Siam Cement’s (SCC) 2Q10 results are expected to be more resilient than petrochem heavyweight peers due to a step up in petrochem volumes from new capacity and healthy contributions from domestic-oriented cement and paper businesses (40% of EBITDA).
A 2Q10 net profit of Bt6.53bn is forecasted for SCC which represents a marginal decline of 4.5% YoY and 4.7% QoQ. A major positive contributor should be higher volumes while the key drag should be lower spreads. Assuming a dividend pay-out ratio of 45%, SCC will pay an interim DPS of Bt5 for its 1H10 operations.
Looking forward, SCC is expected to weather the petrochem cycle trough period through a combination of new volumes, higher HVA in the mix and recovery in cement and paper both of which are largely exposed to Thailand’s domestic recovery. Delays in resolving the Map Ta Phut impasse should not impact our forecasts as we have assumed a conservative timetable of mid-2011.