Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Fundamental trends at <a href="https://www.smartkarma.com/entities/297" target="_blank" data-smartkarma-citation="entities:297:1">Thanachart Capital (TCAP TB)</a> are benign and stand out within Thailand’s somewhat heated banking universe. The bank has been getting better at what is does over the last few years and key metrics/signals for the third straight year underline positive fundamental momentum embodied in a high PH Score™. This stands in sharp contrast to its more “popular” and larger peers. The bank is becoming something of a serial fundamental momentum outperformer. TCAP is now on a much firmer footing than some years ago, and has a solid platform from which to continue evolving positively.
Some investors may shy away from a hire purchase focus and franchise but that may underestimate TCAP. The high concentration of lending to hire purchase (52% of loans) is mitigated by prudent credit policy and risk management as evidenced by enhanced quality of this exposure at the core of the business model and related falling credit costs.
The main line of business should not detract from the proposition of an undervalued, improving, market leader in the aforementioned sector. In addition, TCAP has other strings to its bow. Regarding diversification and business risk, TCAP is not a “one trick pony” with exposure to corporates (18% of loans), SMEs (12% of loans), and mortgages (14% of loans). In addition, TCAP is active in leasing, insurance (fast-growing), credit cards, fund management (mainly mutual funds), and brokerage.
The fact that Scotiabank remains a supportive major shareholder (49% of TBank) is a plus as the cosmopolitan shrewd Canadian lender is a central and proactive management presence and brings varied skills and experience to the table as well as funding lines.
Shares rate good value on P/Book (0.9x), Earnings Yield (13.5%), Dividend Yield (4.5%), total Return Ratio (1.6x), and Franchise Value (8.5%) with the tailwinds (again) of a quintile 1 PH Score™ (7.5) and buyback programme. RSI at 44 intimates that shares are underbought.

Fundamental trends at Thanachart Capital (TCAP TB) are benign and stand out within Thailand’s somewhat heated banking universe. The bank has been getting better at what is does over the last few years and key metrics/signals for the third straight year underline positive fundamental momentum embodied in a high PH Score™. This stands in sharp contrast to its more “popular” and larger peers. The bank is becoming something of a serial fundamental momentum outperformer. TCAP is now on a much firmer footing than some years ago, and has a solid platform from which to continue evolving positively.
Some investors may shy away from a hire purchase focus and franchise but that may underestimate TCAP. The high concentration of lending to hire purchase (52% of loans) is mitigated by prudent credit policy and risk management as evidenced by enhanced quality of this exposure at the core of the business model and related falling credit costs.
The main line of business should not detract from the proposition of an undervalued, improving, market leader in the aforementioned sector. In addition, TCAP has other strings to its bow. Regarding diversification and business risk, TCAP is not a “one trick pony” with exposure to corporates (18% of loans), SMEs (12% of loans), and mortgages (14% of loans). In addition, TCAP is active in leasing, insurance (fast-growing), credit cards, fund management (mainly mutual funds), and brokerage.
The fact that Scotiabank remains a supportive major shareholder (49% of TBank) is a plus as the cosmopolitan shrewd Canadian lender is a central and proactive management presence and brings varied skills and experience to the table as well as funding lines.
Shares rate good value on P/Book (0.9x), Earnings Yield (13.5%), Dividend Yield (4.5%), total Return Ratio (1.6x), and Franchise Value (8.5%) with the tailwinds (again) of a quintile 1 PH Score™ (7.5) and buyback programme. RSI at 44 intimates that shares are underbought.

Thanachart Capital: You Need Dividend Growth and Time. That's It. Time Arbitrage.