CGS-CIMB Securities has a slight positive view to Kasikornbank Public Company Limited (SET: KBANK)’s THB100 billion expansion plan to unbanked-underbanked customers as well as an investment in IT investment and further M&A deals.
The capex of THB100 billion plan consists of;
1) THB22 billion for IT investment in FY22-23, after THB12.7 billion investment in FY20-21.
2) 2 to 5 M&A deals for IT and Tech companies in the next 12 month with a budget around THB 30 billion.
CGS-CIMB Securities stated that the remaining budget should be updated further once more information is acquired.
The pioneer projects for KBANK include;
1) Buy now pay later (BNPL) first bank in Thailand.
2) Enhancing the efficiency process for Micro SMEs with short servicing time, fair practices and more innovative processes.
3) Line BK personal loans.
4) Captive financing facilities for small shops in upcountry.
CGS-CIMB Securities stated that it has a slightly positive to KBANK plan as this aims to secure and enlarge its customers base, which could enhance overall yield for SMEs and the retails sector in return.
This will also support a strong CASA (82% of total deposit) franchise for KBANK, according to CGS-CIMB Securities’ view.
On the other hand, the capex will be booked as both expenses and capex in the financial statement. It may have minimal impact to FY22F of 42%, but should be more material for FY23F. This also depends on revenue recognition.
CGS-CIMB Securities added that there was no discussion about the spinoff of KBANK subsidiaries.
Still, the securities maintained its “BUY” recommendation on KBANK with benefit from NIM improvement and benign asset quality.
