As rising energy costs pressured the profitability of cement producers in 2005, Siam City Cement (SCCC) raised its selling price by around 6.5 per cent to be Bt1650 per tonne in November. However, SCCC’s overall earnings for 4Q05 will be relatively disappointing with net profit of Bt706m, down 19.5 per cent YoY and 32 per cent QoQ mainly from gross margin contraction from extra costs charged in the quarter.
 
KGI Securities says the recent rise in SCCC’s share price has not been justified given that there will be no major changes in its fundamental value. The share price is now very expensive trading at PE of 21.2x. Underperform is maintained with a fair value of Bt276. 
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