KGI Securities (Thailand) wrote in its analysis that Srisawad Corporation Public Company Limited (SET: SAWAD) is set to benefit from reduced pressure on asset quality after years of downsizing its loan portfolio and aggressive write-offs of non-performing loans. In 2Q26, the cost associated with resolving bad debts fell to around THB 200 million, a level that has remained stable quarter-on-quarter and represents a 66% year-on-year decrease.
Company projections suggest these costs should stay low in the near term, which is expected to help decrease operating expenses and enhance profitability. With fewer asset quality concerns, SAWAD is anticipated to renew its loan growth efforts in the second half of 2026, following stagnant loan growth in the first half of the year.
Despite challenges in the second quarter, where funding costs increased by approximately 6 basis points and only marginally declined year-to-date, SAWAD management attributed this to overlapping periods of debt repayment and the issuance of new debentures worth about THB 6 billion.
The company plans to refinance at lower rates, expecting this to reduce the cost of funds and boost net interest margins by the third quarter of 2026, potentially lowering funding costs by 10–20 basis points.
Looking ahead, SAWAD anticipates a seasonal pickup in loan growth during 2H26, consistent with past years, maintaining its full-year growth target of 10%. However, the analyst remains cautious, forecasting loan growth at 4% in 2026 and 6% in 2027 amid continued economic pressures in the low-end segment.
Reflecting these improvements and lower operating expenses from fewer repossessed car sales and write-offs, KGI has lifted its 2026 and 2027 net profit forecasts by 6% and 5%, respectively. The target price has been revised up to THB 28.50 per share and the stock rating upgraded to ‘Outperform,’ underpinned by robust capital structure, renewed loan growth prospects, and attractive valuation following recent share price declines.
