Bangkok Commercial Asset Management PCL (BAM), the largest firm in the asset management field, reported its second-quarter earnings of 169 million baht, a decrease of 80 per cent both quarter-on-quarter and year-on-year.
The stock price reduced since the market opening to 23.30 baht per share at 3:15 p.m., shrinking by 1.20 baht or -4.90 per cent, with the transaction value of 1,851 million baht.
The result came out lower-than-expected by 80 per cent due to a sharp fall in lower distressed assets revenue and lower interest income.
The first half earnings stood at 835 million baht, also down 80 per cent year-on-year, equal to 20 per cent of KGI Securities’ annual forecast.
Well-positioned
The asset management company is one of the few companies with good fortune tied to the economic contraction of Thailand.
BAM stands at the market-leading position as its assets exceed the second competitor by 30 per cent due to its ability to operate in a situation where NPLs in all segments are rising.
BAM’s core business is the purchase of credit receivables (NPLs) and property foreclosed or non-performing assets (NPAs).
BAM’s NPLs portfolio is also heavily tilted toward real estate backed assets of 80 per cent which is the sector that has been stable and will usually bounce back after any minor downturn occurs.
Recovery on the way
Lockdown restrictions during COVID-19 caused a decline in revenues and cash received from the Legal Execution Department. With the reopening of economic activities, KGI expects revenue to recover sharply in the remaining time of 2020.
“More NPLs in the financial system will enable the company to accelerate its purchase of distressed assets for long-term growth,” said KGI.
They also rate ‘Neutral’ on BAM with the target price of 28.00 baht per share.
However, Yuanta Securities rate BAM at ‘Buy’ with the target price of 29.50 baht and believes that the company has bottomed-out in the second quarter already.
