UOB’s core Thailand management team is generally positive on its business and growth in Thailand, supported by rising regional trades, higher transactional banking activities and higher affluence. Profit before tax grew from THB1845m in 2010 to THB2927m in 2012 or a CAGR of 26% (FY10-12). Despite this growth, its NPL ratio edged lower from 4.98% in 2010 to 2.12% in 2012. In terms of its loans breakdown, Personal Financial Services (PFS) accounted for the bulk at 45% as of Jun 2013. Some of the key areas of business emphasis include PFS (growing its market share for deposits, credit cards, personal loans, housing loans, etc), Corporates and SMEs. We are maintaining our fair value estimates of S$22.97, but as the share price has recently corrected to S$20.36, we are upgrading to a BUY.
Positive about Thailand
Recently, we met with UOB’s core Thailand management team at its Corporate Day. Management were generally positive on UOB’s business, presence and growth in Thailand. This optimism is supported by rising regional trades (trade financing), transactional banking activities and the trend of more Thai corporates and SMEs growing outside of the domestic market. UOB Thailand (UOBT) currently has about 156 branches, 358 ATMs and employing about 4200 people as of Jun 2013.
Optimism tempered with prudence
The emphasis on quality new clients and its prudent credit criterions have enabled its Thai operation to enjoy reasonable margin and volume, both from retail and SME clients. The main products are consumer loans, SME loans, trade-related products/services, cross border transactions advisory/structuring services, etc. Profit before tax grew from THB1845m in 2010 to THB2927m in 2012, giving a CAGR of 26% (FY10-12). Despite this growth, its NPL ratio edged lower from 4.98% in 2010 to 3.10% in 2011 and 2.12% in 2012. In terms of its loans breakdown, Personal Financial Services (PFS) accounted for the bulk at 45% as of Jun 2013. This is followed by Commercial (26%), Corporate (17%) and Business Banking (12%).
Aspiration to become a medium-sized Thai bank
Management intends to be a medium-sized bank in Thailand. Some of the key areas of emphasis include PFS (growing its market share for deposits, credit cards, personal loans, housing loans, etc), Corporates and SMEs. The former is also seen in the rise in the number of privilege banking clients - 11,462 with AUM of THB115.3b in FY12 to 12,996 with AUM of THB121.3b in 1H13. The SME market is dominated by family businesses doing domestic businesses, and could benefit from imports/exports growth and higher trade activities.
Upgrade to BUY
We are maintaining our fair value estimates of S$22.97, but as the share price has recently corrected, we are upgrading to a BUY
Recently, we met with UOB’s core Thailand management team at its Corporate Day. Management were generally positive on UOB’s business, presence and growth in Thailand. This optimism is supported by rising regional trades (trade financing), transactional banking activities and the trend of more Thai corporates and SMEs growing outside of the domestic market. UOB Thailand (UOBT) currently has about 156 branches, 358 ATMs and employing about 4200 people as of Jun 2013.
Optimism tempered with prudence
The emphasis on quality new clients and its prudent credit criterions have enabled its Thai operation to enjoy reasonable margin and volume, both from retail and SME clients. The main products are consumer loans, SME loans, trade-related products/services, cross border transactions advisory/structuring services, etc. Profit before tax grew from THB1845m in 2010 to THB2927m in 2012, giving a CAGR of 26% (FY10-12). Despite this growth, its NPL ratio edged lower from 4.98% in 2010 to 3.10% in 2011 and 2.12% in 2012. In terms of its loans breakdown, Personal Financial Services (PFS) accounted for the bulk at 45% as of Jun 2013. This is followed by Commercial (26%), Corporate (17%) and Business Banking (12%).
Aspiration to become a medium-sized Thai bank
Management intends to be a medium-sized bank in Thailand. Some of the key areas of emphasis include PFS (growing its market share for deposits, credit cards, personal loans, housing loans, etc), Corporates and SMEs. The former is also seen in the rise in the number of privilege banking clients - 11,462 with AUM of THB115.3b in FY12 to 12,996 with AUM of THB121.3b in 1H13. The SME market is dominated by family businesses doing domestic businesses, and could benefit from imports/exports growth and higher trade activities.
Upgrade to BUY
We are maintaining our fair value estimates of S$22.97, but as the share price has recently corrected, we are upgrading to a BUY
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