SCB X Public Company Limited (SET: SCB) is considering options that include a sale of its asset management unit, SCB Asset Management Co., Ltd., (SCBAM), according to the report from Bloomberg citing people familiar with the matter.
The report stated that the Thai bank has been speaking with financial advisers to explore a potential transaction for its asset management unit, which has a potential value of around $1 billion to $1.5 billion (approx. 36-54 billion baht).
SCB Asset Management has approximately 1.6 trillion assets under management.
Last week, Kasikornbank Public Company Limited (SET: KBANK) also announced a sale of its asset management unit known as Kasset as well. Kasset recorded 2.6 billion baht of net profit in 2021.
SCBAM recorded 1.6 billion baht of net profit in 2021. The unit has the highest market share in Thailand at 18.9%.
After the report, brokers have made various comments;
Asia Plus Securities:
In case of selling the entire asset, SCB will book 28.8-43 billion baht of net profit, considering the cost accounting in the statement of only 222 million baht and another 20% tax cuts.
Finansia Syrus Securities:
FSS has a similar view as Asia Plus, seeing profit after tax at THB12.7 per share, which could offset all bad debt provision, enough for dividend payout or for investment to enhance its currently developing subsidiaries namely; AutoX, CardX and SCB10X. FSS has a positive view while stating that it will take time for the deal to complete.
FSS International Investment Advisory (FSSIA) gave a “BUY” recommendation on SCB after the report of selling SCBAM, stating that based on the assumptions that selling price for 100% stake is USD1.5b, the valuation for this deal in terms of P/AUM would be at 0.03x, which is nearly the same as the potential selling of KASSET by KBANK. But, in terms of P/E, this deal is likely to be more expensive at of 33.8x vs 18x of KASSET.
In case of selling 100%, SCB should book profit after tax of THB43b, implying THB12.7b/share. However, FSSIA said it does not expect the bank to book all of this extra gain to its net profit. The advisory company believed it would use it to set aside a special provision.
FSSIA noted that SCB has not commented on this yet.
According to FSSIA’s view, if SCB sells some portion to a fund management expert(s), this could be the best option as the buyer(s) could support SCB to expand its business opportunities, possibly to expand its business abroad, amid the tighter competition in the asset management business in Thailand. The bank could also continue to enjoy a potential rise in SCBAM’s net profit, while getting lump sum money to expand into other businesses, digital related in particular.
This news would slightly have a positive effect on SCB’s share price. However, FSSIA thought that it still takes some time to complete the processes. Thus, FSSIA maintained its BUY call with a target price at THB160.
