Kiatnakin Phatra Securities (KKPS) has reiterated its ‘Neutral’ rating on Muangthai Capital (SET: MTC), with a price objective of THB 46.00, as the lender continues to deliver steady growth while funding costs appear to have peaked. MTC’s profit for 3Q25 is forecasted to hit a record THB 1.7 billion, up 14% year-on-year and 3% quarter-on-quarter. This brings the 9M25 profit estimate to THB 4.9 billion (+13% YoY), accounting for 75% of KKPS’ full-year forecast.
The key drivers for MTC’s continued solid performance are loan volume growth and normalizing credit costs. MTC’s asset quality improvement currently outpaces sector peers, although the decline in its funding costs has been comparatively slower. As a result, KKPS projects profit growth of 12% in 2025 and 15% in 2026.
MTC’s funding costs are expected to peak in 3Q25, reflecting the full-quarter impact of a US$350 million five-year debenture at a pre-swap coupon rate of 7.55%. The average funding cost should rise to 4.57% in 3Q25 (+16bps QoQ, +35bps YoY), but refinancing pressures are expected to ease from 4Q25 onwards. MTC has successfully secured baht debentures at lower coupons for three- to five-year tenors and longer-term seven-year debt, indicating funding cost reductions by 20bps per annum in 2026-27E.
On the operational side, MTC maintains the fastest loan book expansion in the sector, growing 13% YoY in the first nine months of 2025. The company emphasizes volume-led growth, aiming to increase loans per branch to THB 21 million in 2025 and up to THB 22-23 million by 2026. Branch expansion will see 600 new outlets this year, bringing the total to 8,800 in 2025, before slowing to 300-400 per year as rural coverage nears saturation. Enhanced scale and productivity are projected to lower the cost-to-income ratio to below 48% by 2027.
Despite positive operational trends, MTC’s relatively rich valuation (11x P/E and 1.7x PBV for 2026) and lower dividend yield underpin KKPS’ maintained ‘Neutral’ stance, with TIDLOR remaining their preferred stock in the sector.
