Earnings Report /
Thailand

Muangthai Capital PCL: Profit beat, due to light LLPs

  • Earnings were 12.6% above our estimate

  • MTC announced a 2Q20 profit of Bt1.27bn

  • The result was 12.6% above our model and 3.4% ahead of the consensus

Bualuang Securities
13 August 2020

We have a BUY call on MTC, premised on strong business growth, supported by a network of 4,568 sales points at end-June 2020 (up by 461 sales points since YE19) and a rising mean lending value per sales point. Its loan portfolio expanded by 16.4% YoY and 5.1% YTD in 2Q20 and we expect that trend to continue through 2H20, despite the economic chaos brought about by the coronavirus. At end-June, the NPLs/loans ratio was only 1.04% with a big loan loss coverage ratio of 211%. Besides, the finco has an ample room for further leverage—its D/E ratio was 2.9x at end-June 2020, against a creditor covenant ceiling of 4.5x.

Earnings were 12.6% above our estimate

MTC announced a 2Q20 profit of Bt1.27bn, up by 24% YoY and 2% QoQ. The result was 12.6% above our model and 3.4% ahead of the consensus, due to lighter net-loan loss provisioning than assumed (the finco reversed Bt85m of its loan loss reserve into revenue; we had assumed that it would set LLPs of Bt110m). Pre-provision operating profit came to Bt1.49bn, up 1% YoY but down 8% QoQ. 1H20 earnings soared 24% YoY to Bt2.5bn, which represents 49.5% of our full-year projection of Bt5.1bn.