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Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Business Description
• Collateral-backed loans
• Asset owners, in need of quick cash
• Branches throughout Thailand
Srisawad Power 1979
(sawad)
Fast Money Co.Ltd
(FM)
SWP Asset
Management
Co. Ltd
(AMC)
New motorcycles ,Personal loan ,Nano...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Core Product
❖ Auto Backed Loans
❖ House and Land Backed Loan
❖ Personal Loans
❖ New Motorcycle Hire Purchase
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢Ambitious ROE target propelled by high loan
growth
➢ N...
Ambitious ROE target of 30-35% per year
❖ Loan growth target: 20-30% (2015-2017)
❖ Driven by aggressive lending in the ban...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢N...
Nanofinance and debt collection services
❖ Awarded Nanofinance licenses from the Ministry of Finance -
May 2015
❖ Lending ...
Loans expansion via SME clients
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Launch bonds of THB 2.5bn in 2015 3rd Quarter
❖ Main aspect: firm’s rapid expansion outlook
❖ Rise in number of branches =...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Manageable Risk and NPL
Proportion of Receivables:
“More than 70% of the loans
are categorised as Current”
Quality of loans
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Branch Expansion
❖ Plans to raise its branch network to
1,300 offices in 2015
1,500 offices in 2016 from 1,059 offices in ...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Financial Statement Analysis: INCOME STATEMENT
• SAWAD’s revenues increased by 35.16% from 1.45bn to
1.95bn
Net income imp...
Financial Statement Analysis: GROWTH RATE
• SAWAD’s growth in earnings per share increased 17.78%
Five year annualized ear...
Financial Statement Analysis: CASH FLOW
• In 2014, Srisawad Power 1979 PLC increased its cash reserves by
246.55% (247.57m...
Financial Statement Analysis: BALANCE SHEET
Debt to Total Capital ratio of 44.50%
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Risk Analysis
 High NPL ratio compared with consumer finance peers
SAWAD’s NPL Ratio is the highest among its consumer fi...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Valuation
LOW Profile, HIGH Profit
• Recommendation: BUY
Share Price Forecast
Valuation
LOW Profile, HIGH Profit
• PRICE: Positive trend Dividends Forecast
2014 Annual Earnings of 0.9118 per share
& E...
Possible Climax Top price
❖ Growth stock tends to reach climax top when its P/E expands to 2.3X of P/E at
break out
❖ SAWA...
Outline
❖ Business description
❖ Core products
❖ Investment thesis
➢ Ambitious ROE target propelled by high loan growth
➢ ...
Trade Strategy
Trade Strategy
Trade Strategy
Support from Institutional Investors
Support from Institutional Investors
These are accumulating shares of SAWAD.
❖ Invest 50% of allocated capital when
1) Price breaches 50 days SMA resistance with strong volume (preferably > 50
days A...
Trade Strategy
❖ Hedge Currency Risk by short Thai Baht 50% of position size.
❖ Consider take profit when return ~ 20%
❖ M...
You Will Survive if CutLoss!
Position Sizing
❖ Minimum allocated capital should be 10% of total
available fund. Otherwise position might be too small.
...
Position Sizing
❖ Maximum position size?
❖ Define your maximum risk based on your risk
tolerance. Let 2% drawdown = Max fo...
“At the end of the day, the most important thing is how good
are you at risk control.”
“If I have positions going against ...
“The only way you get a real education
in the market is To invest cash, Track
your trade, and Study your mistakes.”
Jesse ...
Q&A
Sawad final
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Sawad final

  1. 1. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  2. 2. Business Description • Collateral-backed loans
  3. 3. • Asset owners, in need of quick cash • Branches throughout Thailand
  4. 4. Srisawad Power 1979 (sawad) Fast Money Co.Ltd (FM) SWP Asset Management Co. Ltd (AMC) New motorcycles ,Personal loan ,Nano finance Debt Collection
  5. 5. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  6. 6. Core Product ❖ Auto Backed Loans ❖ House and Land Backed Loan ❖ Personal Loans ❖ New Motorcycle Hire Purchase
  7. 7. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  8. 8. Ambitious ROE target of 30-35% per year ❖ Loan growth target: 20-30% (2015-2017) ❖ Driven by aggressive lending in the banking market ❖ 25 million members of the workforce = “out of system” * ❖ Targeting low-income clients (those difficult to receive loans from large banks) *National Statistical Office: not on a payroll or drawing fixed salary
  9. 9. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  10. 10. Nanofinance and debt collection services ❖ Awarded Nanofinance licenses from the Ministry of Finance - May 2015 ❖ Lending budget at THB 500m - commence 2015 3rd Quarter ❖ Potential clients: franchisees of 30 local brand names 1. Jiang Fish Ball 2. Kieng Empire 3. Hong Kong Noodles ❖ Diversify into distressed asset management and debt collection services via its subsidiary.
  11. 11. Loans expansion via SME clients
  12. 12. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  13. 13. Launch bonds of THB 2.5bn in 2015 3rd Quarter ❖ Main aspect: firm’s rapid expansion outlook ❖ Rise in number of branches => firm to increase its lending & efficiency in debt collection ❖ Low net D/E ratio of 1.7x at the end of Q1 2015 ❖ Estimate new borrowing bring D/E ratio = 2.4x ❖ => leverage D/E ratio
  14. 14. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢Manageable Risk and NPL ➢ Branch Expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy
  15. 15. Manageable Risk and NPL Proportion of Receivables: “More than 70% of the loans are categorised as Current”
  16. 16. Quality of loans
  17. 17. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢Branch Expansion ❖ Financial statement ❖ Risk ❖ Valuation ❖ Trade Strategy ❖ n3.gstatic.com/images?q=tbn:ANd9GcQVSoFQ1_sJIQuGItbwfFySAJIxu8A3Hq-8S9I0- y8JUgPr77dE
  18. 18. Branch Expansion ❖ Plans to raise its branch network to 1,300 offices in 2015 1,500 offices in 2016 from 1,059 offices in 2014. ❖ The company also plan to expand its business overseas.
  19. 19. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial Statement Analysis ❖ Risk ❖ Valuation ❖ Trade Strategy
  20. 20. Financial Statement Analysis: INCOME STATEMENT • SAWAD’s revenues increased by 35.16% from 1.45bn to 1.95bn Net income improved by 48.53% from THB 575.43m. to 854.69m.
  21. 21. Financial Statement Analysis: GROWTH RATE • SAWAD’s growth in earnings per share increased 17.78% Five year annualized earnings per share growth ranks highest in its industry.
  22. 22. Financial Statement Analysis: CASH FLOW • In 2014, Srisawad Power 1979 PLC increased its cash reserves by 246.55% (247.57m) Cash Flow from Financing totalled 80.09% (1.57bn) ofits revenues. • SAWAD used 1.13bn for operations while cash used for investing totalled 188.70m.
  23. 23. Financial Statement Analysis: BALANCE SHEET Debt to Total Capital ratio of 44.50%
  24. 24. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial Statement Analysis ❖ Risk Analysis ❖ Valuation ❖ Trade Strategy
  25. 25. Risk Analysis  High NPL ratio compared with consumer finance peers SAWAD’s NPL Ratio is the highest among its consumer finance peers, because some clients have income streams on a quarterly or half-yearly basis. However, We believe that its low loan-to-value at 30-70% and high interest rate charged cover any default risks, which therefore results in an impressive bad debt recovery rate of 50% in the first year after customers go into default.  Dependence on senior management Major shareholders and management has a strong background in the vehicle pledging loan business in the vehicle-pledging loan business in the provincial markets.  Provisions charged remain high which are in line with SAWAD’s larger portfolio. However, we believe that its effective in-house debt collection unit will mitigate rising NPL amid high household debt
  26. 26. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial Statement Analysis ❖ Risk ❖ Valuation ❖ Trade Strategy
  27. 27. Valuation LOW Profile, HIGH Profit • Recommendation: BUY Share Price Forecast
  28. 28. Valuation LOW Profile, HIGH Profit • PRICE: Positive trend Dividends Forecast 2014 Annual Earnings of 0.9118 per share & EPS Forecast 2015 1st Quarter Earnings of 0.27 per share
  29. 29. Possible Climax Top price ❖ Growth stock tends to reach climax top when its P/E expands to 2.3X of P/E at break out ❖ SAWAD broke out with massive volume on 08/12/2014 ➢ P/E = 34.69 >>> 2.3X P/E ~ 79 ➢ EPS on 08/12/2014 ~ 0.7 ➢ FY2015 EPS ~ 1.24 ➢ Climax Top price ~ 79*1.24 ~ 98 ➢ Upside ~ 150% ❖ SAWAD may or may not reach its climax top price
  30. 30. Outline ❖ Business description ❖ Core products ❖ Investment thesis ➢ Ambitious ROE target propelled by high loan growth ➢ Nano finance and debt collection services to support growth ➢ Plan to launch bonds of THB 2.5bn in late 2015 3rd Quarter to boost expansion ➢ Manageable Risk and NPL ➢ Branch Expansion ❖ Financial Statement Analysis ❖ Risk ❖ Valuation ❖ Trade Strategy
  31. 31. Trade Strategy
  32. 32. Trade Strategy
  33. 33. Trade Strategy
  34. 34. Support from Institutional Investors
  35. 35. Support from Institutional Investors These are accumulating shares of SAWAD.
  36. 36. ❖ Invest 50% of allocated capital when 1) Price breaches 50 days SMA resistance with strong volume (preferably > 50 days Average Volume). 2) Price breaks out from new base with strong volume. 3) Pocket Pivot Buypoint - Up day with volume > prior down Volume within 10 sessions. ❖ Allocate 30% when price goes up 2.5% and 20%when price goes up another 2% (so we will buy within range of 5% from buypoint). “Pyramiding: Averaging UP not Averaging Down!” ❖ Have to buy a stock in a unit of board lot i.e. 1 board lot = 100 shares. So it might be difficult to do pyramiding. Trade Strategy
  37. 37. Trade Strategy ❖ Hedge Currency Risk by short Thai Baht 50% of position size. ❖ Consider take profit when return ~ 20% ❖ MUST “CUTLOSS” if loss reaches 8% (Max. 10%) ❖ Why CUTLOSS?
  38. 38. You Will Survive if CutLoss!
  39. 39. Position Sizing ❖ Minimum allocated capital should be 10% of total available fund. Otherwise position might be too small. ❖ With 8% cutloss for 10% position size then we only risk 8%*0.1 = 0.8% of portfolio
  40. 40. Position Sizing ❖ Maximum position size? ❖ Define your maximum risk based on your risk tolerance. Let 2% drawdown = Max for each position. Maximum position size = 2%/0.08 = 25% ❖ Good trade should yield Reward to Risk ≥ 2:1
  41. 41. “At the end of the day, the most important thing is how good are you at risk control.” “If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.” Paul Tudor Jones
  42. 42. “The only way you get a real education in the market is To invest cash, Track your trade, and Study your mistakes.” Jesse Livermore
  43. 43. Q&A

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