Brokers Rate Siam Cement “BUY” as Company Prepares SCG Chemicals IPO

Despite weaker earnings in 1Q22, most analysts rate The Siam Cement Public Company Limited (SET: SCC) as a “BUY,” signaling that the share price will likely continue to underperform the market, putting it at an attractive value for investing. For SCC, sentiment should improve in the second half of this year, as profits see recovery and the IPO process of SCG Chemicals will begin during this period as well.

 

Maybank Securities (Thailand) (MST) projects SCC’s 1Q22 NP to drop 39% YoY though rise 10% QoQ when SCC reports 1Q results on 27th April. The earlier expectation of a solid YoY rebound is being offset by rising costs and softening demand that caps product prices. MST cut its 2022/23 earnings forecast by 18%/2% on higher costs. This leads to a 17% cut in a target price to THB462.5, which is the average value of DCF (THB500) and GGM (THB425) at 6.4% WACC, 2% G and 13.1% ROE. Given high volatility in key input prices, SCC will likely continue to underperform the market but see it as beneficiary when volatility moderates. Its 5-6.5% 2022/23E dividend yield will cushion the share price. MST also believes that downside has already priced-in.

 

Analysts  Recommendation Target Price
Bualuang Securities BUY THB480.00
Trinity Securities BUY THB475.00
Maybank Securities (Thailand) BUY THB462.00
SCB Securities Neutral THB420.00