Analytic Views on SCB Remain Positive as Decline in Prices Presents Opportunity to ‘Accumulate’

The share price of SCB X Public Company Limited (SET: SCB), one of the top four commercial banks in Thailand, lost its market value by 4.61% last Friday due to the panic sell from investors after JP Morgan downgraded the Thai bank’s rating from Neutral to Underweight along with its target price.


Prior to the fall, the stock price was on a five-day losing streak, shedding 5% during that stretch to combine with a loss on Friday for a total of 9.6% decline in total.


JP Morgan showed concerns on the bank through its downgrade, saying that the guideline from the bank on high credit costs, the scale of operational issues at CardX, as well as the slowdown in AutoX, weighed on the near-term outlook of SCB.

The American investment bank also cut SCB’s 2023-24 EPS estimates from THB 13.06 and THB 14.41 to THB 11.84 and THB 13.79, respectively.


However, Thai brokerage firms have a different view on the Thai bank after the Friday incident, saying that high credit costs are nothing new.

UOB Kayhian (UOBKH) noted that the firm had accounted for those issues within its estimate. The brokerage firm even had higher credit costs estimate for SCB at

195bps. The issue with high credit costs is nothing new, said UOBKH, and that the plummet in share price is the opportunity for accumulation for a target price at THB 130.00 per share.

Asia Plus Securities (ASPS) stated that the bank said there was no significant change in its fundamentals. Meanwhile, its high-yield portfolio only accounts to 6% of the total segment and its net profit for the first half already reached 54.5% of ASPS’ 2023 forecast. The firm saw that SCB’s share prices are laggard when compared to other banks, while its PBV and PER only trades at 0.72x and 8.3x, which are lower than the average of pre-covid level. Still, the bank was expected to be the highest dividend payer of 6.5% among Thai commercial banks.

ASPS maintained ‘BUY’ rating on SCB with a target price at THB 132.50 per share.

Krungsri Securities (KSS) added that the higher credit costs was due to a one-time item from a certain company’s default, coupled with debt collection from CardX, concerns over its retail position and higher provision for CDR.

KGI Securities (KGI) stated that concerns about high credit cost in 2023 and in 2024 have pulled SCB’s share price lower. However, KGI had already factored this into its 2023-2024 earnings forecasts. Furthermore, KGI realized that the uneven economic recovery is resulting in NPLs in the low-end segment, and the brokerage firm had taken into account these market conditions in its high credit cost assumptions of 185bps in 2023F and 2024F. As such, KGI believed the pullback in the share price is an opportunity to buy. KGI rated SCB Neutral with a target price of THB 130.00 per share.

The consensus target price of SCB remains high at THB 126.92 per share, despite a cut from JP Morgan to THB 98 from THB 110.00 in the earlier forecast. ‘BUY’ recommendations are still a majority, according to Refinitiv, from 14 analysts. Only one analyst recommended ‘Hold’ and four told their clients to ‘Sell’.