Business restructuring plan “Siam Commercial” transformed into SCBX, many parties pushed beyond limits If you still need time and proven results to push the share price further
Accepting a major restructuring, “Siam Commercial Bank” this round created shocks for many parties. this decision In addition to challenging the management Still challenging shareholders because if the light is green That means having to accept the conditions and the future that may be uncertain. Because everything, sometimes time can’t guarantee anything.
Athit Nanthawittaya, Chief Executive Officer and Chief Executive Officer Siam Commercial Bank Justified the need to adapt from SCB to SCBX and the future business path that is believed to have glorious ahead. After the past, if SCB cuts branches and layoffs more than half since 3 years ago. That’s clear that traditional banking is on the verge of extinction.
by assessing that Around 2025, the arrival of decentralized finance technology, the expansion and penetration of global platforms into the financial business. Consumer behavior after COVID-19 Including the rules and regulations that have changed drastically. This will make the traditional bank’s fee-based intermediary business model reduce its role. because it cannot meet the new needs and expectations of customers and will affect the bank’s future business value.
The situation made SCB think that it would no longer limit itself to the traditional banking business. but must use the financial strength of the current banking business to benefit Accelerate aggressive expansion into other types of financial businesses that the market needs and build technological capabilities including managing large technological platforms to be on par with global competitors Enter a new and upcoming arena.
and from that matter thus leading to the establishment of a new company and is the parent company under the name of SCBX that is not a bank only but is an investment company (Holding Company) plays a role as a Tech Company by asking for the resolution of SCB shareholders to exchange shares for SCB shareholders to become SCBX shareholders instead, along with the issuance and offering of new ordinary shares. In exchange for the Bank’s ordinary and preferred shares at the rate of 1 SCB ordinary share per 1 SCBX ordinary share and 1 SCB preferred share per 1 SCBX ordinary share, the change will occur in the middle of 2022, then SCBX will be listed on the Stock Exchange. and delisting SCB shares from the market, with SCBX becoming SCB shareholders instead
not only this The board also resolved to propose to SCB shareholders to approve the payment of a special interim dividend of 70 billion baht, of which 70% will be used for business transfers. Establish a new company and new investment To create business opportunities and growth in the future, the remaining 30% will be used as working capital and paying dividends in the year 2022.
What’s interesting about that point? is to unlock SCB from the old bond. for future growth Because from now on, SCB will no longer be just a commercial bank. But it’s more than a bank and a company can pick up or touch something that can benefit. without the need to place on conditions being a commercial bank That means adding an “X” to the end of SCB, it helps to increase the potential of SCB. there is more more likely more possibilities
That’s because being a holding company that will invest in various businesses. and listed on the Stock Exchange of Thailand Instead of Siam Commercial Bank, it will unlock restrictions from traditional regulations that banks cannot. making business operations more flexible and able to invest in other businesses that can continue to grow
The strategy to strengthen the bank along with creating new business for the future It was found that the bank will focus on the use of technology in conjunction with the downgrading of various processes. to meet the changing needs of customers as much as possible in all channels As for the bank’s transformation into a strong financial technology business group. and with commercial banks as the group’s mainstay Many praised it as a smart move. However, expanding into a high-growth personal finance business and the bank is unable to fully respond is a challenge. Despite the confirmation from the executives to support that each business, SCB will cooperate with national partners. and a strong regional level that will be launched in the near future
in addition Important things that SCB shareholders It must not be forgotten that the expansion into the global digital asset business to enter the financial world of the future through SCB 10X and SCB Securities Company Limited (SCBS) through joint investment and a global fund alliance. And developing various digital asset businesses in a new business model to create added value for the group in the long run is not an easy task. And it’s beyond your ability if you’re determined to do it.
Next interesting point It is to continue the business growth under the operation of SCBX. SCB’s affiliates will be brought in to establish about 15-16 subsidiaries for more flexible management. and able to fully expand the business Which can be divided into 2 groups, namely Cash Cow group, which is a banking business, SCB that will be a part of SCBX, is a group that generates good profits and supports SCBX’s capital to invest in new businesses. Including other financial businesses such as banks in Cambodia, Myanmar, Asset Management Company Ratchayothin, SCB Asset Management Company Limited (SCBAM), SCB Protect, SCB Julius Baer, SCB Plus.
and the other group will be the New Growth group, the flagship business group driving growth. Increase the value of businesses that invest in Digital Assets and Digital Platforms, which are divided into Consumer Finance and Digital Financial groups, such as the establishment of Auto X, Card X, Card X Asset Management Company and SCB Securities. Including Digital Platforms and Technology Services group consisting of Purple Ventures Company, SCB TechX Company, Digital Ventures Company, Token X Company, SCB Tenex Company, SCB Abacus Company, Munnix Company, AISCB Company, AIS Joint Venture Company and CP Joint Venture Company SCB-CP
If you look at the business structure in the New Growth group, part of it will come from the transfer of business with Siam Commercial Bank. split into subsidiaries such as Card X accepting credit card and personal loan business transfers, Auto X, car loan leasing business, existing business group that SCB already holds shares in Digital Asset through SCB 10X, food delivery platform business through Purple Ventures securities Take care of digital assets through SCB security, the flagship of the infrastructure building business.
It has also invested in partnership with AIS partners to establish AISCB to provide digital financial services such as digital lending and other financial services. and a joint venture with MGC Group, an automotive retailer, to establish Alpha X, a leasing, leasing and refinancing service for automobiles. Motorcycles (Big Bikes), yachts and river boats, as well as a joint venture of the Charoen Pokphand Group. Set up a $600-800 million Venture Capital fund. for investment in financial technology business in various fields such as blockchain technology Decentralized Finance and other emerging technologies
But all of the above are not as interesting as Sending SCBX to expand into the global digital asset business to enter the financial world of the future through SCB 10X and SCB Securities Company Limited (SCBS) through joint investment and a global fund alliance. and the development of digital asset businesses in various fields because of the business restructuring plan to become SCBX according to the 5-year plan set until 2025, aiming to become a regional and international company That will cover the expansion of the customer base to more than 200 million, able to drive performance growth to double. and pushing the market cap of SCBX to 1 trillion baht or can become a Reginal and International company Creating quality earning growth is a new step for SCB that will continue to adjust for future growth.
For a view of the circles in the stock market I see that after announcing the business restructuring to be a holding company under SCBX, it will support the advantages of competitors in expanding the digital business. The future trend will help expand business in various fields more easily. Because some businesses are not required to be subject to the regulations of the Bank of Thailand (BOT).
SCBX divides its business into cash cow and growth segment, with Cash cow showing steady growth. Low risk, low ROE, such as banking and asset management, accounting for 85% of total revenue. Another segment has high growth potential and high ROE, which accounted for 15% of its profits, mostly from unsecured lending and securities businesses. As a result, management aims to increase revenue by 150% and growing businesses to account for more than a third of total revenue by 2026. In the five-year plan, management aims to increase the number of customers to 200 million through proactive alliances and Merger of 40-50 million customers today, because SCBX aims to be a leader in digital asset and analytics technology. With plans to IPO, CardX (credit card and personal loan), Auto X (car registration loan), SCB Securities (with digital asset service), MONIX and SCB ABACUS (digital loan) in the next 3-5 years. page
so The announcement of the business restructuring to be a holding company called SCBX will give it an edge over its competitors in expanding its digital business, which is the trend of the future. and will help expand business in various fields more easily Because some businesses do not need to be subject to the regulations of the National Bank. Including being able to cooperate with partners in various fields more flexible This will help to expand the customer base of the company even more.
Maybank Kim Eng Securities (Thailand) stated in the analysis that There is a positive view on the restructuring plan by appointing SCBX as a holding company and delisting shares with SCBX on a 1:1 share-to-share basis, subject to approval by the Extraordinary General Meeting of Shareholders on Nov 15. There will be a one-time transfer worth 70 billion baht from SCB to SCBX for the transfer of unsecured loan businesses (70% or 49 billion baht) and dividend payments to shareholders for SCBx (30%). or 2.1 million baht) SCBx is expected to pay a special dividend of 5.1-6.2 baht/share in 2Q22 under SCBX.
side TISCO Securities stated that he still likes the idea of restructuring The main reason is Flexibility in doing business Especially in the FinTech sector where regulations still in development It also adds value from affiliates through an IPO that is expected to split the credit card business. and the unsecured lending business should lead to better valuation by Setting up multiple subsidiaries will be costly in the short term. and pressure on the profit trend during that period And separating an unsecured loan business may incur additional costs due to redundant operations. But this cost issue will gradually disappear after the subsidiary company starts to generate income. Expect earnings in the future to increase from the expected profit from the IPO of affiliates.
In the end, no one can clearly tell that SCB when it becomes SCBX. And how strong will it be? Because everything is not just a matter of time to prove. But the SCB Group needs to empirically show that it can do as the goal is set. Otherwise, the stock price rebounded further. It is ready to shrink as the risk will increase further from now on.