Equity Analysis /

Siam Cement: Unexciting near-term outlook priced in; bargain valuation

  • QoQ core earnings expansion expected for 2Q22

  • Chemical core earnings to weaken YoY and QoQ

  • CBM core profit to fall YoY & QoQ; Packaging earnings to slip YoY

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
14 July 2022

Despite the uninspiring outlook through 3Q22, SCC’s earnings look poised to rebound in 4Q22, boosted by improvements across all businesses. Moreover, SCC’s current valuations are a bargain—trading at a YE22 PBV of 1.2x (1.5SD below its long-term average of 2.2x)—with a good 2022 dividend yield of 4.1% (against 2.8% for the SET).

QoQ core earnings expansion expected for 2Q22

We project SCC to post a 2Q22 net profit of Bt7,399m (down by 57% YoY and 16% QoQ), squeezed by the assumed extra loss on inventories and weaker operational performances. Stripping out extra items, 2Q22 core earnings are forecast at Bt8,096m, down by 52% YoY, the result of smaller profits across all businesses—Chemical, Cement & Building Materials (CBM), and Packaging, but up by 4% QoQ, driven by bigger dividend income.