Current Valuation of BAM and CHAYO Brings Upside Gain Potential

Current trading price of BAM at 16.80 THB and CHAYO at 12.10 THB gives room for higher gains with growth in earnings.

Bangkok Commercial Asset Management Public Company Limited (BAM) is reported to see a significant drive in repayment of installments which is to improve the cash collection. The company’s strong pricing strategy as well as with the aid of e-auction of Non-Performing Assets (NPA) is likely to book higher revenue.

The impact on cash collection due to the extended lockdown is expected to be offset by cash collection through an online channel which is in collaboration with Union Auction Public Company Limited (AUCT). Cash collection from Non-Performing Loans (NPL) is expected to grow by 15% YoY and 25% QoQ in the second quarter of the fiscal year according to Kasikorn Securities’s estimates. Cash position would improve further in the second half of 2021 given backlogs of NPLs and NPAs.

According to an analysis of Kasikorn Securities, Chayo Group PCL (CHAYO) is expected to deliver strong growth in earnings among peers in the period 2021-23 with a of CAGR of 31%. Earnings growth is driven by the synergy created by CHAYO JV where CHAYO holds 55% and other notable shareholders include JWD group and COM7. JWD group is interested in investing in real estate which would support core business of NPA sales. Besides, synergy with JWD would facilitate targeting acquisition of large secured NPLs. COM7 which holds a loan business and could strategically support CHAYO to explore future business prospects. Moreover, cash collection has been relatively stable compared to previous year, according to the management.

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