12-month target price : Bt8.90
Recommendation : BUY
Closing Price (3 Feb 09) : Bt6.90
2008 net profit off 38.39% YoY
- Lower provision for doubtful and bad debts helped BLS to post a net profit rise of 10.56% on the quarter. On a YoY basis, the profit figure was down 67.61% because of shrinking trading volumes.
- The broker reported a drop of 38.39% YoY in 2008 net profit to Bt136.43m due chiefly to a Bt77.69m provision for doubtful and bad debts.
- We expect earnings to recover this year as the provision for doubtful and bad debts is anticipated to be lower than a year earlier. We keep a BUY rating on BLS with a 2009 price target of Bt8.90/share.
4Q08 net profit up 10.56% QoQ but down 67.61% YoY
Broker BLS reported a rise of 6.45% QoQ in 4Q08 brokerage income to Bt142.18m. The provision for doubtful and bad debts dropped sequentially to Bt6.56m against Bt60.51m and Bt9.61m in 2Q08 and 3Q08 respectively. Lower provision charge helped the broker to post a net profit rise of 10.56% QoQ in the fourth quarter. On a YoY basis, the profit figure was down 67.61% as trading volume fell dramatically against Bt19.1b in the same quarter in 2007. For the full year 2008, the broker posted a net profit drop of 38.39% YoY due chiefly to a Bt77.69m provision for doubtful and bad debts.
2009 net profit expected to rise 30.37% YoY despite a likely drop in income
The effect of the worldwide economic downturn is expected to drag 2009 brokerage income down 8.96% YoY. Our forecast assumes 2009 average daily market turnover of Bt15b and the broker's average market share of 4.20% for the year. We also build into our estimates a fall in fee and service income in the face of a slowdown in market activity against the current backdrop. We expect the broker's net profit to improve this year as the provision for doubtful and bad debts is anticipated to be lower than a year earlier. We estimate 2009 net profit to be about Bt177.87m. Our 2009 price target of Bt8.90/share is based on a P/E of 9x. We keep a BUY rating on BLS.
By Phillip Securities (Thailand) Plc. on Feb 4, 2009
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