Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Krung Thai is our sole best value pick among the Thai banks, having solid post-provision profitability, near double digit ROE, a sound balance sheet and attractive PBV and PE ratios</li>
<li>We downgrade Kasikorn from buy to neutral, as it has an unattractive PEG and we believe it is more exposed to credit quality deterioration and potential cost of risk reversal</li>
<li>Bank Ayudhya is suffering from further credit quality deterioration which led to spike in its cost of risk; it now has the lowest NPL coverage relative to the peer group</li>
</ul>


Krung Thai is our sole best value pick among the Thai banks, having solid post-provision profitability, near double digit ROE, a sound balance sheet and attractive PBV and PE ratios
We downgrade Kasikorn from buy to neutral, as it has an unattractive PEG and we believe it is more exposed to credit quality deterioration and potential cost of risk reversal
Bank Ayudhya is suffering from further credit quality deterioration which led to spike in its cost of risk; it now has the lowest NPL coverage relative to the peer group


Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

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.

Thematic (Sector/Industry)

<ul><li>The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.</li><li>Overall, loan growth remained stagnant as banks continued to operate cautiously.</li><li>Meanwhile, net interest margins (NIM) faced pressure, albeit to a lesser extent, from the repricing of fixed deposits. </li></ul>

The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.Overall, loan growth remained stagnant as banks continued to operate cautiously.Meanwhile, net interest margins (NIM) faced pressure, albeit to a lesser extent, from the repricing of fixed deposits. 

Cross Asset Strategy

<ul><li>KTX expects the MPC to maintain the policy interest rate at 2.50% throughout the rest of this year based on the latest resolution of the MPC, with support increasing from 5 to 6 votes to maintain the current rate.</li><li>This interest rate level aligns with the overall economic conditions.</li><li>The Thai economy has shown signs of improvement, particularly in terms of state investment and private consumption.</li></ul>

KTX expects the MPC to maintain the policy interest rate at 2.50% throughout the rest of this year based on the latest resolution of the MPC, with support increasing from 5 to 6 votes to maintain the current rate.This interest rate level aligns with the overall economic conditions.The Thai economy has shown signs of improvement, particularly in terms of state investment and private consumption.

Economic Update: MPC Voted 6:1 to Maintain Rates at 2.50%

<ul><li>The SET fluctuated in a narrow range and closed up for a third day, but it was weaker than other Asian bourses, which surged sharply, with tech stocks taking the lead.</li><li>Furthermore, volume decreased, large cap stocks showed mixed movement, and foreign investors turned to sell, which indicated that the index would face selling pressure.</li><li>The index approached the 1/2 Fibonacci resistance at 1,369 points before retreating, revealing the upward adjustment to be hindered by selling pressure. </li></ul>

The SET fluctuated in a narrow range and closed up for a third day, but it was weaker than other Asian bourses, which surged sharply, with tech stocks taking the lead.Furthermore, volume decreased, large cap stocks showed mixed movement, and foreign investors turned to sell, which indicated that the index would face selling pressure.The index approached the 1/2 Fibonacci resistance at 1,369 points before retreating, revealing the upward adjustment to be hindered by selling pressure. 

<ul><li>Although the baht depreciated, the SET rose for a second consecutive day, bolstered by two days of foreign investor buying and robust 1Q24 earnings.</li><li>This fueled increased buying momentum, particularly in energy, commerce, food, tourism, petrol and finance stocks.</li><li>Consequently, the index hit 1,362.53 points before retreating from profit taking.</li></ul>

Although the baht depreciated, the SET rose for a second consecutive day, bolstered by two days of foreign investor buying and robust 1Q24 earnings.This fueled increased buying momentum, particularly in energy, commerce, food, tourism, petrol and finance stocks.Consequently, the index hit 1,362.53 points before retreating from profit taking.

Thailand

SCB X Public Company Limited provides banking services. The Bank offers accounts, loans, cards, deposits, insurance, investment, payment, digital banking, and other related services. SCB X serves customers worldwide.

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Siam Commercial Bank (SCB TB)

Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...

Victor Galliano

Industry Update - Banking: Jul 23, 2024

The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.

Krungthai XSpring

Economic Update: MPC Voted 6:1 to Maintain Rates at 2.50%

This interest rate level aligns with the overall economic conditions. The Thai economy has shown signs of improvement, particularly in terms of...

Krungthai XSpring

Technical Analysis - APRIL 25, 2024

The SET fluctuated in a narrow range and closed up for a third day, but it was weaker than other Asian bourses, which surged sharply, with tech...

Krungthai XSpring

Technical Analysis - APRIL 24, 2024

Although the baht depreciated, the SET rose for a second consecutive day, bolstered by two days of foreign investor buying and robust 1Q24 earnings.

Krungthai XSpring

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52-week Range

Market Cap (USDm)

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Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

​Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...

Victor Galliano

Industry Update - Banking: Jul 23, 2024

The seven commercial banks we are monitoring reported a combined net profit of Bt53.5bn in 2Q24, up 2.7% YoY but down 11.2% QoQ.

Krungthai XSpring

Economic Update: MPC Voted 6:1 to Maintain Rates at 2.50%

This interest rate level aligns with the overall economic conditions. The Thai economy has shown signs of improvement, particularly in terms of...

Krungthai XSpring

Technical Analysis - APRIL 25, 2024

The SET fluctuated in a narrow range and closed up for a third day, but it was weaker than other Asian bourses, which surged sharply, with tech...

Krungthai XSpring

Technical Analysis - APRIL 24, 2024

Although the baht depreciated, the SET rose for a second consecutive day, bolstered by two days of foreign investor buying and robust 1Q24 earnings.

Krungthai XSpring

Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...