Earnings Report /
Thailand

Thanachart Capital PCL: Result beat, due to light LLPs

  • Earnings were 26% above our estimate

  • TCAP reported a 2Q20 profit of Bt1,029m

  • The firm set LLPs of only Bt217m

Bualuang Securities
14 August 2020

We expect TCAP to deliver earnings of Bt6.9bn for 2020, down 36% YoY, due to the absence of the Bt13.4bn extra gain from selling its 51% stake in TBANK. With its core business divested, the firm is sitting on a pile of cash (close to Bt15bn), but management has yet to announce any new investments. The dividend is likely to dive from Bt7.00 (a yield of 20.6%) for 2019 to Bt2.96 for 2020 (a yield of 8.7%, still among the most generous on the market). The unfavorable prevailing business environment increases the risk of asset quality deterioration, which would require heavier LLP-setting. Our HOLD rating stands for TCAP as dividend play.

Earnings were 26% above our estimate

TCAP reported a 2Q20 profit of Bt1,029m, down by 46% YoY and 76% QoQ. The result beat our estimate by 26% and the Bloomberg consensus by 24%, owing largely to lighter loan loss provisioning than modeled. The firm set LLPs of only Bt217m; we had assumed Bt350m. 1H20 profit dived 32% to Bt5.3bn, which represents 78% of our full-year bottom-line projection of Bt6.9bn.