Bangkok Commercial Asset Management PCL: Earnings to jump HoH in 2H21

  • 2Q21 profit growth of 157.2% YoY, led by gains on NPA sales
  • Strong HoH growth in 2H21, driven by accelerated cash collection
  • YE21 target price cut from Bt24.20 to Bt21

We expect BAM’s earnings to rise strongly HoH in 2H21, driven by accelerated cash collection (supported by a fully operational Legal Execution Department), debt-restructuring, and sales of NPAs. We have downsized our 2021 earnings forecast by 17.2% to Bt2.4bn (up 27.7% YoY), due to diminished expectations for NII in 1Q21 and 2Q21. Hence, our YE21 target price slips from Bt24.20 to Bt21, but our call remains BUY!

2Q21 profit growth of 157.2% YoY, led by gains on NPA sales

We forecast a 2Q21 profit of B349m, up 157.2% YoY (and 41.2% QoQ), led by heavier NPA sales, accelerated debt-restructuring, and more assertive cash collection. BAM expects to mark a Bt450m sale in 2Q21 from a major client; the sale had been postponed from 2020 (we conservatively assume that it will receive the cash in 3Q21). Further-more, the firm has launched promotional prices for debtors aimed at accelerating settlement of NPLs. Note that management targets acquiring only a modest amount of new debtstock in 2Q21, as market supply is currently limited. In 1Q21, the total supply of NPLs for sale was Bt3.3bn; BAM acquired new debtstock with a face value of Bt561m at a cost of Bt333m.

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