THAILAND EQUITY RESEARCH 

 

Page | 1 | PHILLIP SECURITIES (THAILAND)  

Kiatnakin Bank 

4QFY15 profit above forecast  

THAILAND | SET | BANK | COMPANY RESULTS BLOOMBERG KKP TB l REUTERS KKP.BK 

4QFY15 profit of Bt980mn, up 123.6% y‐y and 6.2% q‐q, trouncing forecasts   KKP posted an earnings beat in 4QFY15 on better‐than‐expected interest income and smaller‐than‐expected loan loss provisions. The quarterly profit clocked in at Bt980mn, up a spectacular 123.6% y‐y and 6.2% q‐q. On a y‐y basis, burgeoning interest income, the absence of losses on repossessed cars and a notable drop in loan‐loss provisions were chiefly credited to the stellar profit growth. On the other hand, the profit rise in q‐q terms was largely attributed to higher interest and non‐interest incomes as well as declining loan loss provisions.   For the whole of FY15, net profit jumped 25.8% y‐y to Bt3.3bn. Even though FY15 loan loss provisions remained  high  on  par with  FY14  at  Bt3.2bn  and  interest  income  dwindled  in  the  face  of  loan shrinkage, a dramatic  fall  in  the cost of  funds and narrowing  losses on repossessed cars however allowed KKP to deliver healthy earnings growth in FY15.   4QFY15 loans on steady rise while NPLs down substantially  KKP saw a big drop in NPLs in 4QFY15. Its NPLs slipped to a mere 5.8% of total loans in 4QFY15 from 6.6%  in  3QFY15  due  largely  to  repayments  of  real  estate  development  loans while  gross  loans continued to keep rising. KKP reported sequential loan growth of 0.8% q‐q in 4QFY15, bringing the pace of its full‐year loan contraction down to 4% from 4.8% in the prior quarter. Even though its loan loss provisions declined  to only Bt824mn  in 4QFY15  from Bt941mn  in  the prior quarter,  its NPL coverage ratio however edged sharply higher to 91.7%  in 4QFY15 from 79.7%  in the prior quarter thanks chiefly to a substantial decline in NPLs.   Loan repayments push NIM unusually higher in 4QFY15 Loan repayments by its NPL clients not only sent interest income higher but also pushed loan yields unusually higher in 4QFY15. KKP reported its loan yields rose to 7% in 4QFY15 from 6.9% in the prior quarter. Surging loan yields aside, KKP also succeeded in bringing the cost of funds lower to 2.7% in 4QFY15  from  2.8%  in  the  previous  quarter.  In  sum,  its  net  interest margins  (NIM)  accordingly widened to 4.8% in 4QFY15 from 4.6% in the prior quarter.   FY16 profit view unchanged at Bt3.6bn, up 8.2% y‐y  We leave our FY16 net profit outlook for KKP unchanged at Bt3.6bn, up 8.2% y‐y. In our view, (i) the prospect of a pickup  in hire purchase  loans,  (ii)  the efforts  to bring  in new  clients  in commercial lending business, taking advantage of Phatra’s expertise and (iii) a likely decline in loan loss provisions on the back of improving NPL situation would be key drivers of growth for KKP in FY16. Our forecast also puts its FY16 dividend at Bt2.15/share, up from Bt2/share in FY15.   ‘SELL’ rating with Bt35/share target price  Notwithstanding the fact that FY16 is expected to be a year of recovery for KKP on the prospect of a revival in loan growth and an improving trend in NPLs, we still reiterate a ‘SELL’ call on KKP shares as our FY16 target price of Bt35/share currently offers no upside from current trading levels.      

            

Ref. No.: CO2015_0044   

Closing Price(Bt) 37.75

Target Price(Bt) 35.00 (‐1.59%)

COMPANY DATA

O/S Shares (mn) : 847          

Market Cap. (Btmn) :

Market Cap. (USDmn) :

52‐WK Hi/Lo (Bt) : 41/29.5

3M Average Daily T/O (mn) : 0.90

Par Value (Bt) : 10.00

MAJOR SHAREHOLDERS (%)

1. CREDIT SUISSE AG, HONG KONG BRANCH 8.5

2. CHASE NOMINEES LIMITED 7.3

3. Thai NVDR Co.LTD. 5.9

PRICE PERFORMANCE (%)

1MTH 3MTH 1YR

ABS 9% 16% 2%

REL TO SET INDEX 38% 46% 7%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY14 FY15 FY16E FY17E

Revenue(Btmn) 12,490 14,676 14,882 15,753

Net Profit(Btmn) 2,636 3,317 3,589 3,667

EPS (Bt) 3.13 3.92 4.28 4.37

P/E (X) 12.1 9.6 8.8 8.6

BVPS (Bt) 42.77 44.79 47.38 49.65

P/B (X) 0.9 0.8 0.8 0.8

DPS (Bt) 1.60 2.00 2.15 2.20

Dividend Yield (%) 4.2 5.3 5.7 5.8

ROE  (%) 7.39 8.92 9.19 8.97

Debt/Equity (X) 6.64 6.18 6.12 6.07

Source: Company, PSR Est.

**Multiples and yields are based on latest closing price

VALUATION METHOD

P/B'16 (0.8x)

Adisorn Mungparnchon

Securities Investment Analyst # 18577

Tel: 66 2 635 1700 # 497

881                                                         

11 September 2015

Sell (Maintain)

20 January 2016

31,965                                                  

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KKP TB EQUITY SETI (rebased)

THAILAND EQUITY RESEARCH 

 

 

PHILLIP SECURITIESS (THAILAND) | 2 | P a g e   

Kiatnakin Bank COMPANY RESULTS

Income Statement

Btmn 4Q15 3Q15 4Q14 q‐q+/‐ y‐y+/‐ 2015 2014 y‐y+/‐Interest income 3,743 3,736 4,016 0% ‐7% 14,776 15,942 ‐7%Interest expense ‐1,174 ‐1,260 ‐1,634 7% 28% ‐5,328 ‐7,016 24%Net interest incom e 2,569 2,476 2,382 4% 8% 9,449 8,926 6%Fees and service income 1,079 955 963 13% 12% 3,934 3,863 2%Fees and service expenses ‐126 ‐130 ‐102 3% ‐23% ‐463 ‐411 ‐13%Net fees and service incom e 953 825 861 15% 11% 3,471 3,452 1%Other non-interest income 698 541 241 29% 189% 1,756 112 n.m.Total Incom e 4,220 3,842 3,484 10% 21% 14,676 12,490 18%Operating expense 2,319 1,696 1,539 37% 51% 7,441 6,285 18%Pre provioning profit 1,901 2,146 1,945 ‐11% ‐2% 7,235 6,205 17%Impairment loss of loans and debt securities ‐824 ‐941 ‐1,525 12% 46% ‐3,208 ‐3,199 0%Profit from operating before incom e tax expense 1,077 1,205 420 ‐11% 157% 4,027 3,006 34%Taxation ‐26 ‐264 8 90% ‐417% ‐602 ‐353 ‐70%Minority 70 17 ‐11 319% 750% 108 17 536%

Net profit  980 923 439 6% 124% 3,317 2,636 26%

EPS  (Bt) 1.16 1.09 0.52 6% 123% 3.92 3.14 25%

Key Financial Ratio

% 4Q15 3Q15 4Q14 q‐q+/‐ y‐y+/‐ 2015 2014 y‐y+/‐

Yie ld  on  Ea rning As se t 7.00% 6.88% 6.87% 2% 2% 6.82% 7.07% ‐4%

Cos t of Fund 2.65% 2.80% 3.29% ‐5% ‐19% 2.96% 3.69% ‐20%

Spread 4.79% 4.50% 4.00% 6% 20% 4.09% 3.66% 12%

NIM 4.80% 4.56% 4.07% 5% 18% 4.36% 3.96% 10%

NPL 5.80% 6.60% 5.60% ‐12% 4% 5.80% 5.60% 4%

Balance Sheet 

Btmn 4Q15 3Q15 4Q14 q‐q+/‐ y‐y+/‐ 2015 2014 y‐y+/‐

As se ts 236,144 239,140 240,407 ‐1% ‐2% 236,144 240,407 ‐2%

Liabi l i ti e s 197,988 201,984 204,212 ‐2% ‐3% 197,988 204,212 ‐3%

Pa id ‐up  (mn  s hrs ) ‐ Pa r Bt10 847 847 843 0% 0% 847 843 0%

Equi ti e s 38,156 37,156 36,195 3% 5% 38,156 36,195 5%

BVPS  (Bt) 45.06 43.88 42.94 3% 5% 45.06 42.94 5%

Loan/depos i t (%) 188% 176% 155% 7% 22% 188% 155% 22%

THAILAND EQUITY RESEARCH 

 

 

PHILLIP SECURITIESS (THAILAND) | 3 | P a g e   

Corporate Governance ‐2015

ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTC

EASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCE

KKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPS

PS PSL PTT PTTEP PTTGC  QTC RATCH ROBINS SAMART SAMTEL

SAT SC SCB SCC SE‐ED SIM SNC SPALI THCOM TISCO

TKT TMB TOP VGI WACOAL

AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIP

ASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLA

BMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNT

COL CPF CPI CSL DCC DELTA DEMCO ECF EE ERW

GBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHI

INET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBK

MC MEGA MFEC NBC NCH NINE NSI NTV OCC OGC

OISHI OTO PAP PDI PE PG PJW PM PPP PR

PRANDA PREB PT PTG Q‐CON QH RS S & J SABINA SAMCO

SCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMT

SNP SPI SSF SSI SSSC SST STA STEC SVI SWC

SYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANI

THIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILL

TMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUE

TSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFP

TWS UAC UT UV VNT WAVE WINNER YUASA ZMICO

2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAH

AMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTY

BEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGD

CHG CHOW CI CITY CKP CNS CPALL CPL CSC CSP

CSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIRE

FOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLAND

GLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCP

ITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTIS

KWC KYE L&E LALIN LHK LIT LIVE LST M MAJOR

MAKRO MATCH MATI MBKET M‐CHAI MFC MILL MJD MK MODERN

MOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYT

OCEAN PACE PATO PB PCA PCSGH PDG PF PICO PL

PLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCI

RCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCN

SCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCG

SPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEX

TAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIW

TLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMI

UP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WIN

XO

Score Range

< 50%

50‐59%

60‐69%

70‐79%

80‐89%

90‐100%

The disclosure of the survey result of the Thai  Institute of Directors  Association (IOD) 

regarding corporate governance is  made pursuant to the Office of the Securities  and 

Exchange Commission. The survey of the IOD is  based on the information of a  company 

l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the 

public and able to be accessed by a  general  public investor. The results, therefore, is  from 

the perspective of a  third party. It is  not an evaluation of operation and is  not based on 

inside information.

The survey result is  as  of the date appearing in the Corporate Governance Report of Thai  

Listed Companies. As  a  result, the survey result may be changed after that data. Phil l ip 

Securities  (Thailand) of securities  company does  not confirm nor certify the accuracy of 

such survey result.

No logo given

Number of Logo

Results Presentation

THAILAND EQUITY RESEARCH 

 

 

PHILLIP SECURITIESS (THAILAND) | 4 | P a g e   

Industry Group Name Sector Name Sector Index

Agro & Food Industry[AGRO]  Agribusiness AGRI

Food & Beverage FOOD

Consumer Products[CONSUMP] Fashion FASHION

Home & Office Products HOME

Personal  Products  & Pharmaceuticals PERSON

Financials  [FINCIAL] Banking BANK

Finance & Securities FIN

Insurance INSUR

Industrials  [INDUS] Automotive AUTO

Industrial  Materials  & Machinery IMM

Packaging PKG

Paper & Printing Materials PAPER

Petrochemicals  & Chemicals PETRO

Steel STEEL

Property & Construction[PROPCON] Construction Materials CONMAT

Construction Services CONS 

Property Development PROP

Property Fund & REITs PF&REIT 

Resources  [RESOURC] Energy & Util ities ENERG

Mining MINE

Services  [SERVICE] Commerce COMM

Media  & Publishing MEDIA

Health Care Services HELTH

Tourism & Leisure TOURISM

Professional  Services PROF

Transportation & Logistics TRANS

Technology [TECH] Electronic Components ETRON

Information & Communication Technology ICT

PSR Rating SystemCapital Gain Recommendation

> 15% BUY

> 5% ‐ 15% ACCUMULATE / TRADING BUY

> 0% ‐ 5% NEUTRAL

0 <= SELL

Remarks

We do not base our recommendations  entirely on the  above quantitative return bands.  We consider qualitative factors  l ike (but 

not l imited to) a  stock's  risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of 

stock price catalysts, and speculative undertones  surrounding the stock, before making our final  recommendation 

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