CLSA has maintained its Outperform rating on The Siam Cement Public Company Limited (SET: SCC) with a target price of Bt280.00, following the company’s second-quarter 2026 results that beat expectations despite year-on-year declines.
The Siam Cement reported a net profit of Bt11.5 billion in the second quarter of 2026, up 85% quarter-on-quarter but down 33% year-on-year. The results beat CLSA’s estimate and market consensus by 28% and 36%, respectively.
The strong quarterly performance was driven by higher margins and plant optimization at SCG Chemicals, an improving paper business in Indonesia through Fajar, dividend income, and a stock gain of Bt1.1 billion, compared to a Bt4.2 billion gain in the first quarter. Excluding the stock gain and extra items, core profit stood at Bt10.8 billion, up more than tenfold quarter-on-quarter.
The company’s LSP business posted a smaller loss of Bt631 million, narrowing from Bt757 million in the prior quarter. Meanwhile, the chemical business generated a profit of Bt4.8 billion, or Bt5.5 billion excluding LSP, supported by improving polyethylene spreads, which rose to US$524 per ton, and polypropylene spreads, which climbed to US$437 per ton. Sales volume, however, fell to 489 kilotons from 677 kilotons in the first quarter due to a shutdown at ROC since March 10 and at LSP since mid-May.
Siam Cement also received a Bt6 billion dividend from its investments during the quarter. Cement demand remained flat year-on-year, with strong infrastructure demand offsetting flat commercial and weak residential segments, while cement prices held stable at Bt2,150–2,200 per ton.
Looking ahead, CLSA flagged that tension in the Middle East could disrupt feedstock supply, while producers in China have resumed operations following the reopening of the Strait of Hormuz, pushing polyethylene and polypropylene spreads down to loss-making levels in July. These developments pose challenges for ROC and LSP as they attempt to resume operations.
CLSA expects softer earnings in the third quarter of 2026, with sales volume and spreads likely to weaken quarter-on-quarter amid Middle East uncertainty, and dividend income unlikely to match the second quarter’s level.
Additionally, The Siam Cement’s net debt-to-EBITDA ratio improved to 3.7 times from 5.0 times in the first quarter. The company declared an interim dividend of Bt3.50 per share, with an ex-dividend date of August 5. CLSA’s target price implies a 26 times CY26 core P/E multiple, or 0.7 times price-to-book, for a 3.7% return on equity.
