Experts tip BAM shares as good buy

Latest Interesting Stories
Experts see good value in Bangkok Commercial Asset Management (BAM) shares, as mutual funds buy up the stock on expectations of a second-half recovery for Thailand’s largest manager of distressed assets.

BAM shares closed at Bt23.30, down Bt1.20 or 4.30 per cent on Monday (August 31) after a disappointing second-quarter performance.

Thanatphat Suksrichavalit, an analyst at Maybank Kim Eng Securities (Thailand), said BAM shares dropped after its Q2 performance was lower than market expectations of 80 per cent.

The decline was due mainly to the Covid-19 fallout and changes in financial reporting standards that meant the company was unable to recognise revenue despite cash flowing in.

“In fact, BAM was still able to generate cash flow of about Bt2.7 billion. Although it was 6 per cent down year on year and 14 per cent down quarter on quarter, it was still higher than the 20 per cent drop expected by the market,” said the analyst.

He forecast BAM’s performance would recover to its first-quarter level now that the Legal Execution Department has reopened after the Covid-19 lockdown, allowing the BMA to resume auctioning off its non-performing assets [NPAs].

“We found signs of NPA sales growth after the company held an [assets] auction in June,” he added.

“As the company is not facing cash flow difficulties, we expect it to pay a dividend of Bt1 per share as the market expects.”

Anuwat Srikajornratkul, an analyst at Capital Nomura Securities, said this was an opportunity to gradually buy BAM shares, given that mutual funds are aiming to buy them despite the weak Q2 performance.

“We judge that performance has already bottomed out, but an important risk factor is high expectation in the market as most analysts are waiting for additional information from the company,” he said.

“We have cut its share price forecast from Bt29.50 to Bt27.50 per share as its performance for the rest of this year is expected to be unchanged.”

Tanapat Chatsatien, an analyst at Trinity Securities, said the drop in BAM’s Q2 performance was caused by the temporary closure of the Legal Execution Department.

“The company’s revenue is expected to increase after the Legal Execution Department reopened in June, while the company is offering discounts on its Non-Performing Assets [NPAs] to stimulate sales,” he said.

He added that BAM shares were attractive because the price had dropped sharply but company profit in the rest of this year is expected to recover.

“We have kept the company’s 2021 share price forecast at Bt28.50 per share,” he said.