Equity Analysis /

Ngern Tid Lor: Negligible exposure to HP regulatory risk

  • 2022 LLP assumption upsized

  • Ongoing strong loan growth and non-NII expansion

  • Only negligible exposure to HP-related regulatory risk

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
31 August 2022

TIDLOR will accelerate writing off and disposing of NPLs in 2H22. We now expect LLPs of Bt1.1bn for 2022, up 40% from our earlier assumption, so have trimmed our 2022 profit forecast by 6.2% to Bt3.7bn (up 17% YoY) and cut our YE22 target price from Bt47 to Bt40 (pegged to a PBV of 3.8x). However, the stock remains our top pick in Finance space, as the regulatory threat to its earnings growth profile is negligible. BUY!  

2022 LLP assumption upsized

We now expect TIDLOR to set LLPs of Bt1.1bn for 2022, a credit cost peg of 140bps (we previously assumed only Bt768m, or 100bps), as asset quality has deteriorated. Our YE22 NPLs/loans ratio assumption is now 1.8%; we had previously assumed only 1.4%. NPLs rose QoQ in both 1Q22 and 2Q22. We assume that TIDLOR will want to maintain its loan loss coverage ratio at about 300% (the end-Mar 2022 loan loss coverage ratio was 270%, down from 317% three months earlier). Note that management increased the credit cost peg to 1.9% from 1.5% and maintained the NPLs/loans ratio target at 2.0%. The finco expects to aggressively write off and dispose of NPLs during 2H22.