So the government has come out with the another round of property stimulus measures, and here are the details:

  • On October 22nd, 2019, the Cabinet approved a temporary reduction in transfer fee from 2% to 0.01% and mortgage registration fee from 1% to 0.01% to those home buyers of up to Bt3m/unit. It will last for slightly longer than one year with tentative period of 24 Oct 2019 to 24 Dec 2020.
  • This is additional measure to help property market after the Cabinet earlier approved Bt200,000 tax deductible on 1st home purchase with price cap at Bt5m/unit and a cut in transfer and mortgage fee on below Bt1m home purchase.

According to what I’ve read these companies below are the ones with the THB 3 mn or less and the % of inventory.

  • LPN’s – Bt6.0bn, accounting for c.72% of total finished inventory
  • SPALI – Bt11.0bn or c.18%
  • PSH – Bt6.0bn or c.33%
  • ORI – Bt4.0bn or c.33%,
  • ANAN – Bt5.0bn or c.31%

How often has the government enacted property stimulus measures? Well here’s a table from 2003:

Do they work?

This is where when you do own homework and you’ll able to figure it out 😉

  1. Not really stimulus, more concessions than anything, and wont really help much if you cant get the loan in the first place.

    Pon, what happened to the banks today? Scb and kbank both down 7% in trading. Sky falling down?

    • Was sent the below, explains the drop.

      Kbank takeaways from meeting

      Kbank announced FY20F earnings which look bearish. Credit cost is lower to 150bp from 165bp in 2019 but NPL ratio target is 3.6-4.0% from 3.3-3.7% in 2019.

      The bank targets FY20 non-nii to contract 5-17% yoy vs -6% to -8% this year due to high base of investment gain and impact on TFRS9.

      NIM should decline to 3.1-3.3% in 2020 from 3.3% now as it expect one more policy rate cut.

      Mgt is targeting 4-6% loan growth, driven by retail lending.

      • People running for the hills? That report doesnt look great but looking at the whole banking sector, seems kind of knee jerk. Kbank hasnt been this price since the great floods of 2011. Wonder what will happen when we actually have a recession..

        • No one really looks at the fact that ROE’s for KBANK and SCB have effectively halved since 2013. They don’t deserve the 1.5x – 2.5x PBV as in the past.

          The majority of the banks retail loans are mortgages, older population = less demand for mortgages = no retail loan growth, then throw in these low interest rates killing banks NII, weak econ => high NPLs and write offs as seen for the past few years, and finally SCB decided to smack the entire sector getting rid of fees => Non-NII declining.

          Thai banks are going to mimic korean banks, low roe’s low valuations.

          • Roe has halved as essentially book values have doubled hence why they are low, but I think of it as Im not paying penny for penny for book, I buy the shareprice so even with low ROE, i am getting a really good return on my investment amount. With any mature industries, we could have consolidation, buyouts and regional expansions which are all opportunities for local banks.

            These behemoths ultimately will evolve into holding vehicles for investments when traditional banking starts to wane. Case in point, BBL holds 7.5B of Gulf at a cost of 2B.

          • And until that moment arrives their share prices will be stagnant and/or continue to fall. But I’m sure at some point there’ll be a trading opp in these banks…

  2. they could always do a share buyback to lift ROE. It is just the law of diminishing returns, we see it in nearly every mature industry that once you move past the economies of scale benefits, every marginal dollar will make ever decreasing returns.

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