Stocks in Focus on October 10, 2019: CKP and KBANK

Stocks in Focus on October 10, 2019: CKP (KTB Securities TP ฿6.50/share) and KBANK (KGI Securities TP ฿213.00/share).

Kaohoon Online has selected two stocks with a potential of high growth for investors to consider on October 10, 2019.

 

KTBST – CKP

KTB Securities (Thailand) (KTBST) has raised its rating on CK Power Public Company Limited (CKP) from HOLD to BUY while maintained DCF-based target price at Bt6.50 (WACC of 5.7%, terminal growth of 0%), as CKP’s 2020E earnings are expected to rebound sharply after its Xayaburi hydropower plant project’s COD has been intact, while the share price already reflected an impact from drought conditions following a sharp drawdown over the past three months.

KTBST forecasts 3Q19E core profit to drop -87% YoY, -49% QoQ to Bt53bn as NN2’s electricity output may decrease -74% YoY, -47% QoQ due to drought condition. Such a disappointing outlook would translate to a 55% downside to our full-year core profit forecast.

In this regards, KTBST views the current share price as an opportunity to increase position in CKP after the stock has slumped 20% over the past three months, which we believe already reflected drought condition, as Xayaburi project is likely to begin COD as scheduled, which would boost CKP’s total capacity by +111% YoY in 2020.

KGI – KBANK

KGI Securities (KGI) has stated that Kasikornbank Public Company Limited (KBANK) faces several uncertain factors, i.e. lower GDP growth, new NPL inflow from the weakening economy, upcoming interest rate cut impacting interest income, growing modified loans under a new definition of TFRS9, and fee income reduction. These factors do not favor the bank’s share price recovering and would put pressure on the price. Beyond that, KGI thinks KBANK’s current excess reserve is large enough for maintaining asset quality and avoiding volatility.

 

The direction of next year’s credit cost, stabilized asset quality, and clear interest rate direction will provide recovery. With an undemanding valuation, KGI maintains a rating of Outperform with a target price of Bt213.00.