UBS upgraded SCB X from Hold to Buy and raised its target price to 165.00 baht from 152.00 baht, reflecting the stock's continued discount versus peers, expectations of stronger profit growth in 2027, and the opportunity for increased returns from excess capital following the adoption of Basel-IV standards. It also raised its earnings-per-share forecasts for SCB in 2027-2028 by 2-5%, driven by a cut in its credit cost estimate from 1.65% to 1.55%-1.60%. The continued transfer and sale of non-performing loans and the possibility of setting up a joint asset management company, or JVAMC, to move retail and SME loans off the balance sheet will be key factors in meaningfully reducing the credit cost structure. Meanwhile, asset quality and credit costs for the Auto X business in the Gen-2 group are expected to stabilise more in mid-2027, while the strong wealth management and housing loan platforms will help support shareholder returns and dividends over the long term. UBS continues to expect a high dividend payout ratio of 80% for 2026-2027 and raised its average for 2028-2030 from 72% to 75%. It expects the Tier 1 capital ratio to remain above 17% over the medium term, and based on an 80% payout ratio, the stock's fair value could rise as high as 172.00 baht. The target price increase to 165.00 baht stems from a 6% rise in earnings forecasts and a 3% boost from the Basel-IV adjustment combined with dividend policy, based on a forward 12-month P/E of 11.8 times. SCB and KTB are considered the most attractive banks, given their standout balance of profits, loan-loss reserve ratios, and strong capital positions.
SCB X Public Company LimitedUBS upgraded SCB X to Buy and raised its target price to 165 baht on lower credit costs, higher EPS forecasts, and increased dividend payout.
