CGS-CIMB Expects 5% Upside to KBANK Bottom Line if ‘Home Credit Vietnam’ a Done Deal

Thailand’s Kasikornbank Public Company Limited (SET: KBANK) is eyeing to expand its portfolio in Vietnam after the Vietnamese central bank approved to raise core capital for its business in the country to $285 million from $80 million in June. In the latest movement, the Thai bank has shown its interest in lender Home Credit Vietnam at an estimated acquisition price of $1,000 million.

The core businesses of Home Credit Vietnam (HCV) are hire-purchase loans, electrical appliance loans and cash loans. It is a part of Netherlands-headquartered non-bank financial institution Home Credit Group. Home Credit Vietnam has 9,000 outlets in the country and employs more than 6,000 staff to serve 12 million customers.

According to the report from Reuters, KBANK is in talks with HCV, but no final decision has been made.


CGS-CIMB Securities is slightly positive on the deal. Based on available data back in 2019 and 2020, CGS assumed loans for HCV at 50 billion baht, with 20% ROE and 4x D/E. The quoted price, based on the news report, at $1,000 million (approx. 35 billion baht) could imply 3.5x P/BV, which is a bit premium in CGS’ view, but looks fair if compared to 20% ROE.

CGS estimated the acquisition to provide around 5% earnings upside to KBANK’s bottom line. Meanwhile, there are no major concerns on the capital base as the current level is almost at 500 billion baht.

Lastly, CGS warned that KBANK is still overwhelmed by asset quality concerns and drag from high credit cost.


KBANK published a statement earlier this morning to provide clarification on the news. The bank stated that it continuously seeks various business opportunities in Vietnam, which may or may not result in a transaction occurring in any way.