12-month target price : Bt11.90
Recommendation : BUY
Closing Price (29 Jan 09) : Bt7.40
2008 net profit of Bt534.79m, off 3% YoY
- Top broker KEST posted a drop of 3% YoY in 2008 net profit to Bt534.79m.
- The increased volume of trading by retail investors should help drive the broker's market share higher. We cut our 2009 average daily market turnover estimate to Bt15b, but we raise our 2009 forecast for the broker's average market share to 8.83%.
- We estimate the broker's 2009 net profit to be about Bt561.86m.
- We keep a Trading BUY rating on KEST with a 2009 price target of Bt11.90/share.
2008 net profit of Bt534.79m, off 3% YoY
KEST, Thailand's top broker by market share earned brokerage fees of Bt1,511m in 2008, down 6.65% YoY, as daily market turnover averaged Bt15.9b for the year and the broker achieved an average market share of 8.12%. The broker posted a drop of 3% QoQ in 2008 net profit to Bt534.79m. The result came in below our forecast of Bt564m.
Cut in 2009 average daily market turnover estimate: 2009 net profit expected to be about Bt562m
The average daily market turnover during the start of the year remained light at Bt10.6b. Trading volume is expected to remain muted in the current environment of global economic downturn. We therefore cut our 2009 average daily market turnover estimate to Bt15b from Bt16.5b. The increased volume of trading by retail investors should however help drive the broker's market share higher to about 10%. We expect 2009 brokerage fees to come in at about Bt1,543.76m. We also raise our 2009 forecast for the broker's average market share to 8.83%. We estimate 2009 net profit to be about Bt561.86m, up 5% YoY on the back of increased market share.
Trading BUY rating with 2009 price target of Bt11.90/share
Our 2009 price target of Bt11.90/share is based on a P/E of 12x. We expect the broker to benefit from rising market share, which will help support earnings growth in the face of economic crisis. Given multiple risks to the brokerage sector, we therefore keep a Trading BUY rating on KEST.
By Phillip Securities (Thailand) Plc. on Jan 30, 2009
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