Srisawad Corp PCL: Stronger 2H21 profit growth profile

  • Strong 2021 loan growth—more sales points
  • Substantial profit-sharing from FM (JV with Govt Saving Bank)
  • Lighter OPEX, strong fee income growth, and lighter LLPs

We expect YoY profit growth of 21% for 2021, (despite the auto cash-for-motorbikes interest rate falling to 10-12% in 2Q21), driven by strong loan growth, profit-sharing from Fast Money, higher fee income (especially insurance biz commissions and management & referral fees from FM), and lighter LLPs. SAWAD currently trades at a 2021 PER of 18.5x (1.2SD above its long-term mean). BUY!

Strong 2021 loan growth—more sales points

We expected SAWAD to achieve 18% YoY loan growth for 2021 (excluding auto cash loans-for-motorbikes—Fast Money Co Ltd was reclassified from a subsidiary to an associate). Loan growth will be driven by: 1) ongoing sales-point expansion (SAWAD plans to add 200 new sales points this year (~5,000 sales points by YE21), and 2) expansion of the HP-for-motorbikes and personal loan businesses (we assume a combined YE21 combined portfolio for the two products of Bt4.2bn, up 95% YoY).

Note that SAWAD has much more aggressive YE21 targets—Bt5bn for its HP-for-motorbikes biz (LTV of 60-80%, a mean yield of 30%) and Bt2.5bn for its personal loan biz (a mean yield of 20%).

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