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Thanachart Capital PCL (SET:TCAP), 18.88% stake owned by Thai NVDR Co., Ltd. and 10.77% stake owned by MBK PLC (SET:MBK), as of October 11, 2016, is the parent company of Thanachart Financial Conglomerate. The company has two core business groups, which are financial business group, consisting of commercial banking business, asset management business, securities business, insurance business, hire purchase business, and leasing business, and supporting business group, consisting of brokerage business, service business, and training business, which Thanachart Bank PCL is the main operating business.
According to the Financial Times, the company’s subsidiaries comprise Thanachart Bank PLC, which is 49% owned by Scotia Netherlands Holdings B.V., NFS Asset Management Co., Ltd., Siam City Life Assurance PLC, Max Asset Management Co., Ltd. and NASSET Property Fund 6.
Thanachart Capital said on October 17 that its third-quarter 2016 revenues were up 3.68% year-on-year to 10.26 billion baht, beating the 9.97 billion baht consensus estimate of two analysts following the company, according to the Financial Times. TCAP posted third-quarter 2016 earnings of 1.29 baht per share, up 11.21% year-on-year, but missed the 1.31 baht per share expectations of three analysts covering the company.
The company said the non-performing loans (NPLs) of Thanachart Group declined 16.85%, or 3.805 billion baht, from the end of last year to 18.776 billion baht as of September 30, 2016. As a result, the NPL ratio decreased to 2.56%, while the coverage ratio improved to stand at 132.94%. To strengthen its financial position and to be cautious against economic uncertainties and new regulations, the bank set aside its allowance for impairment loss on loans and debt securities, or loan-loss provisions, of 1.47 billion baht for the quarter, compared to 1.17 billion last quarter, an increase of 25.32%.
For 2015, TCAP reported a dividend of 1.80 baht a share, an increase of 12.5% from 2014. The 20 analysts polled by Financial Times covering the company expect dividends of 1.88 baht a share for the upcoming fiscal year, representing a year-over-year increase of 4.50%.
From our technical viewpoint, shares of TCAP have been moving in an ascending wedge chart pattern since early 2015 and have now broken out the 42.75 baht resistance level. The stock is bumping into the trendline resistance with a potential breakout at 45.50 baht. TCAP could pull back to retest the 42.75 baht level, if the breakout fails. The next support level will be 41.00 baht per share, where the stock could bounce from there.
According to the Financial Times, the consensus amongst 22 polled investment analysts covering Thanachart Capital gave the company an Outperform rating, with the median 12-month price target of 44.00 baht a share, as of December 6, 2016.
Disclosure: We hold a long position in TCAP and no recommendation.
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