Our profit estimates are Bt67m for 4Q21, up 7% YoY (but down 9% QoQ), and Bt405m for 2022, up 39% YoY (led by loan growth and a lower cost/income ratio). Furthermore, NCAP’s planned point-of-sale (POS) lending biz and/or lighter LLPs could make for upside to our 2022 earnings forecast. BUY!
4Q21 profit to mark a rise of 7% YoY (but down 9% QoQ)
We expect NCAP to report 4Q21 earnings of Bt67m, up 7% YoY, led by strong loan growth (we assume lending expansion of 26% YoY; management’s target in range is 25-30% YoY) and a lower mean credit cost peg (we expect it to mark a decline from 221bps in 4Q20 to 203bps in 4Q21). The finco has been building market share in HP-for-motorbike space by cultivating partnerships with dealers and by piggy-backing dealers that open branches in new locations. Hence, NCAP increased its HP-for-motorbike market share from 2.1% in 1Q20 to 5.0% in 3Q21 (even though the number of new motorbike registrations fell from 431k units in 1Q20 to 331k units in 3Q21). In QoQ terms, NCAP’s 4Q21 profit looks set to fall 9% QoQ, due to heavier OPEX (higher staff costs and seasonal expenses) and lower non-NII.