Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<ul><li>We reaffirm our Neutral rating. The valuation metrics suggest that the share price is fully valued in terms of the fundamentals, while the tactical perspective is neutral.</li><li>However, the long-term growth prospects are strong, with EPS growth expected at a CAGR of 22.6% in 2024-2026E.</li><li>MTC reported a 4Q23 net profit at Bt1,351mn, in line with our projection.</li></ul>

We reaffirm our Neutral rating. The valuation metrics suggest that the share price is fully valued in terms of the fundamentals, while the tactical perspective is neutral.However, the long-term growth prospects are strong, with EPS growth expected at a CAGR of 22.6% in 2024-2026E.MTC reported a 4Q23 net profit at Bt1,351mn, in line with our projection.

Muangthai Capital - 4Q23 Earnings in Line; Better Asset Quality

<ul><li>We have downgraded our rating to Neutral (vs. Outperform previously).</li><li>The fair price has also been revised down to Bt35.18 (vs. Bt35.61 previously), based on the earnings yield, with a required return of 8.4% (vs. 8.0% previously), as the risk-free return, based on the Thai 10Y bond yield, was raised by 60 bps from the previous estimate.</li><li>Our valuation metrics suggest that the share price is fundamentally fully valued, while the tactical view is neutral. </li></ul>

We have downgraded our rating to Neutral (vs. Outperform previously).The fair price has also been revised down to Bt35.18 (vs. Bt35.61 previously), based on the earnings yield, with a required return of 8.4% (vs. 8.0% previously), as the risk-free return, based on the Thai 10Y bond yield, was raised by 60 bps from the previous estimate.Our valuation metrics suggest that the share price is fundamentally fully valued, while the tactical view is neutral. 

Muangthai Capital - Improving Asset Quality

Thematic (Sector/Industry)

<ul><li>KTX expects sideways-up movement with the resistance at 1,455/1,472 points and the support at 1,412/1,400 points.</li><li>Key highlights impacting the market include: I) December effect – increased domestic fund purchases from TESG, SSF, RMF, along with the Vayupak Fund; ii) foreign selling pressure expected to ease due to a pause in investments ahead of the Christmas and New Year holidays; and iii) gradual implementation of government measures aimed at boosting confidence in economic growth.</li><li>Risks include a potential reduction in investment in Asian and Thai stock markets in favor of USD assets (e.g., US equities, Russell 2000 Index, US Dollar Index), which are expected to benefit from the policies of President Trump, who will officially take office on January 20, 2025.</li></ul>

KTX expects sideways-up movement with the resistance at 1,455/1,472 points and the support at 1,412/1,400 points.Key highlights impacting the market include: I) December effect – increased domestic fund purchases from TESG, SSF, RMF, along with the Vayupak Fund; ii) foreign selling pressure expected to ease due to a pause in investments ahead of the Christmas and New Year holidays; and iii) gradual implementation of government measures aimed at boosting confidence in economic growth.Risks include a potential reduction in investment in Asian and Thai stock markets in favor of USD assets (e.g., US equities, Russell 2000 Index, US Dollar Index), which are expected to benefit from the policies of President Trump, who will officially take office on January 20, 2025.

<ul><li>The finance sector operators under our coverage reported a combined net profit of Bt3.9bn in 3Q24, down 7.7% YoY and 5.2% QoQ.</li><li>Asset quality improved in the title loan provider segment, while the truck hire-purchase providers segment has yet to recover.</li><li>However, performance pressures have begun to ease, driven by a decline in funding costs and reduced concerns over asset quality, supported by economic stimulus measures.</li></ul>

The finance sector operators under our coverage reported a combined net profit of Bt3.9bn in 3Q24, down 7.7% YoY and 5.2% QoQ.Asset quality improved in the title loan provider segment, while the truck hire-purchase providers segment has yet to recover.However, performance pressures have begun to ease, driven by a decline in funding costs and reduced concerns over asset quality, supported by economic stimulus measures.

<ul><li>We expect that the Bank of America (BofA) Global Fund Manager Survey results for October will shift positively toward equities compared to the latest survey (September 6- 12), where most respondents focused on safe-haven assets due to concerns about the Fed's overly tight interest rate policy.</li><li>Following the Fed meeting on September 18, where it cut interest rates for the first time in four years by a larger-than-expected 50 bps and signaled continued reductions for 2024-26, the risk of a recession is now lower.</li><li>This is likely to lead to increased investment in risk assets, such as equities, and trigger sector rotations from defensive sectors (utilities, consumer staples) to cyclicals (energy, materials, and industrials), along with a greater focus on commodities.</li></ul>

We expect that the Bank of America (BofA) Global Fund Manager Survey results for October will shift positively toward equities compared to the latest survey (September 6- 12), where most respondents focused on safe-haven assets due to concerns about the Fed's overly tight interest rate policy.Following the Fed meeting on September 18, where it cut interest rates for the first time in four years by a larger-than-expected 50 bps and signaled continued reductions for 2024-26, the risk of a recession is now lower.This is likely to lead to increased investment in risk assets, such as equities, and trigger sector rotations from defensive sectors (utilities, consumer staples) to cyclicals (energy, materials, and industrials), along with a greater focus on commodities.

Special Report: The Bigger the Fed Rate Cut, the Better for Cyclicals - SEPTEMBER 24, 2024

Thailand

Muangthai Capital Public Company Limited operates as a commercial lending company. The Company provides car title, personal, agricultural vehicle, land title, and other loan products. Muangthai Capital serves customers in Thailand.

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Muangthai Capital (MTC TB)

Muangthai Capital - 4Q23 Earnings in Line; Better Asset Quality

We reaffirm our Neutral rating. The valuation metrics suggest that the share price is fully valued in terms of the fundamentals, while the tactical...

Krungthai XSpring

Muangthai Capital - Improving Asset Quality

We have downgraded our rating to Neutral (vs. Outperform previously). The fair price has also been revised down to Bt35.18 (vs. Bt35.61...

Krungthai XSpring

Monthly Report: December 2024

Key highlights impacting the market include: I) December effect – increased domestic fund purchases from TESG, SSF, RMF, along with the Vayupak Fund

Krungthai XSpring

Finance & Securities - NOVEMBER 26, 2024

The finance sector operators under our coverage reported a combined net profit of Bt3.9bn in 3Q24, down 7.7% YoY and 5.2% QoQ.

Krungthai XSpring

Special Report: The Bigger the Fed Rate Cut, the Better for Cyclicals - SEPTEMBER 24, 2024

We expect that the Bank of America (BofA) Global Fund Manager Survey results for October will shift positively toward equities compared to the...

Krungthai XSpring

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