BAM – Preview 3Q24: Sharp fall YoY and QoQ

We expect BAM’s 3Q24 earnings to fall sharply both YoY and QoQ on lower cash collection (particularly on NPAs), lower gain on NPAs and higher ECLs. We downgrade BAM to Underperform from Neutral with an unchanged TP of Bt7.

Cash collection: Down YoY and QoQ in 3Q24. According to a conference call with BAM’s investor relations representative, cash collection in 3Q24 fell 10-15% QoQ and YoY. We estimate 3Q24 cash collection at ~Bt3.5bn (-9% YoY, -10% QoQ), 46% below the quarter’s target of Bt6.44bn. Collection on NPLs is expected to have risen 5-10% YoY and QoQ in 3Q24, with collection on NPAs expected to have fallen about 30% YoY and 40% QoQ. We cut our 2024F cash collection assumption to Bt15.2bn (+1%), 24% below its original target of Bt20bn. We expect a seasonal QoQ rise in cash collection in 4Q24.

Figure 1: BAM’s cash collection target

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Source: BAM and InnovestX Research

3Q24 preview: Down sharply YoY and QoQ. We expect earnings to fall 48% YoY and 56% QoQ to Bt200mn in 3Q24. This is based on an expected fall in cash collection (-9% YoY and -10% QoQ), a slight increase in interest and gain on NPLs (+14% YoY, +1% QoQ), a fall in gain on NPAs (-27% YoY, -30% QoQ), a rise in ECL (+22% YoY, +2% QoQ) and rising funding cost.

Cut our earnings forecast. We cut our 2024 earnings forecast by 12% and 2025 by 5%, adjusting cash collection down and ECLs up. We now expect earnings growth of 2% in 2024 and 10% in 2025.

Downgrade to Underperform with unchanged TP. We downgrade to Underperform with an unchanged TP of Bt7 (based on DDM).

Key risks: 1) Cash collection risk from a slower-than-expected and uneven economic recovery, 2) a slowdown in property market demand and 3) rising competition from new players with irrational bidding prices.