CHAYO tightens debt screening to handle shrinking NPL auction market, targets 300 million baht net profit this year

EarningsCorporate Action
โดย HoonVision·TH·Read original
Summary · why it matters

CHAYO Group Public Company Limited, or CHAYO, has adjusted its strategy to focus on rigorously screening debts entering its portfolio, while accelerating cash collection and restructuring debts to give debtors longer repayment periods, keeping its net profit target for this year at 300 million baht. Chief Executive Officer Suksan Yosain opened up that the volume of non-performing loans entering the auction market in the third and fourth quarters of this year was lower than expected, especially debts valued below 100,000 baht, which under Bank of Thailand policy will be forwarded to Sukhumvit Asset Management Company Limited, or SAM. Meanwhile, secured non-performing loans are still coming to market, but some banks have chosen to delay sales to wait for suitable prices. The company estimates this situation may continue into the second quarter of 2570. The company has lowered its 2569 revenue forecast to 1.5-1.6 billion baht from its original target of 2 billion baht, based on calculations of expected credit losses, or ECL, and the effective interest rate, or EIR. It has set full-year ECL provisions at no more than 800 million baht, compared with about 340 million baht in the first half, and expects the remaining period of the year to be about 460 million baht. On debt collection strategy, the company has extended repayment periods from about 1 year to roughly 1.5-2 years, while reducing discounts given to debtors, increasing the amount collected over the life of the debt. Although average monthly revenue will decline in the short term, the internal rate of return, or IRR, remains at the same level. In addition, CHAYO has proposed two approaches to the government: setting a clear timeframe for debtor assistance measures, and allowing debtors who have repaid or restructured their debts to access new loans again.

Impact on stocks 1

Financials▼ · 1 stocks
Chayo Group Public Company Limited
CHAYO
▼ NegativeCapitalDemandrelevance

Full-year ECL provisions set at up to 800 million baht and a lowered revenue forecast weigh on earnings, though the 300 million baht net profit target is maintained.

Off-coverage companies 1

Sukhumvit Asset Management Company LimitedPrivate± Mixed
Regulationrelevance

Bank of Thailand policy routes sub-100,000-baht NPLs to SAM, but the article does not state how this affects SAM's own business.

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