Stocks in Focus on October 20, 2020: KKP and MEGA

Stocks in Focus on October 20, 2020: KKP (KTB Securities TP at ฿50.00/share) and MEGA (KGI Securities TP at ฿40.00/share).

Kaohoon Online has selected stocks with a high-growth potential for investors to consider on October 20, 2020.

 

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on Kiatnakin Phatra Bank Public Company Limited (KKP) with a target price at ฿50.00/share.

KTBST reiterated a BUY rating on KKP and a target price of Bt50.00, which is based on 2020E PBV of 0.9x, or -1.0 SD below its 10-yr average. KKP announced 3Q20 earnings results that beat Bloomberg consensus and KTBST’s forecast by 27-6% because of a narrower-than-expected loss on car repossession. Net profit declined -16% YoY but rose +14% QoQ as 1) NPL ratio narrowed to 3.2% compared to 3.4% in 2Q20 and 2) provision accelerated +41% YoY, particularly for management overlay which resulted in coverage ratio rising to 153% from 129% in 2Q20. In 4Q20E, KTBST estimated earnings to decline slightly QoQ in expectation of higher loan-loss provision amid profits in the EDT business.

KKPs share price underperformed the SET Index by 2% in three months. KTBST expected KKPs stronger-than-expected 3Q20 earnings results to ease concern over high NPL in HP loans, and its track record of consistently paying high dividend yield of 8% should lend support to the share price. Additionally, the stock currently trades at an attractive PBV of 0.7x, which is -1.5 SD below its 10-yr average.

 

KGI Securities has upgraded Mega Lifesciences Public Company Limited (MEGA) from “Neutral” to “BUY” and revised up the target price from ฿37.00/share to ฿40.00/share.

KGI forecasted MEGA’s 3Q20F core earnings to be Bt307mn (+4.0% YoY, +11.9% QoQ), largely driven by higher branded and distribution revenue. KGI expected the company’s earnings to reach a seasonal peak in 4Q20, on the back of higher branded product sales during the holiday season.

KGI revised up the core earnings estimates by 2.7%-3.4% during 2020-2022, thanks to improved operational efficiency. Based on its earnings revisions and rolling over KGI’s base year to the end of 2021, in which KGI derived a new DCF-based target price of Bt40.00, up from Bt37.00. The latest closing price reflects an undemanding 2021F PER of 20.7x, around -0.75STD below the long-term historical average.