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Friday, March 29, 2024

Thailand’s ballooning household debt is a ticking time bomb

The valuation of Ngern Tid Lor (TIDLOR) soared above 100 billion baht on its initial public offering (IPO).

The title loan industry is capable of commanding a high interest rate, coupled with the low risk of loan losses. On the back of TIDLOR’s innovative online roadshow and its novel online IPO application for retail investors, huge demand pushed the stock price to 55.50 baht from its IPO price of 36.50. This resulted in the market valuation for TIDLOR to exceed 100 billion baht despite its modest loan book of roughly 51 billion.

A comparison with commercial bank valuations sheds a light on investors’ expectation of the two businesses. The market valuation of Siam Commercial Bank (SCB), the Thai bank with the largest market cap, is around 300 billion baht despite a 2.2-trillion loan book. The SCB loan book is more than 40 times that of TIDLOR’s, while its…

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