It’s a Trap! A Profit Trap of TISCO!

Tisco Financial Group Public Company (TISCO) is the first Thai financial institution to report 2019 performance, with the net profit 7,270 million baht, increased 254.54 million baht or 3.6%, from 7,015 million baht in the year earlier.

It’s a good performance at first grant, but when looking into each kind of profit, it significantly decreases.

 

Starting with interest rate profit, it lowered by 1.8% to 12,389 million baht, with an interest rate revenue of 17,478 million baht, decreased by 1.2%. Moreover, interest rate expense was up by 0.3% to 5,088 million baht

For non-interest rate revenue, it decreased by 10.4% to 6,643 million baht, resulting in the lack of investment profit like in 2018

At the same time, fee revenue from commercial bank unit decreased by 0.7% to 4.407 million baht because credit related fee income lowered. Revenue for security brokerage decreased by 13.9% to 718 million baht and profit from investments also lowered by 103.5%. Meanwhile, operating costs increased by 5.9% to 9,270 million baht.

 

Those aforementioned figures have highlighted that the company’s operation doesn’t perform quite well!

 

There are only two parts that post an increase. Fee and service revenues increased by 1.5% to 6,185 million baht, while insurance brokerage revenue increased by 9.5%.

However, the bottom line of TISCO still grew well. The allowance for doubtful accounts decreased to 705 million baht from 2,701 million baht in 2019.

 

It can be said that the shown profit figures maybe just an illusion because they aren’t from a normal operation which reflects that TISCO is still in a profit trap..!

Analysts expected that TISCO will report a net profit of 2019 at 7,300 million baht, 0.2% upper, compared to a year earlier due to more expense and lower fee revenue. They recommended to accumulate, with the targeted price at 103.5 baht.

 

Whether it’s because of the delusional profit or not, TISCO’s share price slid to close at 101.50 baht on Wednesday, lower 1 baht or 0.98%, with 441 million baht turnover.

 

However,TISCO is still a high yield dividend share at 6.8% per year so it’s not too bad for long term investors to bet for . But don’t dare to speculate it. It’s not worth.