Siam Commercial Bank (SCB), Thailand's oldest lender, is viewed as an outstanding stock to watch given its fintech business expansion and high-yield lending services, according to Asia Plus Securities (ASPS).
SCB, through its holding company SCB X, informed the Stock Exchange of Thailand last week the Bank of Thailand approved a dividend payment of 61 billion baht from retained earnings to SCB shareholders.
With this amount, SCB X plans to buy shares of subsidiaries from SCB and its tech holding company SCB10X.
SCB X, which holds 99.06% of SCB, emerged after the bank transformed its business from a commercial bank to a more flexible holding company.
Other than SCB, it has 12 subsidiaries including Innovest X, which was renamed from SCB Securities, SCB10X, high-yield lending companies such as AISCB and CARDX, car registration pledge lender AUTOX and the luxury car lender ALPHAX.
ASPS believes in the next few years CARDX and AUTOX can be listed on the stock exchange, offering a public source of funding.
Meanwhile, reducing dependence on SCB X will make SCB's capital structure more flexible, enabling it to have higher return on equity in the long term, the brokerage said.
ASPS analysis revealed SCB should pay a dividend of 1.5 baht per share (equivalent to a dividend payout ratio of 26%), making the full-year dividend 4.5 baht. That represents a dividend yield of 4%, ranking second after state-owned Krungthai Bank.
"SCB has interesting points, especially its clear fintech position and its penetration into the high-yield lending business. It has restructured its business into a holding company with more flexible management," ASPS said.
Earlier, Innovest X was reportedly set to begin its digital asset trading on Sept 12, but SCB has not confirmed the news.
In November last year, SCB said it intended to buy a 51% share of Bitkub Online for 17.8 billion baht, but the bank announced on Aug 25 the deal collapsed, citing regulatory issues.
A crypto industry source who requested anonymity said although Innovest X received a licence to set up a digital asset exchange from the Securities and Exchange Commission (SEC), its system and readiness are being reviewed by the regulator.
The company might have to wait for approval from the SEC before trading services are launched, said the source.
ASPS said SCB shares are trading at a price-to-book value (P/BV) of 0.8 times, lower than the 2021 average of 0.87 times. The P/BV range should be around 1 times and the stock has potential growth prospects for investors, said the brokerage.
