Analyst Recommends “BUY” KBANK at TP ฿240, Expecting 2H19 to Rise from Retail Loan Growth

As of 15.05 local time in Thailand, the share price of Kasikornbank Public Company Limited (KBANK) was at THB179.0/share, dropped THB1.00 or 0.56%. During the session, the highest of KBANK’s share price was THB180.50/share and lowest was 178.50/share with a trading value of THB1,088 million.

Asia Wealth Securities (AWS) stated that the 1H19 figures are in line with AWS’s target. KBANK reported a net profit of 2Q19 at THB 9.9 billion, down 9.0%YoY, since non-interest income has reduced by 16.0%YoY, dragged by insurance premium earning and trading income. Meanwhile, net profit of 2Q19 was down by1.2%QoQ due to non-interest expense increased by 10.8%, mainly from the increase in provision, even though operating income was up by 5.1%QoQ.

Loan grew on a QoQ basis, hoping the year 2019 reaches KBANK’s target. Loans at the end of 2Q19 grew by 5.2%YoY and 1.0%QoQ, mainly from the high growth in housing loans and commercial loans. Meanwhile, KBANK remains its target at 5-7% following the economic conditions that are expected to recover in 2H19, especially retail loans through the Digital Platform. The net interest margin (NIM) was at 3.3%, stable from that of 1Q19 and in line with KBANK’s target of 3.3-3.5%.

The NPL Ratio as of 2Q19 leveled up to 3.4% when compared with at the end of 2018 of 3.3%. This was in line with the company’s intention to manage its bad debts instead of selling them. Even though Coverage Ratio decreased to 158.0% compared to 160.0% at the end of 2018, that ratio still considered to be a good level.

AWS is reiterating BUY rating with a target price of THB240.0/share based on a 1.4x PBV. AWS estimate the 2H19 earnings to be improved, supported by retail loan growth. AWS maintains the FY2019 net profit forecast of THB 39.0 billion with the loan growth assumption of 7.0%, NIM at 3.41%, and credit costs at 165 bps.
Moreover, KGI Securities (KGI), CGS-CIMB Securities (CGS-CIMB), and Kingsford Securities recommended “BUY” KBANK share with the target price of ฿213.0, ฿211.0, and ฿206.0, respectively per share.