Stocks in Focus on January 14, 2020: RS and MTC

Stocks in Focus on January 14, 2020: RS (KTB Securities at ฿17.00/share) and MTC (KTB Securities TP at ฿68.00/share).

Kaohoon Online has selected stocks with a potential of high growth for investors to consider on January 14, 2020.

 

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on RS Public Company Limited (RS) with a target price at ฿17.00/share.

KTBST states that it has a slightly positive view of RS’s 2020E earnings, which has been forecasted to grow significantly +52% YoY to Bt636mn. KTBST projects MPC revenue to increase +22% YoY to Bt2.5bn on the back of an increase in distributing channels and the launch of new products.

The ad media revenue is expected to improve +13% YoY, and RS would book a gain of Bt148mn from the government’s remedy measure on digital TV. An upside to its 2020E earnings forecasts were due to 1) RS’s revenue contribution forecast of Bt500mn from WPTV, 2) any partnership with a new digital TV channel, and 3) synergy benefit from BTS Group.

KTBST believes the share price that slumped 22% in three months has already priced in RS’s weak 2019E earnings outlook, thus, KTBST expects a strong earnings improvement in 2020 to lend support to the share price. Additionally, the stock’s valuation looks attractive, trading at 2020E PER of 18.3x, which is well below an average level of 24.5x in the commerce sector and 23.1x in the media sector.

 

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on Muangthai Capital Public Company Limited (MTC) with a target price at ฿68.00/share.

KTNST states that it has a slightly positive view toward MTC’s 2020E earnings performance. Based on the company’s target of the opening of 600 branches and the estimated budget of Bt120mn, which translates to Bt0.2mn per branch, KTBST believes MTC will open a small-sized branch, for which the payback period is normally one year. In 2019, MTC added 828 branches to a total of 4,107 at YE2019.

As for the forecast in 2020E, MTC’s net profit is expected to grow +28% to Bt5.6bn, assuming that 1) total loan will increase +13.5%, 2) NPL ratio will remain at a low of 1.2% as KTBST expects MTC to pursue its strict measure on personal loan and nano finance, and 3) coverage ratio will remain above 271%, which is more than enough to meet the TFRS 9 standard, thereby resulting in low loan-loss provision and thus a mere credit cost of 1.2%.

KTBST projects MTC’s long-term earnings to remain strong with a growth of +23% CAGR in 2018-20E and ROAE to stay above 30% over the next three years. Additionally, a downward interest rate era and an upgrading of credit rating to BBB+ in 2019 by Tris Rating Thailand would encourage MTC to issue debentures in order to benefit from a lower cost of funds.

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