Yuanta Securities (Thailand) released a stock analysis of Tong Hua Holding Public Company Limited or TH by analyzing that TH which is a company that produces and distributes Chinese daily newspapers that have been in operation for more than 60 years, but with the trend Digitalization make the original business cheap Disrupt and has had a deteriorating performance for many years. Previously, the company had tried to invest in new businesses but was not very successful. Convenience store business and lending business
In 2021, the company decided to invest in bad debt management business (AMC) with partners who have experience in doing business AMC join the company Tong Hua Asset Management : THAM (TH 100% holding) and start bidding to buy unsecured debt from Non-bank one worth 3 billion baht, reflecting the readiness and ability to bid in debt to compete with other companies in the industry by 4Q64 The company began to recognize revenue and profit from the business. AMC Dark in the first quarter and help TH have a net profit of 4Q64, approximately 44 million baht, an outstanding growth of 120.7% QoQ and 405.2%YoY Support for the whole year 2021 has a net profit of 96 million baht, growing 268.5% YoY which is All Time High of the company
Huonta Securities stated that the key strengths are 1) TH is a debt-free company And there is a large amount of funds held in money market funds and low-yield bonds that are gradually being used to invest in business expansion. As a result, the company does not pay as much interest as other players. therefore has a higher profit potential 2) The company started its business with management. NPL unsecured which can transfer the rights of the debtor quickly and Ticket Size per account is not very high making it easy to agree with the debtor for debt restructuring and 3) The Company has an experienced management team and employees. This makes the operation more efficient in tracking and collecting money from debtors.
THANK YOU is Growth Driver Main has a plan to auction new debts continuously. We expect to see a positive development of TH more and more especially business AMC that operates under THANK YOU which is classified as New-S curve of companies that are in the early stages of growth with interesting investment issues 1) The Company aims to bid for another 5-6 billion baht in bad debts, representing an investment limit of 5-600 million baht. YTD The company has been successful in buying more bad debts of 1 billion baht that will begin to gradually transfer the rights in the loan agreements and start debt collection early2 Q65 At the same time, the company is also ready to bid for more bad debt from financial institutions during the rest of the year. THANK YOU Obtained a license to register for asset management business from the National Bank THANK YOU Able to bid more bad debts of the bank from the beginning and exempt from tax on the transfer of collateral Insurance of debtors that will be auctioned into the company’s bad debt portfolio In addition to expanding the loan portfolio for unsecured bad debt from Non-Bank that the company has started operating in 4Q64 we expect to see THANK YOU Begin to enter the bank’s secured bad debt auction which is currently in the process of considering the direction of the company that may start from tracking the automotive loan portfolio of size Ticket Size Not very large or low-risk home and land loans. Expected clarity in 2Q65
2) THANK YOU There is a management system as Asset light focused on Outsource Debt collection work for a debt collection company 3rd Party to reduce the limitations on Capacity In bad debt management, by 2022, the use of debt-based companies has been increased from 1 to 4 for comparison and competition.
as well as diversifying operational risks Reduce excessive dependence on one company. reflecting the readiness of the back-end system to support the expansion of the bad debt portfolio of THANK YOU proactive
3) The company has prepared funds to expand the business in the AMC quite well. At the end of 2021 in TH have cash and investment (Investment in securities and financial instruments) for another 600 million baht, plus cash flows that will gradually increase. from debt collection This has made enough investments to support the auction of bad debts this year. As for the growth in 2023, initially the company expects to bid 6 billion baht in debt, which the Board of Directors has approved the shareholders to issue debentures worth 2 billion baht. It is an emergency option if there is an appropriate timing for the auction to buy bad debts. In addition, the company is preparing to seek approval from shareholders for the issuance of TH-W3 Amount of 241 million shares (to the existing shareholders at the rate of 4:1, Exercise price 1 baht, Conversion rate 1:1, 3 years old) is a liquidity supplement for the next 3 years.
In 2022, we expect to see clearer growth. supported by the growth of THANK YOU to be recognized in the statement of TH First full year Moreover, this year will be the year that banks began to open auctions to sell bad debts to AMC More because debtors under the aid and debt restructuring measures gradually matured to receive assistance. and have to return to pay the monthly installments as usual As a result, some debtors will begin to be relegated. NPL Therefore, we believe that there is a high probability that TH Will be able to buy debt at the level of 5-6 billion baht this year. both from participating in the bad debt auction of Non-bank and started bidding on bank debt
Under our assumptions, the full year is expected THANK YOU will have a peak Claimed Value of the port NPL averaged at 6 billion baht, expected to have a cash collection effect of 7.5% per year of Claimed Value and estimated operating costs and provisioning ECL at 40% of the cash collection result This represents an initial net profit of 2022 at 161 million baht, growing by 67.5%.YoY
We have a positive view on business growth. AMC of TH that can still expand a lot from the readiness to bid for new debts, which ROE The company’s earnings have started to rise from 2-3% to 7.7% in 2021 and will increase in line with the perceived profit of the business. AMC full year from this year onwards There is also Upside Risk from the establishment JVMC together with financial institutions that are expected to become clearer at the end of the year
We estimate the initial value of TH In 2022, based on average PER of the group (JMT, CHAYO and BAM) During the last 2 years- 1 S.D. at 29.1x Get a 2022 base value at 4.90 baht, the current price has Upside about 57.1%
DBS raises price target TH 4.95 baht
DBS Securities, Vickers (Thailand) Co., Ltd. indicate that TH Continue to restructure the business, buy debts to manage another billion. The company’s financial position is strong and there are Warrant byThe company is mainly engaged in investment business. Changed from the former main business is the production and distribution of Chinese daily newspapers. “Tong Hua newspaper” It is the leading Chinese newspaper in Thailand with a history of more than 60 years. It is the Chinese newspaper with the largest market share.
At present, the company has restructured the company divided into 2 main businesses: 1. Technology and media. The technology and media business consists of Tong Hua Lab Co., Ltd., with Mr. Anakorn Kyawathanakit as Chief Technology Officer (CTO) Specializes in cryptocurrencies and has worked with co-founders. Ethereum Help to take care of new technology related matters. Tonghua Media Lab is engaged in media business and will be a new era of media with research and development in media and centralization (Decentralized) mainly
2. Finance Line: The financial business consists of Tong Hua Capital Company Limited, a subsidiary in which the Company holds 99.99% of the shares, which operates credit services by providing short-term working capital loans or factoring, which provides financial loans. Short-term working capital and holding 90% of shares in Tong Hua Asset Co., Ltd., operates a retail business. But now the business has changed to renting space to sell products. provide loan service and provide loan services by accepting transfers of the right to receive money from customers Collect money from debtors, buy and sell with collateral as land and buildings or other collateral and hold 99.99% of Tong Hua Asset Management Company Limited (THANKS) Operates non-performing asset management and asset management business with the first asset being managed 3,045 million baht that was auctioned in the year 64 and the company has a plan to buy debt in the coming years for another 5-6 billion baht per year, which will make this company a company that drives the company’s performance significantly in the period from now on. including the lead plan THANK YOU Listed on the stock market in the next 2-3 years
THANK YOU won the auction of debt to manage another 1,000.55 million baht TH Informed the market on Friday, March 4, that Tong Hua Asset Management Company Limited (THANKS) Won the auction, signed the contract and paid for the second lot of debt worth 1,000.45 million baht (from the goal to buy debt to manage this year, total 6 billion baht in 2022)
In the year 64 THANK YOU It won the first asset management auction of 3,045 million baht. This debt has already begun to recognize revenue in 4Q21 of 54 million baht, better than our expectation at 20-30 million baht and has outstanding debt at The end of 2021 is equal to 2,730 million baht (3,045 million baht less debt that decreases in 4Q64 at 315 million baht) and the company continues to focus on auctioning good quality debt The average age is not high, about 2 years, the average credit line is not more than 30,000 baht / person, making progress in changing the business structure more and more.
Financial strength is also the main advantage in this industry. The company’s financial liquidity is very good, with cash of 11.91 million baht and short-term investments in equity and debt securities totaling 577.21 million baht, two of which account for 47.77% of total assets. While on the liabilities side, only the main item is trade accounts payable of 113.43 million baht. Overall, the company has strong liquidity and capital advantages. Thus, it does not require as much financial cost as other competitors in the market. As a result, the total profit margin will be better in the early stages of business operations.
Warrant announcement TH-W3 proportion 4:1 exercise price 1 baht The company has resolved to issue a net warrant to purchase ordinary shares of the 3rd generationTH-W3) The amount does not exceed 241,258,981 units allocated to the existing shareholders at the rate of 4 existing ordinary shares per 1 unit of free warrants, provided that the warrants are valid for 3 years. 1 unit of warrant is entitled to purchase 1 ordinary share, the exercise price is 1 baht/share. XW On May 13, 20… it is a signal to expand more businesses in the asset management business for Dilution effect at 20%, but it is expected that it will not happen as quickly in the beginning
increase income THANK YOU in 2022 to 312 million baht (from 250 million baht). We revised our 2022 revenue projection that THANK YOU will have revenue to increase to 312 million baht (from 250 million baht) which comes from the recognition of income from the same debt that is bought and managed for a full year Added another 1 billion baht in newly acquired debt, with a percentage of revenue recognition from debt collection at 0.60 0.62% per month.
2022 net profit grows by 73% to 166 million baht from 96 million baht in 2021 as a result of 1) expecting the company to have a net profit from the original media business and from the asset pledge of 35 million baht., 2) have income from THANK YOU 312 million baht, 3) gross margin of THANK YOU at 70% and 4) THANK YOU There are administrative expenses and other 15% of income.
Revenue projections are also Upside risk This is because the estimated revenue of 312 million baht does not include debt that the company has an opportunity to bid more from this year’s target of 6,000 million baht. will increase the income
Assumptions in stock valuation We value stocks using GGM Appraised the underlying reference value at 3.3 times of PBV (companies nearby in the market like JMT Trading at 4.72 times P/BV and CHAYO Trading at 4.69 times P/BV) The valuation in 2022 is at 1.50 baht based on the assumption that no warrants have been converted this year.
basic appraisal TH at 4.95 baht per share, an increase from 4.32 baht because of the acquisition of new assets to manage but does not include new auctions of the company during the remainder of 2022, when the company will continue to bid more to meet the target of 5 billion baht at the current share price. Upside about 50%
We keep advice “buy” The company’s strengths are that there are no financial costs in the early stages of business operations. from a strong financial position resulting in very low financial costs and outsourcing debt collection to many operators This makes operating costs low and spreads business risks well. Therefore, the profit margin is higher than the industry average. especially in the early stages of operations.
The main risks are: 1. The company is at risk from entering new business. therefore still have to follow up on the operating results in the period from now on. 2. Buying debt to manage in the situation of COVID-19 May cause the number of default payments And the numbers according to debt collection differ from past statistics. As a result, there is a risk of bad debt assessment, provision and profit of the company. that may affect the valuation of the Company’s receivables in the future
