We have trimmed our earnings projections by 5.4% for 1Q22 to Bt1.38bn (flattish YoY but up 25.5% QoQ) and by 4.3% for 2022 to Bt5.9bn (up 18.6% YoY), due to a heavier LLP assumption (deteriorating asset quality). Hence, our YE22 target price downsizes from Bt68 to Bt65, pegged to a PBV of 4.6x (MTC’s long-term mean of 4.6x).
1Q22 profit estimate trimmed 5.4% to Bt1.38bn
The 1Q22 loan yield will mark bottom for the year, we believe, as the effect of high-yield motorbike title loans signed in 4Q20 (a 20% interest rate) and 1Q21 (18%) will be diluted by the 16% rate charged for contracts signed during 2H21 (about 90% of high-yield title loans are likely to have been replaced by the current yield of 16%). Also, the first-quarter has the fewest number of days in the year (interest income is calculated by the number of days), which will dampen the 1Q22 yield somewhat. Hence, we expect 1Q22 NIM to decline by 13bps QoQ (4Q21 NIM was 16.11%), even though the high-yield HP-for-new motorbikes biz (currently a 24% loan rate) is building scale.