KTBST Securities (KTBST) reiterated a “BUY” rating on Singer Thailand Public Company Limited (SINGER) but raise the target price to ฿40.00/share (from ฿30.00) and 2021E PBV multiples to 5.4x (+3 SD above its 10-yr average), which is equivalent to 2021E PER of 28.0x (+1.5 SD) and PEG of 1.0x (EPS growth estimate at 26% CAGR in 2020-22E), from 2021E PBV 4.8x (+2.5 SD) following its earnings forecast upgrade to reflect stronger-than-expected loan and lower-than-expected total loan.
SINGER reported 4Q20 earnings results were in line with the Bloomberg consensus forecast. Net profit grew +198% YoY, +6% QoQ to 124 million baht on the back of higher revenue from sales and wider gross profit margin. Total loan jumped +83% YoY, which significantly exceeded our growth estimate of +65% YoY. NPL ratio narrowed to 4.4%, better than KTBST forecast of 4.9%. KTBST raised the 2021-22E net profit forecast by 10%/4% to 637 million baht (+44%)/ 802 million baht (+26%), as it revised up the total loan growth estimate while cutting NPL ratio and credit cost forecast.
The share price of SINGER gained in three and six months and thereby outperformed the SET Index by 83%/112% in response to strong earnings optimism. KTBST saw room for SINGER’s C4C loan to grow further in the foreseeable future given its share of just 0.2% in the market, while the company has an extensive network of 180 branches across the country. Additionally, NPL ratio has remained at a low level. SINGER announces a dividend of ฿0.15/share for 2020 performance. The stock will trade ex-dividend on April 30.