Siam Commercial Bank
SCB to sell stake in SCBLIF?
Siam Commercial Bank Plc (SCB)
What is new?
The Post Today reported this morning that SCB is about to sell a 25% stake in SCB Life Assurance (SCBLIF) to an unnamed Japanese life assurance firm. The newspaper suggested that the price for the stake could be US$600m. However, SCB CEO, Ms Kannikar Chalitaporn, denied that there was any truth to the story.
Background details
SCB currently holds 95% of SCBLIF, which ranks fourth among life assurance firms behind AIA, Muangthai Life and BLA. It has a book value of Bt197/share. The stock closed yesterday at Bt1,132 (the price moved only insignificantly during the last month, so there hasn’t been any speculative trading in anticipation of news). Clearly, SCBLIF’s free float is far below the SET-stipulated minimum of 15%; it is in danger of being delisted after two full calendar years of the managing shareholder owning almost all the shares.
What if there is a deal in the works?
If the bank were sell a 25% stake to a new partner at price of about Bt1,150 apiece, SCB would post a big net-of-tax gain of Bt14bn (Bt3.7/share). We would expect its CAR to increase to 18% from 16.3% currently. The gain would enable the bank pay a special dividend.
Regardless of the veracity of the article in Post Today, SCB is a financially strong bank with excellent prospects for the year ahead. It is one of our two tip picks in the sector. BUY!
