Fun times at SCB

First the media notes that

“The report said the central bank played a role in recommending Mr Boontuck to sit on the board and probe the bank’s heavy lending to three companies: Sahaviriya Steel Industries Plc, Pace Development Corporation… “


SCB has retorted that
“Recent media reports have suggested that the Bank of Thailand (BOT) has nominated Mr. Boontuck Wungcharoen to serve as a member of the SCB Board of Directors in charge of loan audits. The Bank would like to deny the accuracy of these reports, and note that the Bank is the party nominating Mr. Boontuck to fill a vacant position on its Board of Directors, based on his qualifications. Mr. Boontuck’s nomination is currently under the consideration of The Bank of Thailand.
SCB would like to reiterate that the story of the BOT nominating Mr. Boontuck are groundless.”


We are wondering who falls on the knife first, senior management or an innocent underling? There have been several entities that SCB have loaned to such as SSI, PACE, ITD (the Dawei project, yes that one) that haven’t quite turned out so well. Then again there are several positives ones as well, every financial institution will have some issues with their loans, it is part of the business so perhaps nothing went wrong at SCB and remember TISCO also lent a value that was 1/3 of their equity to SSI, so could these reporters just be making things up? Wouldn’t be a first.

Thai Government
There’s been some huffing and puffing regarding the government potentially planning to spend THB 90 bn on a satellite project. Note this is for Thailand’s space affairs strategic defense, which means that the government must be worried about something, what could it be? China invading the country’s telecom space? Wait a Chinese SOE already owns a stake in True Corp, maybe its the cheeky Singaporeans down south! No wait they own AIS, INTUCH and its satellites, then it must be the vikings in the north! No wait they already own DTAC. Ok nevermind…

The second question from this becomes, Theia who?
So….how will Thailand benefit again? This Theia doesn’t seem capable of launching a satellite system…or perhaps I am looking at the wrong data sources

Ah yes and the budget is out…

My comments: None, I love the government. But what I have always noticed is that the Education Ministry has consistently been one of the highest recipients within Thailand’s budget for decades, thus it is hasn’t been the fault of the political parties leading Thailand, the capital and the funding is there, but it is frankly an issue with the teachers and the way it is managed internally. Fact: One of the largest unions in Thailand is the teacher unions. Fact: Who starts these afterschool teaching programs for students? Most of the time, the teachers themselves. Argh…I’m going to start rambling, there’s no point.


Ok something markets related…..Minor Group!
A few weeks ago they took a small stake and on the conference call at the time part of the management team said that it was just going to be a financial purchase. Now it looks like MINOR is going for the whole lot.

Who is this NHH? Well its hotel group in Spain with multiple assets, and not really profitable, but it’s revenue and ebitda are basically equivalent to MINT’s.

How is MINT paying for this?

  • 100% Debt financed. On the latest call they part of the management team was adamant that there would be no recap.

When is this going to be done?

  • Well an EGM will be called in September, if approved then it could all be completed by Jan 2019.

So what?

  • Aside from the risk of the recap, this effectively doubles MINT’S revenue, EBITDA #’s. If the ops improve then at some point it effectively doubles the profits as well. If there’s no recap then…
  • But, have a look at these past names financial and share price performance when they underwent similarly huge acquisitions CPALL, BJC and WHA
  • So what is interesting was my own personal reaction to this news. At first I thought no brainer trade, stock has declined by some 30% in the past few months, partially due to the market, partially due to its 1Q18 #’s being weak and partially this. But then after leaning back and thinking about it for a few hours, my mind changed given that the actual equity value of MINT won’t grow for a # of years as it is, as a friend put it, digesting the acquisition. Only post the full acquisition and then digesting the new business and de-levering would there then be an opportunity to accumulate shares. It’ll be interesting to see how this plays out over the coming days, weeks, months, quarters and years. Could be very right or very wrong, but as usual it will be somewhere in the middle…

Data Sources:

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