Bank of Thailand’s latest statistics indicate a mild recovery in domestic cement consumption in September of 2.4Mt, increasing 5.3 per cent YoY while domestic price remains flat MoM but increased 4.3 per cent YoY. For 3Q06, domestic cement consumption was 7Mt, increasing 3.6 per cent YoY and entering into positive territory for the first time since 4Q05.
On the export side, September’s export volume decreased 2 per cent to 1.3Mt, continuing the negative trend seen in August. Thanks to strong volume and robust YoY growth in July 2006, overall volume export in 3Q06 still posted positive growth of 7 per cent YoY.
Although a sign of positive development is visible in 3Q06, zero YoY growth in domestic consumption provided the poor investment sentiment on both the private and public side. Therefore, Siam City Cement Pcl (SCCC), the pure cement play, is expected to post only mild growth in full year 2006 revenue following the increase in domestic cement price while bottom line will contract following cost pressure experienced in 1H06. Maintain Underperform on the counter.