First Read: Bangkok Commercial Asset Management "Prioritize addressing..."

Research evidence excerpt

First Read: Bangkok Commercial Asset Management "Prioritize addressing..."

Forecast returns

Forecast price appreciation -6.9%

Forecast dividend yield 6.7%

Forecast stock return -0.2%

Market return assumption 7.0%

Forecast excess return -7.2%

Company Description

Bangkok Commercial Asset Management (BAM) was founded on 14 Aug 1998 under the

MoF's Financial Institutional Development plan to acquire and manage non-performing

assets from Bangkok Bank of Commerce and other FIs under the Financial Institution Asset

Management Corporation Decree. A merger in 2005 enhanced business scale and efficiency,

leading BAM to become a public company in 2015. Its core business is credit for the purchase

of receivables and foreclosed properties. BAM utilises capital and borrowed funds to acquire

assets during economic downcycles and turns them to high-margin income in upcycles.

Valuation Method and Risk Statement

We use P/BV methodology to derive our price target for BAM, reflecting 2026-28E

sustainable profitability due to: its highly volatile short-term profit growth profile pre/post

COVID, interest rate movements, and its adoption of IFRS9 standards. Our valuation implies

0.4x 12-months forward P/BV based on 4.4% medium-term ROE and 6.7% COE.

Key upside risks include: 1) a stronger-than-expected economic recovery after new

government formation and an ease of Middle East tensions, which could help NPL/NPA gains

and ROE to recover in H226; 2) an interest rate downcycle, which could support debt

servicing ability and a decline in credit cost.

Key downside risks include: 1) slower than expected revenue contribution from JVAMC; 2)

prolonged sluggish demand on residential property sector and stubbornly high household

debt could lower NPA margin over time.