Cement consumption in Thailand is likely to be rather flat in 3Q15 and 9M15, according to a report by Bualuang Securities focussed on domestic cement major Siam Cement Co (SCC).
Last week, the research house accompanied SCC's management and IR team to meet investors in Germany, Switzerland and France. The information gathered during the non-deal roadshow (NDR) gave Bualuang a clearer picture of SCC's long-term growth profile.
Regarding SCC's Cement-Building Materials (CBM) business, Bualuang believes that the demand growth target of 2-3 per cent this year (implying growth of 8-10 per cent in 4Q15) may be unachievable. Demand from the residential sector, which accounts for around 50 per cent of country demand, remains weak and is unlikely to pick up strongly in 4Q15. Demand should pick up in 1Q16 but pricing will become a concern due to TPI Polene's new capacity.
Growth should, however, be seen from 2H16 onwards on the back of Asean expansion, Bualuang notes.
Such expansion "would not only lengthen the [company's] growth story, but also create a sustainable earnings platform for the long term," it writes. (Source: The Nation, Thailand).