Equity Analysis /

Siam Cement: 4Q20 earnings softness priced in; catch-up play opportunity opens

  • 4Q20 core profit to soften QoQ, led south by …

  • …lower core profits at the Chemical and Packaging units

  • CBM core earnings to rise YoY in 4Q20

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
15 January 2021

SCC’s share price has lagged the SET (by 9%) and commodity peers (by 26%, on average) during the past three months. Its current stock price implies a 2021 PER of 11.3x (0.5SD below its long-term mean) and a YE21 PBV of 1.5x (1.5SD below its long-term average), which factors in market anticipation of QoQ core profit slippage for 4Q20. We see SCC as a catch-up play, supported by QoQ core earnings growth for 1Q21. 

4Q20 core profit to soften QoQ, led south by …   

We expect SCC to post 4Q20 NPAT of Bt9,066m (up 28% YoY but down 7% QoQ). The firm will mark extra gains on inventories and FX, making for YoY bottom-line growth. Stripping out extra items, 4Q20 core earnings are estimated at Bt8,525m (flat YoY and down 10% QoQ), squeezed by smaller profits at the CBM, Chemical, and Packaging businesses. In YoY terms, stronger numbers for the Chemical and Cement & Building Materials (CBM) units will be roughly offset by a weaker Packaging performance. Note that we have trimmed our 2020 net profit estimate by 3% to Bt35,162m and rolled over our investment horizon to YE21 with a new DCF-derived target price of Bt460.