Siam Cement Shares Broke Out Despite Mixed Fourth-Quarter Earnings

Witawat (Ed) Wijaranakula, Ph.D.
Sat Jan 28, 2017

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 one of Thailand's largest industrial conglomerates with market capitalization of 619.20 billion baht, as of January 27, 2017. 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. 

Siam Cement said on January 26 that its fourth-quarter 2016 revenues were 99.6 1billion baht, down 5.69% from the same period the previous year, missing the consensus estimate of 101.10 billion baht of the 3 analysts polled by the Financial Times. The company posted fourth-quarter 2016 earnings of 10.40 baht a share, a 9.01% increase on a year-on-year basis, beating the consensus estimate of 8.10 baht a share of 4 analysts. 

In its press release, the company said the 11% decline in the quarter-to-quarter profit was partly due to lower performance following 40-day maintenance turn-around of the first cracker complex in Thailand in the Chemicals business, and increased depreciation expenses as well as market softness in the Cement and Building Materials business.

Revenues from SCG Cement-Building Materials were 41.11 billion baht, down 4% year-on-year, while EBITDA earnings were down 6% year-on-year to 4.89 billion baht. Revenues from SCG Chemicals were 42.69 billion baht, down 10% year-on-year, while EBITDA earnings were up 24% year-on-year to 16.21 billion baht. SCG Packaging generated revenues of 18.41 billion baht, or flat year-on-year, while EBITDA earnings were down 22% year-on-year, to 2.37 billion baht. 

SCC reported a dividend of 19.0 baht a share in 2016, which represents an 18.75% increase from 2015. The 24 analysts covering the company expect dividends of 18.86 baht a share for the upcoming fiscal year, representing a year-over-year decrease of 0.76%. The next earnings announcement is expected on April 26, 2017. The company expects revenue growth of 5-10% this year amid signs that the economy is recovering, especially as the government kicks off major investments in infrastructure projects, according to The Nation.

From our technical viewpoint, SCC broke out the symmetrical chart pattern and is bumping into the 518 baht resistance level. The stock may pull back and retest the trendline support at around 510 baht or move higher toward the 530 baht level. The RSI indicates slightly overbought, while the MACD momentum indicator is bullish. According to the Financial Times, as of January 28, 2017, the consensus amongst 27 polled investment analysts covering Siam Cement gave the company an Outperform rating, with the median 12-month price target of 580 baht a share.

Disclosure: No position and no recommendation.


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