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Asset
Plus Securities
ASSET <Bt24.70>
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Recommendation
New
: HOLD
Previous : BUY
Fair Value : Bt37.30
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Downgraded
to HOLD despite attractive dividend yield
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Although Asset Plus
Securities (ASSET) is among our favourite brokerage stocks,
we have downgraded our recommendation from BUY to HOLD
due to the fall in stock market turnover amid uncertainties
over the Iraq crisis. Nevertheless, we believe ASSET is
better protected than other listed securities companies due
to its well-diversified revenue structure and strong balance
sheet.
One major attraction of ASSET
is its attractive dividend yield. The company will pay a
dividend of Bt1/share for 2H02 results, bringing its
dividend for the full year to Bt3 or 12.1%. The stock will
go XD on March 25 with payment due on April 24.
Below are some key points
that emerged after our meeting late last week with ASSET's
management:
- Brokerage:
ASSET opened three new branches last year but has no
plans for further branch expansion this year. Instead the
company aims to expand its client base (it currently has
3,000-4,000 brokerage accounts). About 30% of its accounts
are institutional, 10% are from corporate/high net worth and
60% from retail. Its target market share this year is 2%, in
line with our forecast. The company claims that it has a
major cost advantage over competitors given that 40% of its
trading volumes come from institutional and corporate
clients. This allows it to pay fixed salaries to marketing
staff rather than giving marketing officers a 25% cut of
commission fees like brokers relying on retail investors.
Underwriting:
Despite the impending
war, ASSET expects to be lead underwriter in six IPOs this
year – the same number as in 2002. Among IPO deals in the
pipeline are Thailand's second largest music company R.S.
Promotion, leading hire purchase firm Mida Asset, concert
organiser BEC Terro and Japanese restaurant chain Oishi.
Moreover, ASSET is also working on share sales of
privatisation issues such as Thai Airways International (THAI)
and the Communications Authority of Thailand (CAT). The timing
of these share sales remains uncertain, however, and we
haven’t included them in our forecasts for ASSET.
Advisory:
ASSET is also advising companies on debt restructuring,
re-engineering and merger & acquisitions. Fee income from
advisory activities is recurring and long-term. ASSET also
acts as a selling agent for various mutual fund companies.
Portfolio
investment:
84% of the company’s assets is in cash &
investments (mainly in debt instruments), with liquid assets
totaling about Bt1.1bn. Although these safe haven investments
offer steady if unspectacular returns, interest income is
likely to fall this year following this month's cut in
domestic interest rates.
Private
equity: The company
has a budget for private equity of about Bt100mn this year.
This will be used to invest in and/or co-manage non-listed
companies, with the aim of boosting profitability and
preparing them for a SET or MAI listing.
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Earnings
Forecast |
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2001 |
2002 |
2003F |
2004F |
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Brokerage fees (Bt
mn) |
18 |
116 |
220 |
232 |
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Net profit (Bt mn) |
12 |
112 |
149 |
160 |
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Brokerage fees/share
(Bt) |
0.41 |
1.93 |
3.66 |
3.86 |
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Eps (Bt) |
0.26 |
1.87 |
2.49 |
2.66 |
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BVps (Bt) |
6.57 |
12.08 |
13.57 |
15.17 |
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Dps (Bt) |
0.25 |
3.00* |
2.49 |
2.66 |
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P/Brokerage fees (x) |
59.63 |
12.67 |
6.67 |
6.32 |
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P/E (x) |
94.35 |
13.06 |
9.81 |
9.17 |
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P/B (x) |
3.72 |
2.02 |
2.02 |
2.02 |
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Dividend yield (%) |
1.02 |
12.30 |
10.20 |
10.91 |
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ROE (%) |
3.06 |
21.97 |
19.40 |
18.53 |
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* 1H dividend of Bt2
and another Bt1 for 2H |
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Analyst: Ratchanok
(Orange) Dandamrongrak Ext.1560
ratchanok.d@kimeng.co.th
If you have
any questions or suggestions please feel free to email our Research
Webmaster
Copyright © March 2000,
Kim Eng Securities (Thailand) PLC. All rights reserved.
Disclaimer
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