new motorcycle loans. 

KTBST Securities (KTBST) believed SAWAD’s share price had previously dropped because of concerns about lower interest income. Currently, such issues are dwindling. This was due to the stringent lending conditions from Fast Money Co., Ltd.’s (Fast Money: FM) special interest rate, and the interest income can be changed automatically if the debtor fails to meet the criteria.

The company targeted 20% loan growth, despite the fact that 1Q21 results were flat compared to 1Q20 and 4Q20. The company intended to expand its personal lending portfolio, as well as introduce a new motorcycle hire purchase loan.

Phillip Securities said collaborating with Government Savings Bank enables SAWAD loans to flourish and finance costs to be minimized. SAWAD could extend its customer base by leveraging GSB’s national network of over 1,000 branches.

 

Other securities	Recommendation	Target Price
KTBST	BUY	฿85.00
Phillip (Thailand)	BUY	฿85.00
Asia Wealth	BUY	฿83.00
Land and House	BUY	฿80.00