Coronavirus turns Thai firm into world's top asset management stock

A man reads a newspaper in front of an electronic board displaying live market data at a stock broker's office in Bangkok. PHOTO: REUTERS

BANGKOK (BLOOMBERG) - Thailand's biggest manager of distressed assets has become the world's top performer among peers this year partly because the coronavirus outbreak (Covid-19) is wreaking havoc on the nation's economy.

Shares of Bangkok Commercial Asset Management - known as BAM - have surged 74 per cent this year, and the firm has delivered the highest total return in the period among asset management companies with a market value of at least US$1 billion (S$1.39 billion), according to data compiled by Bloomberg. The stock has almost doubled since its listing in December, when the Bank of Thailand more than halved its stake.

Investors are betting slower economic growth will spur opportunities for the distressed-assets firm. South-east Asia's second-biggest economy will probably expand less than 1 per cent from a year earlier this quarter due to the chilling impact of the viral outbreak on tourism, according to the government.

"BAM's business and outlook runs counter to the economic cycle," said Chalie Kueyen, an analyst at KGI Securities (Thailand). "The company will benefit from buying more distressed assets at a much cheaper cost due to the economic slowdown."

BAM was set up to manage the bad debts of lenders that had been seized or shuttered by the central bank after the mid-1990s Asian financial crisis. The firm in December sold 1.77 billion shares for 30.9 billion baht (S$1.38 billion) in Thailand's second-biggest initial public offering (IPO) in 2019.

After the rally, BAM's shares have an "unattractive valuation" due to its modest earnings growth, said Kittima Sattayapan, an analyst at SCB Securities. The stock, which trades at about 24 times its 12-month earnings estimate, has an average price target of 27.3 baht, 13 per cent below its Friday close, according to data compiled by Bloomberg.

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