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Siam Cement Pcl (SET:SCC), 31.6% owned by the Crown Property Bureau Group, which manages the Thai royal family’s properties and investments, is Thailand's largest industrial conglomerate with market capitalization of 585.6 billion baht, as of April 27. The company operates in four business segments: Siam Cement Group (SCG) Cement-Building Materials, SCG chemicals, SCG Packaging and SCG Investment, overseen by Cementhai Holding Co., Ltd. in various businesses including agricultural machines and automotive parts.
Investors should not confuse the company with Siam City Cement Pcl (SET:SCCC), Thailand's second-largest cement manufacturer with market capitalization of 74.75 billion baht as of April 27.
Siam Cement said on April 27 that its first-quarter 2016 revenues were 109.998 billion baht, flat year-on-year. The company posted first-quarter 2016 earnings of 13.62 billion baht, a 23% increase on a year-on-year basis. SCC blamed flat sales on increased depreciation, market competition and low crude oil prices.
Revenues from SCG Cement-Building Materials were 45.88 billion baht, down 3% year-on-year, while earnings were down 8% year-on-year to 3.29 billion baht. Revenues from SCG Chemicals were 47.81 billion baht, down 19% year-on-year, while earnings were up 85% year-on-year to 9.11 billion baht. SCG Packaging generated revenues of 18.85 billion baht, a 10% year-on-year growth, while earnings were up 43%, to 1.26 billion baht.
SCC reported a dividend of 16.0 baht a share in 2015, which represents a 28.0% increase from 2014. The 22 analysts covering the company expect dividends of 16.58 baht a share for the upcoming fiscal year, representing a year-over-year increase of 3.63%.
Mr. Roongrote Rangsiyopash, President and CEO of SCG, said in a company statement that “SCG’s continued dedication to the development of High Value Added (HVA) products throughout the years, both from SCG’s own research and development (R&D) team and through collaborations with Thailand’s and the world’s leading research institutes.”
According to UK-based CemNet, Siam Cement told investors in early April that it expects capacity in Thailand and nearby markets, including Indonesia, Vietnam, Myanmar, Cambodia and Laos, to reach 292 million metric tons annually (MTA) in two years, up from 251 MTA in 2015. SCG is planning to push ahead, despite that in 2015 the domestic consumption in the six countries was just 168 MTA, implying a utilization rate of 67%.
According to Jakarta Globe, Indonesia sees a cement supply glut this year, as foreign cement companies move in and compete with existing producers, which are already struggling to maintain their market share amid a glut in production capacity.
From our technical viewpoint, SCC is bumping into head resistance at the 500 baht level of the ascending triangle chart pattern. A breakout could take the stock higher to test 554 baht per share, the all-time high. SCC could gain some momentum since the 136 billion baht Thai government economic stimulus package is supposed to kick in during the first-half of this year. The 100-day and 200-day moving averages could provide some support if the stock pulls back.
According to the Financial Times, the consensus amongst 24 polled investment analysts covering Siam Cement gave the company an Outperform rating, with the median 12-month price target of 541 baht a share.
Disclosure: Long position and no recommendation. |
