The share price of JMT Network Services Public Company Limited (SET: JMT) has been falling over 40% this year as the performance of the group company in the first quarter does not bode well with expectations the market had hoped.
Still, Kiatnakin Phatra Securities (KKPS) reiterated a “BUY” recommendation on JMT with a target price as high as THB81.00 per share, citing its strong profit growth outlook.
KKPS said that NPL sales have been abundant this year as expected. The company acquired THB10 billion in face value of distressed assets in 1Q, doubling YoY and accounting for 31% of the full-year 2022 amount, at around a 90bps cheaper price. The company maintained CAPEX for new 2023 NPL purchases at THB 10 billion for unsecured loans, which would be more than double from THB4.6 billion in 2022.
JMT expected cash collection growth of 26-42% to THB 8-9 billion for 2023. Collection in 2Q23 is supposed to be sustained QoQ despite the low season, thanks to portfolio growth. KKPS expected the company’s cash collection performance should drive a reversal provision in 2Q23E against THB 114 million ECL expense in 1Q23.
In addition, KKPS noted that JK (a JV between JMT and KBANK) delivered a strong performance in the first quarter of operation in 3Q22 and saw a QoQ jump during 4Q22-1Q23. The JV recently acquired THB100 billion of NPLs from KBANK, making it far ahead of the plan by 2024. KKPS expected JK to contribute equity income growth of 145% in 2023 and 39% for 2024 to JMT.
KKPS still believed JMT to continue recording a new-high net profit this year at THB2,270 million, and would jump to THB2,800 million and THB3,387 million in 2024-25.
The target price of THB81.00 by KKPS is much higher than a consensus by Refinitiv at THB65.11 per share.
