Stocks in Focus on February 14, 2020: KTC and CBG

Stocks in Focus on February 14, 2020: KTC (KGI Securities TP at ฿48.00/share) and CBG (Maybank Kim Eng TP at ฿102.00/share).

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

 

KGI Securities has upgraded Krungthai Card Public Company Limited (KTC) rating from Underperform to “Outperform” and a target price from ฿36.00/share to ฿48.00/share.

KGI states that changing to accounting standards under TFRS 9 provides more earnings upside to KTC than downside. On the negative side, TFRS 9 does not allow the company to aggressively write-off NPLs so its NPL ratio should gradually rise from 1% in 2019 to around 7.2% at the end of 2020, and its NPL coverage should decline from 620% in 2019 to around 200% at the end of the year. On the positive side, KTC will not have to set aside huge provisioning expenses and can realize additional non-cash revenue from NPLs.

In addition, past bad debt write-off of around Bt18-20bn (recovery rate 50%) will provide income of around Bt3-3.5bn/yr from bad debt recovery over the next three years. At this level, KGI cuts LLP to Bt5.1bn/Bt4.1bn in 2020/2021 (down from Bt6bn/Bt6.2bn), boosting earnings 12%/18%.

 

Maybank Kim Eng has given a recommendation on Carabao Group Public Company Limited (CBG) with a target price at ฿102.00/share.

Maybank states that CBG is a safe stock from coronavirus with only 3% of its total exports to China. The share is expected to book higher profit due to its low costs, resulting in an estimate of 7% increase in 4Q19 QoQ and 48% increase YoY. Moreover, CBG’s 2019 net profit is expected to grow 17% YoY.