Keep an eye on KTC in 2019 as the profit could hike by 169% with the target price at THB 45.00
The cooperation between KTB and KTC is a win-win to scoop up the profit. KTB will book two-way profit from both KTC, a subsidiary company, and KTC Nano and Pico, new subsidiary companies. As for KTC, the company will acquire 75% more of its revenue from subsidiary companies while being able to lower the cost from expanding branches through KTB which has more advantage than other competitors. KTB’s profit in 2019 is expected to be at an average of THB 29 billion, increasing 3% from the previous year and KTC’s profit is expected to be THB 6 billion. The target price of KTB is at THB 20.96 and KTC at THB 45.
Mr. Koraphat Vorachet, the director of investment research and investor services division at Capital Nomura Securities, said the case of Krungthai Bank Public Company Limited (KTB) and Krungthai Card Public Company Limited (KTC) which had joined in establishment of two new companies which were KTC Nona Co., Ltd. and KTC Pico (Bangkok) Co., Ltd. will give a positive result and long term profit for both companies. It will be a new channel for the future profit growth.
KTC will gain a huge benefit from this investment such as increasing of the revenue in new subsidiary companies in the position of a major shareholder, holding 75% of shares while supporting by Nano Finance service through Krung Thai Bank branches around the country. In this regard, KTC will get an advantage in terms of the cost that will be cheaper than other competitor and be able to expand the business rapidly. Additionally, KTC has also KTB as a supporter for a lower financial cost.
At the same time, KTB has also gained the benefit for both two ways. Firstly, KTB will receive revenue from KTC due to being a major shareholder (a revenue allocation that increases in the new business Nano and Pico Finance). Secondly, receiving a revenue allocation from holding 25% shares of a new subsidiary company that joined with KTC.
In addition, the consensus shows the average profit of KTB in 2019 at THB 29 billion, increasing 3% from the previous year with a target price of ฿20.96/share while giving the average profit in 2019 of KTC at THB 6 billion.