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Siam Cement Pcl [SET:SCC], Thailand's largest industrial conglomerate, said on July 29, 2015, that its second-quarter 2015 revenues were 113.82 billion baht, down 8.8% year-on-year, missing the 119.95 billion baht consensus estimate of 2 analysts, according to the Financial Times. The second-quarter 2015 earnings were 11.56 baht per share, up 62.59% year-on-year, beating the 10.04 baht per share consensus estimate of 3 analysts. In 2014, Siam Cement reported a dividend of 12.50 baht, up 127.27% year-over-year. The next earnings announcement was expected on October 27.
In late September, SCC shares broke down the trendline supports below 460 baht per share after Siam Commercial Bank Pcl [SET:SCB] sold its stake in Siam Cement Pcl to the Crown Property Bureau, a major SCC shareholder, to raise 4.46 billion baht to help to cover provisions for loans to struggling steel firm Sahaviriya Steel Industries [SET:SSI]. Siam Commercial Bank's chief executive Arthid Nanthawithaya said in a press conference that, "The Crown Property Bureau wanted to raise its stakes in Siam Cement. So, the shares changed hands in the same investor group." Investors were confused and didn't take the news very well, also dumping SCC when Siam Commercial Bank sold its Siam Cement shares.
In fact, Siam Commercial Bank might have thrown good money after bad money as SSI shares are trading near a 52-week low of 0.04 baht per share this week, down over 50% since the transaction was announced. Steel companies were supposed to be entering a turnaround in 2015. Nonetheless, the strong dollar, weak global demand and a huge glut of Chinese steel have put pressures on global steel prices, to its lowest level in more than a decade.
From our technical viewpoint, SCC is facing some downside risk as the stock is bouncing along the lower trendline supports of the symmetrical triangle chart pattern. The stock seems to be having a hard time breaking out the 480 baht a share level, despite the strong SET rally in October. SCC could gain some momentum if the impact of the recent Thai government stimulus package on Siam Cement’s top-and bottom-line is clarified. According to the Financial Times, the consensus forecast amongst 25 polled investment analysts covering Siam Cement gave the company an Outperform rating with a price target of 590 baht a share.
Disclosure: Long position and no recommendation. |
