THRE – Solid earnings growth with upside

We raised our earnings forecasts by 9% for 2026F and 24% for 2027F to capture upside potential from the National Disaster Insurance Scheme. Restructuring into a holding company will provide operational flexibility. We expect a turnaround in core earnings to Bt295mn in 2026F from a loss in 2025, driven by a lower combined ratio, and 10% earnings growth in 2027F, supported by a recovery in insurance revenue. We maintain an Outperform rating and raise our mid-2027F TP to Bt0.75 from Bt0.50, reflecting solid earnings growth, upside from the National Disaster Insurance Scheme, and a 6.4% dividend yield for 2026F.

Upside from the National Disaster Insurance Scheme. THRE will benefit from the national disaster insurance scheme, backed by a Bt15.5bn state-subsidized premium pool covering 30mn households against floods, windstorms, and earthquakes, effective October 1, 2026. As Thailand’s sole domestic reinsurer, THRE stands to capture premium and fee revenue from this scheme. The premium pool of Bt15.5bn is equivalent to around 3x THRE’s 2025 gross written premiums. However, we believe THRE is unlikely to retain large exposure from this scheme, as it aims to focus on personal line products. To capture potential benefits from this program, we raised our insurance revenue growth forecasts from -1% to 0% for 2026F and from 3% to 6% for 2027F. We will fine-tune our estimates once we obtain further clarity from the company, which could offer additional upside. Separately, THRE intends to reduce its health insurance exposure in 2026 to cope with rising medical inflation.

Restructuring into a holding company. THRE is restructuring into a holding company via a voluntary tender offer conducted by a newly established holding entity (THREH) through a 1:1 share swap with no cash consideration, taking place from September 23 to November 20, 2026. THRE will be delisted from the SET and replaced by THREH as the publicly listed parent company. This restructuring will give the company more operational flexibility and agility for future expansion.

Raise earnings forecast. We raised our earnings forecasts by 9% for 2026F and 24% for 2027F. We now expect a turnaround in core earnings to Bt295mn in 2026F from a Bt3mn loss in 2025, mainly driven by an improvement in the combined ratio (reflecting no recurrence of catastrophe claims) and a better ROI. Note that THRE booked extraordinary income from a court case in 2026. For 2027F, we expect core earnings to rise 10%, mainly driven by a recovery in insurance revenue.

Expect good dividend yield. THRE will resume dividend payments with a payout ratio of at least 40% in 2026 after skipping the dividend for 2025. We expect 2026F DPS to be Bt0.04 (50% payout), translating to an attractive dividend yield of 6.4%.

Maintain OUTPERFORM with a TP hike. We maintain an OUTPERFORM rating and raise our mid-2027F TP to Bt0.75 (based on 0.75x PBV) from Bt0.50, driven by solid earnings growth in 2026 and 2027, upside potential from the National Disaster Insurance Scheme, and an attractive 6.4% dividend yield for 2026F.

Risk considerations. Key risks include: 1) higher claims than expected, 2) slower premium growth than expected, 3) ESG risk on market conduct.