Kiatnakin Maintains ‘BUY’ on SAWAD, Seeing Loan Expansion on Track for 2026

Kiatnakin Phatra Securities maintains a “BUY” recommendation on Srisawad Corporation Public Company Limited (SET: SAWAD), setting a target price of THB 30.00 after the company’s 1Q26 performance met expectations. SAWAD delivered a net profit of THB 1.34 billion, marking a 22% year-on-year and 1% quarter-on-quarter increase, aligning with both the broker’s and consensus estimates. Excluding an estimated Bt5 million mark-to-market loss from Thai Airways International Public Company Limited (SET: THAI), normalized profit reached Bt1.35 billion. The quarter’s earnings were bolstered by reduced losses from sales and impairment, robust loan recovery, and declining funding costs. First-quarter earnings represented 23% of the full-year forecast, with the broker keeping its projections unchanged. Kiatnakin Phatra anticipates stronger loan expansion and higher refinancing gains in subsequent quarters. Loan growth saw a turnaround, rising 2% YoY and 0.1% QoQ, breaking a declining trend seen over the last five quarters. Motorcycle hire-purchase (HP) loans stabilized, while title loans grew markedly by 8.2% YoY, outpacing the previous quarter’s 6.7% growth. As the impact from SCAP’s portfolio reduction diminishes, accelerated loan growth is anticipated, with a forecast of 6% for 2026. Asset quality remains manageable. Non-performing loans (NPLs) saw a slight uptick to 3.9% of total loans due to fewer write-offs, while SAWAD’s standalone NPL ratio stood at 3.6%. Stage 2 loans dropped 10% QoQ, new NPL formation improved, and expected credit loss expenses were down 7%, resulting in a credit cost decline to 2.2%. Loan-loss coverage remained stable at 59%. Margins continue to improve, with net interest margin (NIM) climbing 44 basis points QoQ to 14.6%, and lending yields also increasing due to a greater proportion of title loans. Operating expenses were effectively managed, down 15% YoY, aided by a reduction in sales and impairment losses. Consequently, SAWAD’s cost-to-income ratio improved to 43% from 47% in the prior year.