Left Brain Right B - the DBS Vickers Securities Equities Research

Regional Equity Strategy 4Q 2009
Siam Cement
Bloomberg: SCC TB | Reuters: SCC.BK
BUY Bt229.00 SET : 709.23
Price Target : 12-month Bt 252.00
Potential Catalyst: Sustained petrochemical spreads, economic recovery
Analyst
Vichitr Kuladejkhuna CFA +66 2657 7826
vichitrk@th.dbsvickers.com
Price Relative
280
230
180
130
80
Bt
Relative Index
2005 2006 2007 2008 2009
Siam Cement ( LHS ) Relative SET INDEX ( RHS )
Forecasts and Valuation
FY Dec (Bt m) 2008A 2009F 2010F 2011F
Turnover 293,230 235,563 295,249 312,934
EBITDA 38,981 50,637 55,076 53,175
Pre-tax Profit 20,968 29,864 33,268 31,458
Net Profit 16,771 21,262 23,238 21,521
Net Pft (Pre Ex.) 16,507 21,262 23,238 21,521
EPS (Bt) 14.0 17.7 19.4 17.9
EPS Pre Ex. (Bt) 13.8 17.7 19.4 17.9
EPS Gth Pre Ex (%) (36) 29 9 (7)
Diluted EPS (Bt) 14.0 17.7 19.4 17.9
Net DPS (Bt) 7.5 8.5 10.0 10.0
BV Per Share (Bt) 72.7 82.4 92.5 100.5
PE (X) 16.4 12.9 11.8 12.8
PE Pre Ex. (X) 16.6 12.9 11.8 12.8
P/Cash Flow (X) 11.3 9.8 8.9 9.7
EV/EBITDA (X) 10.7 8.4 7.5 7.6
Net Div Yield (%) 3.3 3.7 4.4 4.4
P/Book Value (X) 3.1 2.8 2.5 2.3
Net Debt/Equity (X) 1.1 1.0 0.8 0.6
ROAE (%) 19.3 22.8 22.1 18.6
Earnings Rev (%): - - -
Consensus EPS (Bt): 17.5 18.6 22.3
ICB Industry : Industrials
ICB Sector: Construction & Materials
Principal Business: Thailand’s largest conglomerate with core
businesses in cement, petrochemical, paper, and building materials.
Source of all data: Company, DBS Vickers, Bloomberg
219
199
179
159
139
119
99
79
59
Riding on economic recovery
• Sustainable demand and delay in new capacity
will keep petrochemical spreads at healthy levels
• Latest data on domestic cement sales and
Consumer Confidence Index are encouraging
• Petrochemical may not have bottomed out, but its
non-chemical business should recover in tandem
with the economy in 2010
• Maintain BUY and Bt252 TP (13x 2010 PE).
Resilient petrochemical spreads, early recovery
signs in non-chemical business. HDPE and PPnaphtha
spreads remained at above US$600/tonne,
supported by firm regional demand attributed to
economic stimulus packages across the region, the
industry’s low inventory level, and delay in new capacity.
SCC’s new naphtha cracker capacity should cushion
against weaker petrochemical spreads in 2010.
Improving prospects for non-chemical businesses.
Domestic cement sales turned around to grow y-o-y
starting in June, while the Consumer Confidence Index
had ticked up for 3 consecutive months since May. The
government’s 2nd stimulus package should accelerate
domestic construction activities from 2010 onwards.
Maintain BUY. SCC’s prospects will improve, led by an
economic recovery, better than previously expected
petrochemical outlook, strong balance sheet, and solid
cash flow. Hence, we maintain a BUY rating, with a
14% total return to our Bt252 target price.
At A Glance
Issued Capital (m shrs) 1,200
Mkt. Cap (Btm/US$m) 274,800 / 8,152
Major Shareholders
The Crown Property Bureau (%) 30.0
Thai NVDR (%) 8.9
Chase Nominees Limited 42 (%) 3.7
Free Float (%) 67.9
Avg. Daily Vol.(‘000) 2,757
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Refer to important disclosures at the end of this report
ed-SGC / sa-CS