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Siam Commercial Bank Pcl (SET:SCB), Thailand's third largest lender by assets, 2.77 trillion baht in 2015, operates four business segments: the wholesale banking group, the business banking group, the retail banking group, and the special business group, which is responsible for non-performing loan (NPL) solutions. As of December 30, 2015, SCB’s top two principle shareholders are the Crown Property Bureau, which manages the Thai royal family’s properties and investments, and Thailand-based Vayupak Mutual Funds One, with 23.69% and 23.21% of total shares, respectively. Foreign investors hold 35.69% of both ordinary and preferred shares.
SCB said on January 19 that its fourth-quarter 2015 revenues were 32.31 billion baht, missing the 32.95 billion baht consensus estimate of 3 analysts, according to the Financial Times. The company posted fourth-quarter 2015 earnings of 3.47 baht per share, beating the 2.98 baht per share consensus estimate of 2 analysts. Revenues were up 1.47%, while earnings were down 3.61%, over the same period the previous year. For the full-year 2015, earnings were 13.88 baht per share on revenues of 137.41 billion baht, compared to the consensus estimate EPS of 13.61 baht per share on revenues of 137.46 billion baht.
For 2015, SCB reported a dividend of 5.50 baht a share, which represented an 8.33% decrease from 2014. The 23 analysts covering the company expect dividends of 5.67 baht a share for the upcoming fiscal year, representing a year-over-year increase of 3.07%. The next earnings announcement from Siam Commercial Bank Pcl is expected on April 25.
SCB's non-performing loans (NPLs) increased to 2.89% of total lending at the end of 2015, from 2.11% at the end of 2014, while its lending grew 3.2% in 2015. The bank is aiming for loan growth of 4-6% in 2016, while NPLs are projected to be around 3% or slightly lower. "2015 has been a tough year for the sector and SCB. Many unfavourable incidents and a slower-than-expected economic recovery negatively affected the bank's performance," chief executive Arthid Nanthawithaya told Reuters.
SBC got into trouble when steelmaker Sahaviriya Steel Industries (SSI) went into bankruptcy in October 2015, leaving lenders including Krung Thai Bank (SET:KTB), Siam Commercial Bank and Tisco Bank (SET:TISCO) stuck with a debt of an estimated 50 billion baht, according to the Nikkei.
In late March, Trina Solar Limited (NYSE:TSL) announced that the company was entering into a financing agreement with a syndicate of banks led by the Siam Commercial Bank and China Minsheng Banking Corp (CMBC), worth about 5 billion baht (U.S. $143 million), to set up assembly lines for photovoltaic modules with annual production capacity worth 500 MW in Thailand, according to Business Etc.
Here was what SCB’s CEO had to say about the deal, “This is our first solar financing project, and we partnered with Trina Solar because of its solid growth history, vast growth potential, strong financial position, and highly professional team. We believe that the effort will not only help boost Thailand’s economy and create job opportunities.”
Technically, SCB shares made a bearish double top reversal at around 200 baht at the end of 2014, and then pulled back sharply to the 112 baht level in January 2016, a 44% correction. The stock rebounded along with the broader SET50 index, but was unable to break the neckline resistances of the double top chart pattern at the level between 130 and 146 baht. A broadening descending wedge chart pattern has now emerged and SCB shares are at risk of trending downward.
There could be some headwinds for SCB, as the Moody’s ratings agency said on Monday that the minimum lending rate (MLR) cut will hit the Thai banks' net interest margins (NIMs). Last week, Siam Commercial Bank said it cut their MLR by 15 basis points, to 6.375%.
According to the Financial Times, the consensus amongst 28 polled investment analysts covering SCB gave the company an Outperform rating, with the median 12-month price target of 183 baht per share, as of April 9.
Disclosure: No position and no recommendation. |
