Srisawad Corporation: Eyes on portfolio quality
Related Stories
- Srisawad Corporation: A better year 202604 Mar 2026
- Srisawad Corporation: Back on track17 Nov 2025
- Srisawad Corp: All eyes on 2H25 performance20 Aug 2025
Results missed expectations on lower-than-expected top line. 4Q24 earnings came in at THB1.2bn (-3.3% y/y; -5.8% q/q), taking FY24 earnings to THB5.05bn (+1.0% y/y). The 4Q24 results missed the Bloomberg consensus and our estimates by 7% and 4%, respectively, due to lower-than-expected top line.
For 4Q24, the y/y and q/q declines were due to lower interest income (from loan and net interest margin [NIM] contraction) and lower fee income (from the slowdown in motorcycle hire purchase [HP] loan expansion, which in turn resulted in a slowdown in insurance sales commissions).
For FY24, the increase was attributed to higher interest income (+14.5% y/y) from loan expansion in 1H24 (+12.4% y/y). However, fee income decreased 4.8% y/y due to (i) the consolidation of Fast Money [FM]’s statement of comprehensive income since 2Q23 (which cancelled out fee income received from FM) and (ii) the continued slowdown in motorcycle HP loan expansion (which in turn resulted in a slowdown in insurance sales commissions).
Loan portfolio contracted 3.0% q/q and 4.3% y/y in 4Q24. SAWAD had shifted its focus to asset quality and liquidity, instead of portfolio expansion, due to the difficult conditions in the bond market in 2H24. With that, its loan portfolio contracted 3.0% q/q and 4.3% y/y to THB96bn at end-FY24. Of the c.THB4bn decrease in its loan portfolio in FY24, c.THB3bn was from motorcycle HP, and c.THB1bn was from vehicle title loans.
The situation in the bond market had been better in Dec, and the company successfully raised its funding via debentures issued late that month. Moreover, SAWAD has recently been assigned an A- (tha) rating from Fitch Ratings (Thailand) for its new debenture issuance (Mar 2025), currently in the selling process.
This has somewhat relieved the management’s concerns over liquidity management, and as such, SAWAD expects to continue loan expansion in FY25F. Management revealed that its YTD new lending was c.10-15% stronger than that in 4Q24 and expects loan growth of 10-15% in FY25F.
In terms of loan breakdown, car title loans made up 25% of the total loan portfolio; land title loans made up 25%; motorcycle title loans (partly under its 98% subsidiary [Fast Money: FM] and partly under SAWAD’s other subsidiaries) made up 16%; motorcycle HP loans (operated under its 72% subsidiary – SCAP) made up 31%, and personal loans (also operated under SCAP) made up the other 3% of loans at end-4Q24.
SAWAD had 5,695 branches at end-2024 (i.e., +265 in 2024) and has guided for 200-300 more branch openings in 2025.
NIM contracted on higher funding costs and lower yields. NIM contracted y/y and q/q in 4Q24 and in FY24, due to a decline in yield (due to loan portfolio contraction) and higher cost of funds (despite a lower funding base).
We expect NIM to further contract in FY25F from higher cost of funds due to larger funding base and the USD100mn credit facilities received in Feb (which carry a higher interest rate of approx. 10bps compared with baht borrowings).
Nonetheless, with its newly assigned credit rating and a potentially lower market interest rate, it is likely that SAWAD’s cost of funds may decline somewhat in 2H25F.
Fee income declined with loans. SAWAD’s fee/other income comprises appraisal fees, penalty fees, services fees, insurance commission fees, management fees, and income from bad debt recovery. Most of these fees tend to grow in line with loans.
Fee income decreased 3.5% y/y and 7.0% q/q in 4Q24 and 4.8% y/y in FY24, due mainly to lower insurance commission fees. We believe the continuing slowdown in motorcycle HP loan expansion will result in a slowdown in insurance sales in FY25F as we had witnessed in FY24.
However, SAWAD plans to boost its insurance sales in 2025 through its branches (scan and go) and mobile platform (license for online insurance sales granted), expecting strong growth in insurance commission fees.
Nonetheless, with the lower number of repossessed vehicles expected in 2025 (compared with in 2024), vehicle repossession fees should also decline. Net-net, we believe fee income is likely to decrease in FY25F.
C/I ratio increased in FY24 on higher loss on sales of repossessed vehicles. Operating expenses (OPEX) decreased 2.4% y/y and 2.4% q/q in 4Q24, on lower loss on sales of repossessed vehicles. Meanwhile, OPEX increased 12.6% y/y in FY24, in line with the higher number of vehicles repossessed in FY24 compared with FY23.
However, cost-to-income (C/I) ratio increased y/y and q/q to 52.4% in 4Q24 (vs. 50.0% in 4Q23 and 51.1% in 3Q24), due to lower revenue base. On a full-year basis, C/I ratio increased to 52.2% in FY24 (vs. 49.7% in FY23), due to higher loss on sales of repossessed vehicles.
We expect C/I ratio to decline to 52.0% in FY25F on the back of the lower number of vehicles repossessed.
Asset quality remained poor. While NPL amount declined by 0.6% q/q to THB3.3bn, NPL ratio increased to 3.6% at end-4Q24 (vs. 3.5% at end-3Q24). It’s worth noting that the decline in NPL (-0.6% q/q) was slower than the decrease in loan portfolio (-3.0% q/q) in 4Q24. Meanwhile, Stage 2 loans remained high at 10.3% in 4Q24 (vs. 10.2% in 3Q24 and 8.0% in 4Q23).
In the meantime, credit cost was lower to 1.6% in 4Q24 (vs. 1.9% in 3Q24), and we believe it should be attributed mainly to the q/q loan contraction in the respective quarter. Coverage ratio decreased to 59.5% at end-4Q24 (vs. 61.1% at end-3Q24).
To pay 10:1 stock dividend for FY24 performance. SAWAD announced a total dividend worth THB0.14 per share for its FY24 performance, comprising (i) a cash dividend of THB0.04 per share and (ii) a stock dividend at a ratio of 10:1 (equivalent to THB0.10 per share). This implies a payout ratio of 4.2% and a dividend yield of 0.4%. XD will be on 8 May 2025. Payment date is 27 May 2025.
Access more at DBS Insights Direct
In this regard, SAWAD will increase its capital by 151.046mn shares at a par value of THB1.00 to reserve for the stock dividends mentioned above.
Management has hinted that its dividend payment is likely to continue to be in the form of cash and stocks over the next few years to preserve its internal cash for business expansion amid high interest costs for debt financing.
2025 guidance. Management is confident that it will achieve 10-15% loan growth in FY25F, due to easing conditions in the bond market. It has also guided for credit cost to remain in a range of 180-200bps in FY25F (vs. 195bps in FY24 and our assumption of 190bps for FY25F). It expects NPL ratio to stay in a range of 3.0-4.0% at end-FY25F (vs. 3.6% at end-FY24 and our forecast of 3.8% at end-FY25F).
FY25F/FY26F earnings cut by 18%/19% to reflect lower loan growth, lower NIM, and higher C/I ratio assumptions. As we incorporate SAWAD’s 4Q24 results and revise our key forecast assumptions, we cut our FY25F/FY26F earnings forecast by 18%/19%.
Specifically, we (i) cut FY25F/FY26F loan growth to 10%/11% (vs. 15%/14% previously), (ii) reduced NIM to 14.4%/14.4% (vs. 15.0%/15.0% previously), and (iii) raised C/I ratio to 52.0%/51.0% (vs. 49.0%/49.0% previously).
With that, its FY25F/FY26F earnings growth was cut by 18%/19%. We now expect SAWAD’s earnings to drop 2.1% y/y in FY25F but increase 12.7% y/y in FY26F.
Maintain HOLD with a lower TP of THB35.00. As we incorporated SAWAD’s 4Q24 results and revised our key assumptions for FY25F/FY26F, we derive a lower TP of THB35.00 (vs. THB39.00 previously) for SAWAD. Our TP is based on 1.5x FY25F P/BV, i.e., 1.5SD below its 5-year average P/BV. We believe SAWAD’s portfolio quality will remain relatively weak, and its earnings growth outlook is likely to remain inferior to peers. Nonetheless, we believe, at this point, the outlook is already reflected in SAWAD’s share price. Our HOLD rating stands.
Access more at DBS Insights Direct
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Vickers Securities (Thailand) Co Ltd (''DBSVTH''). This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVTH.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere.
There is no planned schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.
DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.
General | This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. |
Australia | This report is being distributed in Australia by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”) or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946. DBS Bank Ltd, DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA. |
Hong Kong | This report has been prepared by a personnel of DBS Bank, who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Bank (Hong Kong) Limited (''DBS HK''), a registered institution registered with the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). DBS Bank Ltd., Hong Kong Branch is a limited liability company incorporated in Singapore. For any query regarding the materials herein, please contact Dennis Lam (Reg No. AH8290) at [email protected] |
Indonesia | This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. |
Malaysia | This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies. |
Singapore | This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6878 8888 for matters arising from, or in connection with the report. |
Thailand | This report is produced by DBS Vickers Securities (Thailand) Co Ltd which is regulated by the Securities and Exchange Commission, Thailand. For any query regarding the materials herein, please contact Chanpen Sirithanarattanakul at [email protected] |
United Kingdom | This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore. This report is disseminated in the United Kingdom by DBS Bank Ltd, London Branch (“DBS UK”). DBS Bank Ltd is regulated by the Monetary Authority of Singapore. DBS UK is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. In respect of the United Kingdom, this report is solely intended for the clients of DBS UK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS UK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. |
Dubai International Financial Centre | This communication is provided to you as a Professional Client or Market Counterparty as defined in the DFSA Rulebook Conduct of Business Module (the "COB Module"), and should not be relied upon or acted on by any person which does not meet the criteria to be classified as a Professional Client or Market Counterparty under the DFSA rules. This communication is from the branch of DBS Bank Ltd operating in the Dubai International Financial Centre (the "DIFC") under the trading name "DBS Bank Ltd. (DIFC Branch)" ("DBS DIFC"), registered with the DIFC Registrar of Companies under number 156 and having its registered office at units 608 - 610, 6th Floor, Gate Precinct Building 5, PO Box 506538, DIFC, Dubai, United Arab Emirates. DBS DIFC is regulated by the Dubai Financial Services Authority (the "DFSA") with a DFSA reference number F000164. For more information on DBS DIFC and its affiliates, please see http://www.dbs.com/ae/our--network/default.page. Where this communication contains a research report, this research report is prepared by the entity referred to therein, which may be DBS Bank Ltd or a third party, and is provided to you by DBS DIFC. The research report has not been reviewed or authorised by the DFSA. Such research report is distributed on the express understanding that, whilst the information contained within is believed to be reliable, the information has not been independently verified by DBS DIFC. Unless otherwise indicated, this communication does not constitute an "Offer of Securities to the Public" as defined under Article 12 of the Markets Law (DIFC Law No.1 of 2012) or an "Offer of a Unit of a Fund" as defined under Article 19(2) of the Collective Investment Law (DIFC Law No.2 of 2010). The DFSA has no responsibility for reviewing or verifying this communication or any associated documents in connection with this investment and it is not subject to any form of regulation or approval by the DFSA. Accordingly, the DFSA has not approved this communication or any other associated documents in connection with this investment nor taken any steps to verify the information set out in this communication or any associated documents, and has no responsibility for them. The DFSA has not assessed the suitability of any investments to which the communication relates and, in respect of any Islamic investments (or other investments identified to be Shari'a compliant), neither we nor the DFSA has determined whether they are Shari'a compliant in any way. Any investments which this communication relates to may be illiquid and/or subject to restrictions on their resale. Prospective purchasers should conduct their own due diligence on any investments. If you do not understand the contents of this document you should consult an authorised financial adviser. |
United States | This report was prepared by DBSVTH. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. |
Other jurisdictions | In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. |
HONG KONG | SINGAPORE |
INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: William Simadiputra DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected] | THAILAND |
Related Stories
- Srisawad Corporation: A better year 202604 Mar 2026
- Srisawad Corporation: Back on track17 Nov 2025
- Srisawad Corp: All eyes on 2H25 performance20 Aug 2025
Related Stories
- Srisawad Corporation: A better year 202604 Mar 2026
- Srisawad Corporation: Back on track17 Nov 2025
- Srisawad Corp: All eyes on 2H25 performance20 Aug 2025