Asia Wealth Securities

The Siam Commercial Bank Public Company Limited (SCB) announced on Monday (November 15) the resolutions of the Extraordinary General Meeting of Shareholders to approve the restructuring of the SCB financial group and the payment of interim dividends to SCBx in the amount of 70,000 million baht. Asia Wealth Securities (AWS) considers it will have a short-term positive effect on SCB's share price. The Extraordinary General Meeting of Shareholders approved the SCB financial group restructuring plan, which included the establishment of SCB X Public Company Limited (SCBx) as the parent company of the financial group's companies, as well as the delisting of the company's securities from the SET in order for SCBx to replace, and the business transfer (i.e. assets, liabilities and any claims related to the credit card business and the unsecured personal loan business) to a subsidiary that will be established by SCBx. Additionally, the meeting has approved the payment of interim dividends from the net annual profit for the year 2021 and retained earnings according to the latest bank-only financial statements, in an amount of approximately 70,000 million baht. AWS recommends “BUY” for SCB, with a target price of 150 baht, from the perspective of a recovery in earnings in 2022, from provisions in 2022 that will be reduced in line with better loan quality. The aforementioned issue will be a positive factor for the share price in the short term from the progress of the business restructuring and the trend of paying special dividends in the mid 2022. The analysts from AWS are also positive on the share price from the initial success of SCB's restructuring plan, followed by a tender offer in Jan 2022, which shareholders must accept more than 90% to carry out the next restructuring plan which will delist the existing SCB shares from the stock exchange in order for SCBx to replace them in Feb 2022. Interestingly, the dividend to SCBx is 70 billion baht to be used in the operations of the transfer of subsidiaries and approximately 70% of investment capital for business expansion, with the remainder expected to be a special dividend to shareholders according to SCBx's dividend payment policy (at least 30% of net profit each year), the amount of dividends is approximately 6 baht per share which the amount of dividends from SCB is expected to be paid to SCBx in 2Q22. However, AWS still has to keep an eye on the tender offer in January 2022 which needs more than 90% response.