JMT Maintains 30% Growth Projection with High Debt Purchasing to Boost Profits

On Monday (16 Oct), JMT Network Services PCL (SET: JMT)’s stock price dropped by 10.53% or 4 baht to 34 baht per share with 1.834 billion baht worth of trading value. JMT’s CEO, Mr. Piya Pong-acha clarified in Kaohoon TV Online that there’s no need to worry about the rumored default risk for JMT as it already paid this year’s debentures, citing the company’s strong cash flows as the annually 9 billion baht expected of cash collection could easily cushion the 2.4 billion baht debenture due in 2024.


The CEO added that JMT’s 2023 gross profit margin remained unchanged from its first half of 2023 at 70%. However, both Return on Asset and Equity (RoA, RoE) would be increased on average to 10% to 20% during the later half of 2023, compared to respectively 7% and 8% during the first half of 2023.


Mr. Piya stated that the business performance is on course to the projection as the company had bought 100 billion baht of debt so far this year (mainly from KBANK) for its debt management subsidiary, JK AMC ltd. The increasing NPL and unsecured loans in the market is quite normal during the recent years of economic downturn.

However, it’s an opportunity for JMT as the past debt negotiation and cash collection records have been proven, which made him believe the larger debt portfolio would be  positive for JMT. The CEO maintained his forecast for a 20-30% growth this year with confidence on the expansion of the bad-debt market and JMT’s ability to collect cash.


Meanwhile, Kiatnakin Phatra Securities (KKPS) downgraded JMT to “Underperform” and lowered JMT target price from 68 to 33 baht per share, citing the side effects from higher interest rate and government policies that would reduce debt demands, which possibly reduces JMT’s debt collections by 3% in 2023 and 5% in 2024. KKPS also saw deceleration in growth as the CAGR of 2017 to 2022 is at 17% which is lower than 30% that JMT targeted. Also, the Earning Per Share (EPS) is projected to decrease to 13% in 2023 and 19% in 2024.


Bualuang Securities (BLS) still recommends accumulating buy, citing JMT’s big portfolio that already started some collections even if JMT growth would slow down as PEG ratio reduces to 0.9 from the previous average of 1.2 with PER at 18x. Meanwhile, Finansia Syrus Securities (FSS) also recommends buying JMT with a 60 baht target price, citing 2.2 billion baht of normalized profit and 28% growth in 2023 from its big debt portfolio, and the recovery of non-life insurance, both of which would perform better in 2024.


Lastly, Trinity Securities set target price for JMT at 47 baht, citing the 9% weakening of JMT profit in Q3 of 2023 at 500 million baht due to the bearish economy, however, the Q4 is usually the high season for debts which should push back JMT growth along with reduction in ECL.