BAM - 4Q24: Recovery, as expected

In line with our preview, BAM’s 4Q24 results reflected a recovery in cash collection, better gain on NPLs and NPAs and lower ECL. Slightly below expectation, BAM announced a DPS on 2024 of Bt0.35, equivalent to 5.43% dividend yield. We expect earnings growth of 8% in 2025, with a 3% rise in cash collection, lower gross margin on cash collection, a minimal reduction in cost of funds and the addition of management fees from JVAMC. We stay Neutral with an unchanged TP of Bt6.5.

4Q24: Recovered as expected. BAM reported 4Q24 earnings of Bt495mn (+8% YoY, 149% QoQ), in line with our estimates.

Highlights:

1) Total cash collection increased 9% YoY and 24% QoQ to Bt4.25bn in 4Q24, in line with our preview. Cash collection on NPLs was flat YoY and up 8% QoQ to Bt2.33bn and cash collection on NPAs rose 21% YoY and 53% QoQ to Bt1.93bn.

2) Interest income rose 1% YoY but fell 4% QoQ in 4Q24, with the cash portion up 10% YoY and 1% QoQ and the accrual portion up 1% YoY but down 4% QoQ. Gain on NPLs rose 2% YoY and 6% QoQ in 4Q24. Gross margin on NPL cash collection rose 37 bps YoY but fell 39 bps QoQ.

3) Gain on NPAs rose 3% YoY and 29% QoQ in 4Q24 with a fall in gross margin from NPA cash collection (-625 bps YoY, -571 bps QoQ). This reflected a more aggressive pricing strategy amidst an unfavorable property market.

4) Cost of funds rose 15 bps YoY and 3 bps QoQ to 3.57% in 4Q24.

5) Credit cost (excluding accrued interest) fell 6 bps YoY and 25 bps QoQ to
-0.03% in 4Q24, better than expected.

6) Cost to income ratio came down 168 bps YoY but rose 146 bps QoQ to 24.51% in 4Q24. Opex decreased 4% YoY but rose 11% QoQ in 4Q24.

Slightly lower DPS than expected. BAM announced a 2024 DPS of Bt0.35, equivalent to 5.43% dividend yield. This was lower than our estimate of Bt0.38, as it cut 2024 payout ratio to 71% from 2023’s 80%.

2025 outlook. BAM preliminarily targets total cash collection of Bt17.8bn (+17%) in 2025, overly optimistic in our view. We expect the year to bring earnings growth of 8%, with a 3% rise in cash collection, lower gross margin on cash collection, a minimal reduction in cost of funds and the addition of management fees from JVAMC.

Maintain Neutral with unchanged TP. We stay Neutral with an unchanged TP of Bt6.5 (based on DDM).

Key risks: 1) Cash collection risk from a slower-than-expected and uneven economic recovery, 2) a slowdown in property market demand and 3) rising competition from new players with irrational bidding prices.