A QoQ drop is anticipated in Siam Cement’s (SCC) 4Q09 net profit due to lower earnings on the petrochemical side and from seasonal factors. The delay in opening its new petrochem plant at Map Ta Phut following the court injunction would affect its earnings in 2010, but Buy rating is maintained as its earnings growth potential from 2011F remains intact.

Forecast of a normalised profit of Bt5.6bn in 4Q09 implies a drop of 18.9% QoQ but a turnaround from the Bt3.5bn loss in 4Q08. The projected QoQ drop reflects a lower petrochem spread and sales volumes due to seasonal factors and an unplanned plant shutdown.

SCC’s earnings will fall by 4% YoY in 2010 because of lower spreads for its petrochem division, though revenue and earnings from cement, paper and building products should grow helped by higher demand and increased production capacity for paper. Earnings growth should resume in 2011F when the new petrochem plant begins operating.
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