Vehicle leases rebound seen
The leasing sector, especially concerning hire-purchase service providers for commercial trucks, is expected to rebound this year after languishing in the doldrums for four years due to tepid domestic car sales, according to Asia Plus Securities.
The ramping up of state investment in large-scale infrastructure projects, opportunities to improve trade value following the launch of the Eastern Economic Corridor (EEC) and the high tourism season in the second half will serve as a boon to the leasing sector, said Usanee Liurat, executive vice-president of Asia Plus Securities.
Commercial truck loans are expected rise 14.5% this year and jump significantly in 2018, she said. They surged 10.9% year-on-year from January to March, even though truck sales edged up a mere 1.4% o 8,770 units in annualised terms from January to April.
Asia Plus Securities’ forecast echoed that of Isuzu and Hino — two leading commercial truck manufacturers — by anticipating truck sales will jump 10-15% this year.
Given that the high season for commercial truck sales is typically in the second half, the brokerage firm expected that Ratchathani Leasing Plc (THANI) and Asia Sermkij Leasing Plc (ASK) would deliver strong earnings during the six months to December.
THANI, Muangthai Leasing Plc (MTLS), Srisawad Power 1979 Plc (SAWAD), Lease It Plc (LIT) and Singer Thailand Plc (SINGER) will post a robust net profit for the second quarter, said Ms Usanee.
THANI is expected to benefit from the hike in commercial truck loans, she said. The leasing company has high capital reserves and is ready to apply a new accounting standard, Thai Financial Reporting Standards, which will take effect in 2019, she added.
She forecast that MTLS’s net profit for the Aprilto-June quarter would hit a new record despite seeing growth decelerate from the first quarter.
SAWAD and THANI are Asia Plus Securities’ top picks for the leasing sector.
SAWAD’s loan growth is expected to hit 20-30% this year. It should benefit from its partial acquisition of Bangkok First Investment and Trust Plc (BFIT), since renamed Srisawad Finance Plc, as the deposit-taking financial firm can raise funds at low cost.
Leasing firms tipped to record a second straight quarter of solid net profit are IFS Capital Thailand Plc (IFS), S11 Group Plc (S11), Thitikorn Plc (TK) and Krungthai Car Rent and Lease Plc (KCAR). Those expected to see declines are ASK, Union Auction Plc (AUCT) and Aeon Thana Sinsap Thailand.
Meanwhile, Asia Plus Securities is bullish over JMT Network Services Plc (JMT), a debt collection arm of Jay Mart Plc, saying its revenue is still rising after it raised its bad debt management portfolio to 100 billion baht.