Analysts Expect KPP Loan Portfolio to Benefit from “Honda-Isuzu”, Giving a TP at ฿50

Analysts Expect KPP Loan Portfolio to Benefit from “Honda-Isuzu”, Giving a TP at ฿50

Analyst sees a support on Kiatnakin Bank Public Company Limited (KKP) after partnered with Honda and Isuzu, giving a “BUY” recommendation with a target price at ฿50/share. Foreseeing this partnership could lead loan income to grow by 7%, with an increase in NIM of 0.5% this year, while expecting full-year profit to hit 5.6 billion baht with an outstanding dividend yield of 7%.   


KTB (Thailand) Securities (KTBST) has given a “BUY” recommendation on KKP with a target price at ฿50/share (based on 2020E PBV at 0.9x (-1.0SD below 10-yr average PBV)). KTBST had a negative sentiment toward KPP Board of Directors Meeting as 1) a slightly increase of credit cost, which lower than 2.5% due to assisting customers through relief measures, which could result in lower allowance for expected credit loss among bank sector 2) expecting NIM to surge by 0.5% this year, supported by interest rate downturn and CASA increased 3) expecting loan to grow by 7% YoY due to new customers such as Honda and Isuzu and 4) NPLs will grow at a faster pace in 4Q20 after the debt relief program end, with a charge to rise below 3.9% from 3.4%.


KTBST estimates KKP to post a 2020F core profit of 5.3 billion baht (-12%YoY), credit cost will offset by higher NIM, while expecting 2H20 profit to further contract from a year earlier caused by an increase of allowance for ECL, but would benefit from EDT.


Phillip Securities stated that the loan offer for Honda, Isuzu and used car led KPP loan portfolio to grow, but later could bring a higher NPL. Analyst expects 2020F core profit to hit 5.6 billion baht (+5.9%YoY), giving “BUY” recommendation and maintains its target price at ฿45.50/share.