Siam City Cement (SCCC) is expected to announce a lower 2Q06 earnings, both quarter-on-quarter and year-on-year, but still acceptable after rather impressive 1Q06 earnings. This report will be affected by the slowdown in the cement industry and higher energy costs. The 2Q06 net profit is expected to be Bt1003m (EPS Bt4.22), down 12% Q-o-Q and Y-o-Y, as cement prices have risen to Bt1,700-1,750/t in 2Q06 from Bt1,700/tin 1Q06 and Bt1600-1650/t in 4Q05. Export prices have remained high.
A revision is considered in 2006 earnings, as a result of the slowdown in cement demand. The current share price of Bt226 has a slight upside to fair value of Bt262 based on a 2006 PER of 15x and equal to the leading cement companies. The strong point for SCCC is the financial strength with net cash and the expected dividend of around Bt14-15 per year for a yield of 6.2 - 6.6%.
In 2Q06, domestic sales, in volume terms, are expected to be stable, while exports are expected to be slightly down. Sales prices were slightly up in the period to Bt1,700-1,750/tonne from Bt1,700/tonne in 1Q06 and Bt1,600-1,650/tonne in 2Q06. Export prices remained high at $35-39/tonne. 2Q06 sales are expected to be Bt5,902mn and down 4% qoq, but up 2% yoy. (Kim Eng Securities Thailand)