The 1Q22 result will prove to be the weakest earnings quarter of the year, we believe. Strong loan growth, a slightly fatter NIM (high-yield lending expansion), rising non-NII (higher loan-related fee income), and a lower cost/income ratio will fuel profit growth. Our 2022 earnings forecast is Bt5.9bn, up 18.6%. Moreover, the stock is cheap (down 25% since YE21)—a 2022 PER of 16x.
Strong loan growth, despite higher inflation
We expect MTC to achieve our 2022 loan growth assumption of 20% YoY, despite the inflation spike. The finco will tighten its loan approval standards in order to maintain asset quality, we believe (our 20% loan growth assumption is much more conservative than MTC’s 2022 target of 30%). The drivers are ongoing sales-point expansion to 6,400 locations by YE22, up 600 YoY (MTC’s 2022 sales-point target is 6,500), and HP-for-new motorbikes biz growth—we assume 56% YoY to Bt6.4bn, led by cross-selling (despite tighter loan approval standards for new customers). The historical record strongly suggests that Thai consumer loan demand is much more influenced by GDP growth than by the inflation rate (and high farm produce prices should boost overall spending power in the provinces).