Equity Analysis /
Thailand

Bangkok Commercial Asset Management PCL: Ongoing profit growth, despite near-term headwind (higher inflation)

  • How realistic is BAM’s cash collection target?

  • Key components of strategy in the short-term …

  • … and long-term

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
17 June 2022

In this report, we have compiled a checklist to answer the question: “Is BAM still worthy of position-taking?” We expect profit growth of 21% YoY for 2022 (despite higher inflation), led by expanding cash collection and NPA sales. Moreover, the stock is cheap (down 18% since YE21)—a 2022 PER of 18x.

How realistic is BAM’s cash collection target?

We expect BAM to achieve its 2022 cash collection target of Bt17.5bn. 1Q22 cash collection was only Bt3.2bn (equal to 18% of its full-year target), but we expect cash collection to accelerate in 2H22 in tandem with the seasonality of the asset management industry. The drivers are moderate demand for non-performing assets and improving debt-servicing capacity among distressed borrowers. Some business sectors will bounce back before others, but Thailand’s economy will continue to recover from COVID-19 effects (despite higher inflation)—even adjusted for higher inflation assumptions, the BOT forecasts real GDP growth of 3.2% for 2022 and 4.2% for 2023. Hence, demand for NPAs will rise and the debt-servicing capacity of distressed borrowers will increase.