KrungThai Card's profit predicted to surge a whopping 93% to THB441m

Thanks to improved credit card spending.

Thailand's KrungThai Card (KTC) is expected to report 4Q14 net profit of THB441m, a 93 percent increase YoY.

According to a research note from Maybank Kim Eng, this is thanks to improved credit card spending, better loan and fee income growth from both credit card and personal loan business and (iii) lower provisions of THB1.3b from THB1.4b in 4Q13.

Meanwhile, on a QoQ basis, earnings should drop 12% QoQ on seasonality effect of high OPEX and increasing credit cost.

Here's more from Maybank Kim Eng:

Asset quality to improve further. We expect its NPLs ratio to decline to 2.60% in 4Q14 from 2.69% in 3Q14. NPL coverage should increase by 5ppt QoQ to 345% in 4Q14, supported by the efficient debt collect service and good portfolio quality.

Clear earnings visibility. We forecast KTC earnings will grow 38% to THB1.8b in 2014F and 13% to THB2.0b in 2015F, supported by stronger loan and fee income growth, high NIMs and lower credit cost assumption (9.45% in FY14F and 9.35% in FY15F).

Its provisioning risks should be limited from the current strong loan loss reserve.

Maintain BUY, THB85 TP. We think current 9x 2015F PER and 2.2x P/BV are undemanding against a 26% ROE and 4% dividend yield.

We like KTC for its earnings visibility, 22% earnings CAGR for 2013-16F, and see strong re-rating prospects against the 30x-plus 2015 PERs of consumer-loan stocks such as SAWAD and MTLS.