Equity Analysis /

Srisawad Corp PCL: Bottom fishing!

  • Strong 2022 loan growth outlook

  • Fair asset quality, low credit cost peg

  • BUY, despite flattish YoY earnings forecast for 2022

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
7 September 2022

We maintain a BUY call on SAWAD, even though we expect 2022 earnings to slip 4.6% YoY, due to heavier OPEX (dealer and other costs tied to the HP-for-motorbikes biz rise and sales-point expan-sion expenses) and LLPs. However, we forecast 3Q22 earnings growth of 6.5% YoY and 13.6% QoQ. SAWAD trades at cheap valuation metrics (a 2022 PER of 14.8x); the stock price has dropped 21% YTD.

Strong 2022 loan growth outlook

Our model points to SAWAD achieving 23% YoY loan growth for 2022 (up 19.5% YTD as of end-June, excluding the auto cash loans-for-motorbikes portfolio). Lending will be driven by: 1) ongoing sales-point expansion (we expect the finco to add 200 new sales points this year, so 5,243 by YE22), and 2) growth in the following businesses—HP-for-motorbikes (we expect Bt9.8bn at YE22), title loans-for-cars, and personal loans (we expect Bt3.0bn at YE22).