Siam Cement 2Q13 earnings growth forecast

Siam Cement 2Q13 earnings growth forecast
12 July 2013


Siam Cement Co is expected to report YoY robust earnings growth thanks to impressive performances from its three core businesses including its cement division.

KGI Securities expect SCC to report a 2Q13 net profit of THB8.8bn, up 106 per cent YoY and 0.2 per cent QoQ. ? 

In terms of its cement division, concerns about a delay to the government's THB2tn borrowing bill would impact sentiment for the cement unit but not the actual demand for building materials. This is thanks to steady spending from the current expenditure budget which should allow SCC to maintain its conservative growth target for local cement demand in 2013 of at least 10 per cent YoY from 31Mt in 2012. Strong growth in the suburbs, particularly for residential, remains a key factor behind the growth and has helped 5M13 domestic cement demand rise 14.5 per cent YoY.

Meanwhile, the local cement price should increase a bit to THB1800-1850/t. This should help maintain SCC's EBITDA margin at 14.8 per cent, KGI states.

According to Siam Cement’s Chief Executive, Kan Trakulhoon, the company plans to raise domestic cement production by 10 per cent in the next few years, with new plants to be opened in Indonesia, Cambodia and Myanmar.

The company wants to increase overall sales growth this year by seven per cent to THB43bn (US$14bn).  "The higher target is to reflect higher revenue from our building material business after a recent restructuring in its sanitary ware business and an acquisition of Prime Group, a ceramic tile maker in Vietnam," Kan said.

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