SCB X Public Company Limited (SET: SCB) saw its share price plunging three-straight days from the end of last week that it released 3Q23 financial results to the first trading day of this week.
The main issue of the market’s concerns are high provisions in the third quarter that was slightly higher from the previous quarter, but quite significant when compared to the same quarter in 2022. An increase in provisions was a prudent response to the prevailing global geopolitical uncertainty, while maintaining overall loan quality under control.
The share price was down nearly 1% on October 19, a day prior to the earnings result and plunged 3.62% the next day when results came out, coupled with negative sentiment in the global market that pressured risk assets. SCB continued to decline on Tuesday, October 24, coming out of a long holiday that plunged other markets a day prior.
However, analysts maintained their recommendations on SCB with a “BUY” rating, seeing that the share price was already priced in negative factors to the point that it widened SCB’s upside to target price.
Tisco Securities maintained “BUY” recommendation on SCB at a fair value of THB130.00 per share. The concern was on credit cost from Gen-II business and weak operating asset quality from Card X..
The management from the analyst call expected the situation to get better, while Auto X was seeing positive growth rate with loan portfolio expanding to 26.3 billion baht, compared to 18.2 billion baht in the second quarter of this year. Meanwhile, yields on loans remained above 20% and NPL was lower than 1%. Still, all these businesses are in an early stage of investment and should not contribute to SCB’s profitability in the short-term.
DBS Vickers Securities (DBSVS) also rated “BUY” on SCB with a target price at THB129.00 per share, saying credit costs should already reach its peak in the third quarter, while NIM has a potential to expand in 4Q23. The cost-to-income ratio is also expected to increase as well due to seasonality.
According to a consensus from Refinitiv, SCB’s target price is at THB118.43 per share with 14 brokers recommended “BUY,” two recommended “Hold” and three rated “Sell”.
The share price of SCB bounced back on Wednesday to THB98.25 per share, increased THB2.25 or 2.34%.
