Equity Analysis /
Thailand

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

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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.