We’ve liked the change in management in KTC at the end of last year from a CEO who enjoyed using company funds and marketing girls for his own amusement to K. Rathian, who is well-known for being strict with spending and strong on ethics within the industry. To us the investment thesis is fairly straightfwd:

• KTC has been underperforming as a company since it IPO’ed in 2002 @ 19 baht/share
• The new CEO targets to drop the cost-to-income ratio to industry standard levels (improvement of about 20%)
• Yes I know the industry is extremely competitive with discounts all around but I looked at this as a simple turnaround story, the stock was trading cheaply at the beginning of the year below BV, there was a potential catalyst in terms of performance should the CEO achieve his plans, and then anyone with basic valuation skills can see that it would be worth close to high 30’s. Plus there is a one massive outlier with KTB as a 49% shareholder that they may want to fully consolidate KTC in the future.
• Its good to see he is achieving what he plans and we’re hoping that the operational improvement within the company continues.

Krungthai Card (KTC) has returned to the black after two straight quarters of losses thanks mainly to improvements in bad-debt management.

Rathian Srimongkol, the president and chief executive, said the non-bank company posted a net profit in the second quarter this year of 86.2 million baht, up by 71.1% year-on-year.

Source: Bangkok Post

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