Higher DPS than expected
KKP announced a 2H24 DPS of Bt2.75, equivalent to 5% dividend yield. It raised payout ratio to 68% on 2024 from 47% on 2023, which is higher than our original forecast of 50%. We raise our payout ratio forecast from 50% each year to 69% in 2025 (expecting a stable absolute DPS), 63% to in 2026 and 60% in 2027, which lifts ROE by 3-16 bps for 2025-2027. We keep our Neutral rating but raise TP from Bt50 to Bt53 as we re-rate PBV target to 0.7x from 0.65x to reflect higher ROE brought by the hike in dividend payout
Higher-than-expected DPS. KKP announced a 2H24 DPS of Bt2.75, equivalent to 5% dividend yield. It raised payout ratio to 68% on 2024 from 47% on 2023, which is higher than our original forecast of 50%. XD is May 6, with payment on May 22.
Raising dividend payout raises ROE. We raise our payout ratio forecast from 50% each year to 69% in 2025 (expecting a stable absolute DPS), 63% to in 2026 and 60% in 2027, which lifts ROE by 3-16 bps for the years 2025-2027.
Expect weaker earnings in 2025. We expect 2025F earnings to fall 2% due to lower NII (from a sharp loan contraction in 2024) and smaller FVTPL gain. We expect mute loan growth, a 9 bps rise in NIM, a 10 bps drop in credit cost, a 2% decline in non-NII and rising cost to income ratio.
Maintain Neutral rating and a TP hike. We keep our Neutral rating but raise TP from Bt50 to Bt53 as we re-rate PBV target to 0.7x from 0.65x to reflect higher ROE brought by a hike in dividend payout.
Key risks: 1) Asset quality risk from uneven economic recovery, 2) falling used car prices, 3) volatile capital market and 4) ESG risk on market conduct.
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