Tidlor Holdings: The best is yet to come
- 1Q25 results marked a record high; stronger quarters expected ahead
- Loan growth momentum has resumed and remains strong
- Manageable asset quality; credit costs to stay in check
- Maintain BUY with a higher TP of THB22.00
Tidlor Holdings (TIDLOR TB) to be listed on 15 May 2025. Recall that Tidlor Holdings PCL (TIDLOR) has made a tender offer for the securities of Ngern Tid Lor PCL (NTL) for corporate shareholding restructuring, at a swap ratio of 1 common shares of NTL for 1 common shares of TIDLOR during 10 Mar-30 Apr 2025. The number of NTL’s shareholders accepting the tender offer was 2,895,929,570 shares, equivalent to 99.4% of the total issued and paid-up shares of NTL.
During the process of the corporate shareholding restructuring (i.e., 2-14 May 2025), Ngern Tid Lor PCL was listed on the Stock Exchange of Thailand (SET) under the ticker “NTL”.
On 15 May 2025, Tidlor Holdings (TIDLOR) will be listed as securities on SET instead of Ngern Tid Lor PCL (NTL), which will be delisted from the SET on the same day.
1Q25 results beat expectations and marked a record high. 1Q25 earnings came in at THB1,218mn (+10.3% y/y; +16.6% q/q), beating the Bloomberg consensus and our estimate by 8% and 5% respectively, thanks to lower-than-expected credit cost.
The y/y increase was attributed to higher interest income (from loan expansion), higher fee income (from growth in insurance brokerage business), and lower credit cost. Meanwhile, the q/q increase was thanks mainly to lower cost-to-income (C/I) ratio.
3M25F earnings accounted for 24% of our revised FY25F forecast.
Loan growth momentum has resumed and remains strong. Loans expanded 4.6% y/y and 0.8% q/q to THB104.7bn in 1Q25. Segment wise, title loans increased 1.2% q/q, while hire purchase (HP) declined 3.7% q/q in 1Q25. Based on type of vehicles, 2-wheel title loans grew the strongest in 1Q25, following by 4-wheel and truck title loans.
With that, the proportion of HP to total loans decreased to 8.2% at end-1Q25 (vs. 8.6% at end-FY24 and 10.5% at end-FY23).
Note that most of its HP loans were for used trucks, and if broken down by collateral, used trucks accounted for about 17% of TIDLOR’s total loans (vs. 20% in 2Q23 and its peak at 25%).
Management revealed that 1Q25 loan growth was concentrated in Mar, after heavy loan prepayments in Jan-Feb. Loan growth was even stronger in Apr and May-to-date, and management expects the momentum to continue through the rest of 2025.
TIDLOR opened 23 new branches in 1Q25 (vs. 30 in 1Q24), taking the total number of branches to 1,801 at end-1Q25. The company targets to open a total of 100 branches in 2025.
As at end-1Q25, the company has issued more than 741k TIDLOR cards to its loan customers (+7% y/y), and over 71% of the disbursement transactions were conducted through the E-Withdrawal feature in the NTL application.
NIM contracted y/y and q/q in 1Q25. TIDLOR’s yield increased y/y thanks to the company’s lending rate adjustments in Oct 2024. Nonetheless, without any yield adjustments in 1Q25 and with a fewer number of days in 1Q25 compared with that in 4Q24, its yield declined q/q in 1Q25.
Meanwhile, cost of funds increased y/y, due to higher interest rates for new borrowings (compared with existing and matured ones) and an expanded funding base to support loan expansion, but relatively stabilised q/q, given that there were no debentures maturing in the quarter (i.e., no repricing impact).
Net-net, net interest margin (NIM) contracted y/y and q/q to 15.44% in 1Q25 (vs. 15.46% in 1Q24 and 15.67% in 4Q24).
Management has guided that it has no plans to raise its lending rates (for a particular product) but its average yield may change with loan mixes (and credit risks). Meanwhile, given the current market interest rate outlook, it expects cost of funds to peak in 3Q25F.
TIDLOR follows a funding diversification strategy, leveraging both domestic and international (fully hedged) financial institution borrowings as well as issuing debt instruments. This approach enhances its financial flexibility and mitigates concentration risk.
The company’s funding structure was almost evenly split between financial institution loans and debentures, with a ratio of 45:55 at end-1Q25. Its debt-to-equity (D/E) ratio remained low at 2.35x at end-1Q25.
Fee and service income increased y/y but declined q/q due to seasonality. Most of TIDLOR’s fee and service income was derived from insurance sales and services. While insurance premium sales seasonally peak in 4Q, sales in 2Q are usually lower than in 1Q, while sales in 3Q are higher than in 2Q.
Fee income increased 5.4% y/y but declined 7.9% q/q to THB972mn in 1Q25. The y/y increase was attributed mainly to an 8.7% y/y increase in non-life insurance premium sales, amounting to THB2,772mn, supported by the wide-range and accessible distribution channels, along with a well-curated product suite that effectively addresses diverse customer needs. Meanwhile, the q/q decline was attributed to the seasonal effect. The proportion of fee income to total revenue was 17% in 1Q25 (vs. 18% in 4Q24 and 17% in FY24).
Note that TIDLOR’s non-life insurance premium sales growth was 16% in FY24 (and 8.7% in 1Q25), vs. the market’s 4% contraction. Meanwhile, around 90% of voluntary motor insurance policies were sold to non-loan customers, with more than 60% were type-1 motor insurance.
Currently, TIDLOR has three major channels for insurance sales, including (i) traditional branches and telesales (i.e., Shield Insurance), (ii) insurance platform for sub-broker (i.e., Areegator), and (iii) self-service digital broker (i.e., heygoody).
Cost-to-income ratio seasonally declined q/q. With most of its operating costs being fixed, TIDLOR’s cost-to-income (C/I) ratio should continue to reduce as its top line grows.
Operating expenses (OPEX) increased 5.8% y/y but declined 12.8% q/q in 1Q25. The y/y increase was due to higher marketing expenses alongside the expansion of its lending and insurance brokerage business. While the q/q decrease was attribute to lower seasonal expenses.
Meanwhile, with its effective cost management, C/I ratio remained relatively stable y/y at 54.2% in 1Q25 but declined q/q (vs. 60.9% in 4Q24). With a stronger top-line growth momentum, we believe it is likely that C/I ratio will remain in check in FY25F.
Manageable asset quality: Credit cost to remain in check. NPL ratio slightly declined to 1.78% at end-1Q25 (vs. 1.81% at end-4Q24) thanks to the company’s prudent credit approval strategy and comprehensive risk management strategy.
Credit cost edged up to 2.96% (vs. 2.72% in 4Q24), due to (i) an abnormally low credit cost in 4Q24 following the company’s proactive write-offs in 9M24 and (ii) rising macro uncertainties which may require TIDLOR to undertake more NPL write-offs in the future.
With that, coverage ratio increased to 256% at end-1Q25 (vs. 243% at end-4Q24).
Note that some credit costs and NPLs were from Stage 2 customers registering for the “You Fight, We Help” programme in 1Q25. Specifically, those customers, once registered (but not yet approved), stopped paying their loans, resulting in a reclassification to Stage 3, leading the company to set aside more credit costs.
Management expects these customers, once approved for programme participation, will pay their loans according to the new restructured terms, implying better asset quality and thus lower credit costs.
Nonetheless, currently only less than 2% (c.1.2%) of loans are under the “You Fight, We Help” programme.
Note that TIDLOR will not reverse the credit costs already provided in past quarters but will reserve more if it deems necessary.
Management has guided that it currently estimates its credit cost to stay below 3.0% and NPL ratio to remain below 2.0% in FY25F.
Stronger quarters ahead. As we incorporated TIDLOR’s 1Q25 results and fine-tuned our key assumptions for FY25F, our FY25F earnings increased by 3%. Specifically, we slashed FY25F loan growth to 10.1% (from 11.5% previously), cut credit cost to 3.0% (from 3.4% previously), and raised C/I ratio to 54.3% (from 53.8% previously).
We now expect TIDLOR’s FY25F earnings growth at 18.9% y/y and expect it to report stronger earnings q/q over the remaining quarters of FY25F, supported by continuing loan growth and manageable asset quality.
Maintain BUY with a higher TP of THB22.00. Following our earnings revision, we derive a higher TP of THB22.00 (vs. THB21.00 previously) for TIDLOR. Our TP is based on 1.8x FY25F P/BV, i.e., 1SD below its average P/BV. We believe TIDLOR’s asset quality should have passed the bottom and expect the counter to re-rate with the overall economic recovery.
TIDLOR: 1Q25 results summary
THB mn | 1Q25 | 1Q24 | y/y (%) | 4Q24 | q/q (%) |
Interest income | 4,658 | 4,374 | 6.5 | 4,702 | (0.9) |
Interest expense | (631) | (557) | 13.3 | (654) | (3.5) |
Fee and services income | 972 | 922 | 5.4 | 1,055 | (7.9) |
Other income (expense) | 11 | 13 | (19.2) | 20 | (47.5) |
SG&A | (2,717) | (2,569) | 5.8 | (3,118) | (12.8) |
PPOP | 2,292 | 2,183 | 5.0 | 2,005 | 14.3 |
ECL | (772) | (809) | (4.7) | (702) | 10.0 |
Net profit | 1,218 | 1,104 | 10.3 | 1,044 | 16.6 |
EPS (THB) | 0.42 | 0.39 | 7.2 | 0.36 | 16.6 |
Loans | 104,719 | 100,133 | 4.6 | 103,934 | 0.8 |
Percent | 1Q25 | 1Q24 | y/y (ppts) | 4Q24 | q/q (ppts) |
Spread (bps) | 14.29 | 14.50 | (21.7) | 14.54 | (25.7) |
NIM (bps) | 15.44 | 15.46 | (1.5) | 15.67 | (23.1) |
Cost-to-income ratio | 54.24 | 54.06 | 0.2 | 60.86 | (6.6) |
Credit cost | 2.96 | 3.28 | (0.3) | 2.72 | 0.2 |
Operating margin | 40.64 | 41.12 | (0.5) | 34.71 | 5.9 |
Net margin | 21.59 | 20.80 | 0.8 | 18.08 | 3.5 |
ROE | 15.66 | 15.25 | 0.4 | 13.62 | 2.0 |
ROA | 4.58 | 4.33 | 0.2 | 3.92 | 0.7 |
NPL | 1.78 | 1.60 | 0.2 | 1.81 | (0.0) |
Coverage ratio | 255.74 | 264.10 | (8.4) | 242.67 | 13.1 |
D/E (x) | 2.35 | 2.52 | (0.2) | 2.49 | (0.1) |
Source of all data: Company, DBSVTH
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