Analyst Recomm. “BUY” on KTC with TP of ฿90 in Expectation of Economic Recovery in 2022

KTBST Securities (KTBST) holds a BUY rating on KTC with a target price of 90.00 baht, in expectation of economic recovery in 2022, stronger credit card spending and lower NPLs alongside higher secured loans.

Krungthai Card Public Company Limited (KTC) reported a net profit of 1,679 million baht in 2Q21, an increase of 46.19% from the same period of last year, which was in line with the market forecast. 

KTC’s overall performance in the second quarter was comparable to the previous year, with total revenue of 5,406 million baht. While the quarter’s net profit was 1,679 million baht. Due to the provision reduction and a decrease in total operating expenses, which was consistent with a decrease in finance costs.

Total loans to customers and accrued interest receivable were 89,444 million baht, grew by 7.1% YoY, mainly from credit card receivable of 4.6% YoY and increased from KTBL receivable worth 4,255 million baht which was included in this quarter. The personal loan receivable decreased slightly by -2.5% YoY.

For the first six months of 2021, KTC had total revenue of 10,798 million baht, decreased by -2.5% YoY, due to lower finance expenses and no additional provision set up.

KTBST Securities (KTBST) holds a BUY rating on KTC with a target price of 90.00 baht, which is pegged to 2022 PBV of 7.4x, or +3 SD above its 3-year average, maintaining 2021/2022 net profit forecast at 6.38 billion baht (+20% YoY)/7.44 billion baht (+17%). 

Total loan is predicted to grow +8% each given its lending ecosystem with KTBL to introduce loan products in 3Q21. Credit cost is forecasted to decrease to 606/455 bps in expectation of lower NPL alongside higher secured loans. 

KTC’s stock price gained 5% over the past month, outperforming the SET Index 8%. KTBST sees the stock rising further as 1) 2022 earnings are projected to grow at a rapid pace in expectation of higher secured loans and stronger credit spending along with an increasing threshold of COVID-19 vaccinations, 2) EPS is estimated to increase 18% CAGR in 2020-22 on the back of the digital lending ecosystem in the aftermath of eMoney license, and 3) the stock currently trades at an undemanding 2022E PBV of 5.8x, or +1 SD.

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