New Law on Leasing Business Takes Effect – Clear! Unrelated to MTLS, Focuses Solely on Lease Control; MTC's Financials Show 40% Growth in Q1/61, Strict NPL Management at 1.2%

A newly enacted law emphasizing control over leasing businesses has come into effect, effective from July 1, according to the Government Gazette announcement. This law notably impacts businesses engaged in leasing but does not affect MTLS, as the company primarily focuses on lending rather than leasing activities. This distinction necessitates a renaming of the company from 'Muangthai Leasing' or MTLS to 'Muangthai Capital' or MTC for a clearer understanding of its business operations. Muangthai Capital's Q1/2018 financials demonstrate a 40% growth in line with targets, coupled with stringent control over Non-Performing Loans (NPL) kept at a low level of 1.2%. In the stock market, Phillip Securities has set a target price of 54.50 baht per share, expressing confidence in maintaining leadership in the motorcycling lending business. The expansion plan for branches is expected to reduce costs and increase lending.

Chuchat Petaumpai, CEO of Muangthai Leasing Public Company Limited (MTLS), clarified that the recent announcement of the law does not directly impact MTLS due to its lending-oriented operations, not focusing on leasing activities. Consequently, the company is in the process of seeking shareholder approval to change its name to 'Muangthai Capital' or MTC.

For the first quarter of 2021, business operations are forecasted to achieve a 40% growth rate compared to the previous year, with effective NPL management at a low of 1.2% The company has opened more branches, reaching 213 as of March 31, 2021, out of the planned 600 branches for the year, totaling 2,637 branches.

Phillip Securities (Thailand) recommends investing in MTLS, estimating a fundamental price of 54.50 baht per share. MTLS, founded in 1992, initially engaged in motorcycle leasing and later expanded to vehicle financing. Currently, MTLS operates two main business segments: collateralized loans (motorbike title loans, car title loans, tractor title loans and land title deed loans) and unsecured loans (personal loans and nano finance).

MTLS has experienced substantial growth since entering the stock market in 2014, allowing for significant business expansion. By the end of 2017, it had opened 2,424 branches, enabling increased lending, leading to remarkable loan growth averaging 67.7% since 2011. The net profit also exhibited significant growth, averaging 77.1%.

Phillip Securities anticipates continuous growth for MTLS, aiming to reach 4,000 branches by 2020. The substantial branch openings contribute to increased lending, quick returns, and higher loan volume per branch. Projected growth for 2018-2019 estimates an average loan growth of 32.5% and net profit growth of 37.9%.

MTLS exhibits strong risk management, with a low NPL rate of 1.2%, while only 8% of loans are overdue but not classified as NPL. The company maintains a healthy provision-to-NPL ratio of 265%, adequate to accommodate new future standards. The fundamental price estimation stands at 54.50 baht.