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Siam Cement PCL (SET:SCC), 31.6% stake 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 621.60 billion baht, as of August 30, 2016. 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 69.46 billion baht as of August 30, 2016.
Siam Cement said on July 27 that its second-quarter 2016 revenues were 108.87 billion baht, down 4.34% from the same period last year, missing the consensus estimate of 109.88 billion baht of the 4 analysts polled by the Financial Times. The company posted second-quarter 2016 earnings of 13.36 baht a share, a 15.57% increase on a year-on-year basis, beating the consensus estimate of 11.13 baht a share of 2 analysts. SCC blamed declining sales on soft demand from the non-government sectors and numerous regional upstream plant shutdowns.
In a released statement, the company said the domestic Thai market continued to see weak demand, as second-quarter 2016 sales of housing products, including roof, ceiling and wall, dropped 2% year-on-year, while the demand for ceramic tiles decreased 7% on a year-on-year basis.
Revenues from SCG Cement-Building Materials were 42.98 billion baht, down 6% year-on-year, while EBITDA earnings were down 5% year-on-year to 6.14 billion baht. Revenues from SCG Chemicals were 49.53 billion baht, down 8% year-on-year, while EBITDA earnings were up 29% year-on-year to 18.9 billion baht. SCG Packaging generated revenues of 18.84 billion baht, or year-on-year growth of 10%, while EBITDA earnings were up 12% year-on-year, to 2.81 billion baht.
SCC reported a dividend of 16.0 baht a share in 2015, which represents a 28.0% increase from 2014. The 21 analysts covering the company expect dividends of 17.97 baht a share for the upcoming fiscal year, representing a year-over-year increase of 12.31%. The next earnings announcement is expected on October 26, 2016.
From our technical viewpoint, SCC broke out the head resistance at the 500 baht level, as the stock has gained some momentum from the 217 billion baht of government spending in the first six months of this year. The National Economic and Social Development Board of Thailand expects the government to disburse an additional 110.5 billion baht of stimulus funds in the second-half of 2016, according to Bloomberg. Hence, the stock could move higher to test 554 baht per share, its all-time high. The 50-day and 100-day moving averages could provide some support if SCC pulls back.
According to the Financial Times, as of August 26, 2016, the consensus amongst 24 polled investment analysts covering Siam Cement gave the company an Outperform rating, with the median 12-month price target of 572 baht a share.
Disclosure: Long position and no recommendation. |
