We have a BUY call on SAWAD, premised on loan growth-driven profit expansion. Also, fee income should increase in tandem with rising sales of insurance products and we expect the cost/income ratio to decline. Because we have cut our 2022 profit forecast and reduced our PBV valuation peg from 3.5x to 3.3x (as we have upped our cost of equity assumption, due to a higher expected risk-free rate), our YE22 target price downsizes from Bt78 to Bt70.50. BUY!
Profit was 23% below our estimate
SAWAD posted 1Q22 earnings of Bt1.04bn, down by 24% YoY and 9% QoQ. The result was 23% below our estimate (and 9% shy of the Bloomberg consensus), due mainly to lower non-NII and higher OPEX than expected and a loss at an associate (we had expected Fast Money Co Ltd to mark earnings, but it reported red ink). Pre-provision operating profit came to Bt1.4bn, down 19% YoY and flattish QoQ. 1Q22 earnings comprise 19% of our old full-year forecast of Bt5.6bn.