For the government’s Bt1.43trn investment package to be disbursed over the next three years, the early phase of the plan to be spent in 4Q09 and early 2010 would focus on road and irrigation projects worth Bt30-40bn. As a result, Thai construction material counters have rallied significantly. Companies related to petroleum asphalt, long steel, pipe to transmit water supply, and last but not least cement significantly outperformed SET.
In the cement space, a positive view is maintained for the outlook on domestic cement due to i) improved residential property markets, ii) stronger indicators on private investment, and iii) chunky government investment. Positive is remained to both Siam Cement (SCC, Bt220, OP) and Siam City Cement (SCCC, Bt223, OP), but Figure 2 shows that SCCC is trading near the lower band of its historical relative performance against SCC. Hence, SCCC is likely to play catch up soon.