Leasing

Government to spend B100bn budget for low incomers Neutral

Leasing

- B40bn aid for farmers, B55bn tax refund for low incomers

The government has approved to implement the new short-term economic

stimulus policies with budget of B363bn in 4Q14, focusing on employment,

accelerating disbursement of leftover budget, and lowering production cost

for farmers in order to inject more money into the system and promote

people's purchasing power. Some of the government's economic stimulus

policies focus on low incomers: 1) For low-income rice farmers, the

government has approved to support rice farmers who own up to 15 rai of

land by directly providing them B1,000/rai or up to B15,000 financial aids

(rice price has dropped to B8,000/ton, lower than the average production

cost of B9,000/ton). Three point four million farmers would benefit from this

policy, and total B40bn budget will be distributed by the Bank for

Agriculture and Agricultural Cooperatives (BACC) from October 20, 2014 on.

This supporting policy will last only one production season. 2) For low

incomer, negative income tax (NIT) measure will be implemented under the

name "poverty relief for hard workers". Employed people aged 15-60 with

under B80,000/year income will receive tax refund of at least B2,000 up to

B6,000. Eighteen million Thai people would benefit from this policy, and

B55bn/year budget will be spent on it.

-GCAP, TK, GL, SAWAD, SINGER, AEONTS to benefit most

GCAP, TK, GL, SAWAD, SINGER, AEONTS would benefit most from the

government's measures. 1) Supporting measure for low-income

farmers would benefit GCAP, TK, GL, SAWAD, and SINGER. GCAP

(agricultural vehicle leaser; 100% of client base is farmers) would get the

most advantage, followed by TK and GL (motorcycle leasers) and SINGER

(25% of client base is farmers). 2) Supporting measure for low

incomers would benefit every business. Particularly, AEONST would get the

most advantage from 8% hike in civil servants' wage. Civil servants account

for 20-30% of AEONTS's client base, while only 5% of SINGER's clients are

civil servants.

- 2H14 top picks: GCAP, AEONTS, SINGER, KCAR

Leasing sector's 2H14 top picks are GCAP(FV@B6), AEONTS(FV@B121),

SINGER(FV@B25) and KCAR([email protected]) for their potential strong earnings

in 2H14.