Siam Cement Shares Drop 3% following Disappointing Earnings

Shares of Thailand’s Siam Cement declined 3% on Thursday after the company reported disappointing earnings for the fiscal year 2022. Despite China’s reopening, the stock has been given a “HOLD” rating due to a challenging outlook.

As of 11.00 A.M. (Thai time), the share price of The Siam Cement Pcl. (SET:SCC) dropped THB10.00/share, or 2.90%, to THB335.00/share, with a trading value of THB947 million.

SCC reported a weak 4Q22 net profit of THB157 million, 87% lower than Bloomberg consensus estimate. Meanwhile, for the fiscal year 2022, SCC recorded a net profit of THB21,382 million, a decrease of 55% on a yearly basic.

Key disappointments were the weak contribution from its packaging unit and the record-low EBITDA margin of its cement-building material (CBM)  unit while its chemical unit reported a wider net loss QoQ. 

CGS-CIMB Securities has given a “HOLD” rating on SCC with an unchanged target price of THB345.00, as it expected SCC’s chemical unit to remain in the red in 1H23 despite China’s reopening.

According to the analyst, SCC’s chemical EBITDA in 1Q23 will be supported by Asian PVC spread. However, it anticipates that the Asian integrated PE/PP spread remains below cash cost at US$173/ton, presumably keeping ROC closed in 1Q23 as it is difficult to deliver a positive EBITDA.

A stronger baht also hurts SCC’s profit given its net export position.