Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

<p><strong>SCC 4Q20 net profit was Bt8.0bn (+13% YoY, -17% QoQ). While the YoY increase came from strong profitability in packaging and petrochemical businesses, the QoQ retreat was due to the loss in cement - building materials business.</strong></p><div>• 4Q20 revenue was Bt97.3bn (-4%YoY, -8%QoQ).</div><div>• 4Q20 EBITDA margin was 17% (+4ppts YoY, -1ppts QoQ), supported by solid petrochemical spread.</div><div></div><div>• SCC’s net profit grew 8% to Bt34bn, mainly driven by packaging business growth and petrochemical business solid margin.</div><div></div><div>• SCC announced dividend payment of Bt8.5/share, XD on 8-Apr-21.</div><div></div><div>• We expect positive momentum QoQ in 1Q21 driven by petrochemical business.</div><div>
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</div><p><strong>We maintain HOLD rating, with 2021E target price of Bt359.00, derived from 12.9x PE, which is its 7 years trading average.</strong></p>

SCC 4Q20 net profit was Bt8.0bn (+13% YoY, -17% QoQ). While the YoY increase came from strong profitability in packaging and petrochemical businesses, the QoQ retreat was due to the loss in cement - building materials business.• 4Q20 revenue was Bt97.3bn (-4%YoY, -8%QoQ).• 4Q20 EBITDA margin was 17% (+4ppts YoY, -1ppts QoQ), supported by solid petrochemical spread.• SCC’s net profit grew 8% to Bt34bn, mainly driven by packaging business growth and petrochemical business solid margin.• SCC announced dividend payment of Bt8.5/share, XD on 8-Apr-21.• We expect positive momentum QoQ in 1Q21 driven by petrochemical business.
 
We maintain HOLD rating, with 2021E target price of Bt359.00, derived from 12.9x PE, which is its 7 years trading average.

SCC : 4Q20 Net Profit Was Bt8.0bn +13% YoY, -17%QoQ

<p><strong>We upgrade our recommendation to HOLD, from SELL rating, with new 2021E target price of Bt359.00, from Bt343.00, derived from 12.9x PE, which is its 7 years trading average.</strong></p><div>• SCC reported 3Q20 net profit of Bt9.7bn (+57% YoY, +4% QoQ), the drowsy top line was offset by solid petrochemical margin.</div><div></div><div>• We revised up our 2020-22 net profit forecasts by 23%, 5%, and 15%, respectively, mainly reflected an increase in petrochemical spread assumption.</div><div></div><div>• SCC also announced about i) temporary suspension of cement unit in Myanmar, and, ii) shares subscription in AJ’s Private Placement and establishment of Joint-Venture company in Vietnam with AJ. We see insignificant impact from the incidents as they would account for less than 2% of SCC’s assets.</div><div></div><p><strong>The petrochemical spread should be even stronger in 4Q20. However, we expect softened performance for SCC as it has planned shutdown on its MOC unit for 45 days in the quarter. We expected petrochemical profitability to retreat in 2021E, given the resumption of regional petrochemical supply as Covid-19 situation would gradually relieve.</strong></p>

We upgrade our recommendation to HOLD, from SELL rating, with new 2021E target price of Bt359.00, from Bt343.00, derived from 12.9x PE, which is its 7 years trading average.• SCC reported 3Q20 net profit of Bt9.7bn (+57% YoY, +4% QoQ), the drowsy top line was offset by solid petrochemical margin.• We revised up our 2020-22 net profit forecasts by 23%, 5%, and 15%, respectively, mainly reflected an increase in petrochemical spread assumption.• SCC also announced about i) temporary suspension of cement unit in Myanmar, and, ii) shares subscription in AJ’s Private Placement and establishment of Joint-Venture company in Vietnam with AJ. We see insignificant impact from the incidents as they would account for less than 2% of SCC’s assets.The petrochemical spread should be even stronger in 4Q20. However, we expect softened performance for SCC as it has planned shutdown on its MOC unit for 45 days in the quarter. We expected petrochemical profitability to retreat in 2021E, given the resumption of regional petrochemical supply as Covid-19 situation would gradually relieve.

SCC : Strong 3Q20 Thanks to Petrochemical Spread

<p>We downgrade our recommendation to SELL, from HOLD rating, with a new 2021E target price of Bt343.00, from Bt306.00, derived from 13.0x PE, which is its 7 years trading average.</p><ul>
<li>SCC reported 2Q20 net profit of Bt9.4bn (+33% YoY, +35% QoQ).</li>
<li>Solid petrochemical spread helped offsetting the negative impact of weak revenue.</li>
<li>2Q20 revenue was Bt96.0bn (-12%YoY, -9%QoQ)</li>
<li>2Q20 Gross profit margin was 22.8% (+5.1ppts YoY, +3.9ppts QoQ).</li>
<li>SCC announced a dividend payment of Bt5.5 (XD on 13-August-20), which is equivalent to 1.4% upcoming dividend yield.</li>
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</div><p>We expect weaker petrochemical business in 2H20E, given the resumption of regional petrochemical supply, as Covid-19 situation would gradually relieve. In addition, SCC would have planned shutdown on its MOC unit for 45 days in 4Q20 and VCM2 unit for 29 days in 3Q20.</p>

We downgrade our recommendation to SELL, from HOLD rating, with a new 2021E target price of Bt343.00, from Bt306.00, derived from 13.0x PE, which is its 7 years trading average.
SCC reported 2Q20 net profit of Bt9.4bn (+33% YoY, +35% QoQ).
Solid petrochemical spread helped offsetting the negative impact of weak revenue.
2Q20 revenue was Bt96.0bn (-12%YoY, -9%QoQ)
2Q20 Gross profit margin was 22.8% (+5.1ppts YoY, +3.9ppts QoQ).
SCC announced a dividend payment of Bt5.5 (XD on 13-August-20), which is equivalent to 1.4% upcoming dividend yield.

 
We expect weaker petrochemical business in 2H20E, given the resumption of regional petrochemical supply, as Covid-19 situation would gradually relieve. In addition, SCC would have planned shutdown on its MOC unit for 45 days in 4Q20 and VCM2 unit for 29 days in 3Q20.

SCC : Solid Petrochemical Spread Spiked 2Q20 Earnings

<p>We maintain our HOLD rating on SCC with new 1H21E target price of Bt306.00, derived from 12.0x PE, which is its 5 years trading average.</p><div>•We cut 2020E earnings by 16%, to incorporate the impact from Covid-19, which would affect petrochemical and Cement – Building Materials businesses in 2Q20. Meanwhile, we trimmed 2021-22E earnings by 4-6%.</div><div>•SCC reported 1Q20 net profit of Bt7.0bn (-40% YoY, -2% QoQ). The quarter performance was eroded by a weakness in Cement – Building Materials and Petrochemical businesses.</div><div>•Almost flat earnings in 1Q20 was an evidence that impact from Covid-19 has not taken into account yet. We think The partial supply chain disruption should be seen in 2Q-3Q20E for petrochemical and Cement – Building Materials businesses. Also, highly volatile oil price added challenges for the group.</div><p>We expect SCC’s earnings to be bottom in 2Q20E. While, the recovery from the Covid-19 should be seen in 2021E, the weak petrochemical business due to oversupply in the pre-Covid period should still overhang. Thus we maintain our HOLD rating.</p>

We maintain our HOLD rating on SCC with new 1H21E target price of Bt306.00, derived from 12.0x PE, which is its 5 years trading average.•We cut 2020E earnings by 16%, to incorporate the impact from Covid-19, which would affect petrochemical and Cement – Building Materials businesses in 2Q20. Meanwhile, we trimmed 2021-22E earnings by 4-6%.•SCC reported 1Q20 net profit of Bt7.0bn (-40% YoY, -2% QoQ). The quarter performance was eroded by a weakness in Cement – Building Materials and Petrochemical businesses.•Almost flat earnings in 1Q20 was an evidence that impact from Covid-19 has not taken into account yet. We think The partial supply chain disruption should be seen in 2Q-3Q20E for petrochemical and Cement – Building Materials businesses. Also, highly volatile oil price added challenges for the group.We expect SCC’s earnings to be bottom in 2Q20E. While, the recovery from the Covid-19 should be seen in 2021E, the weak petrochemical business due to oversupply in the pre-Covid period should still overhang. Thus we maintain our HOLD rating.

<p>We downgrade our recommendation on SCC to HOLD rating, from BUY, with new 2020E target price of Bt361.00, derived from 12.9x PE, which is PE’20E of its Asia ex Japan’s material peers.</p>
<div>•2020-21E earnings revised down by 38%, mainly reflected a contraction in petrochemical spread.</div>
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<div>•SCC’s 4Q19 net profit was Bt7.1bn (-32% YoY, +15% QoQ). The quarter performance was eroded by a weakness in petrochemical business, whose spreads declined gradually.</div>
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<div>•SCC’s 2019 net profit was Bt32bn (-28% YoY). The down-cycle in petrochemical business was the main factor, eroded both revenue (-9% YoY) and profitability (EBITDA Margin contracted by 1.9ppts to 13.8%)</div>
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<div>•The narrow petrochemical spreads should still erode SCC’s performance in 2020-21E, as the oversupply and weak demand shouldn’t ease rapidly.</div>
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<p>The trigger for SCC new bullish cycle should be a recovery in petrochemical spread which largely depends on global economy.</p>

We downgrade our recommendation on SCC to HOLD rating, from BUY, with new 2020E target price of Bt361.00, derived from 12.9x PE, which is PE’20E of its Asia ex Japan’s material peers.
•2020-21E earnings revised down by 38%, mainly reflected a contraction in petrochemical spread.

•SCC’s 4Q19 net profit was Bt7.1bn (-32% YoY, +15% QoQ). The quarter performance was eroded by a weakness in petrochemical business, whose spreads declined gradually.

•SCC’s 2019 net profit was Bt32bn (-28% YoY). The down-cycle in petrochemical business was the main factor, eroded both revenue (-9% YoY) and profitability (EBITDA Margin contracted by 1.9ppts to 13.8%)

•The narrow petrochemical spreads should still erode SCC’s performance in 2020-21E, as the oversupply and weak demand shouldn’t ease rapidly.

The trigger for SCC new bullish cycle should be a recovery in petrochemical spread which largely depends on global economy.

SCC: Overshadow by Weak Petrochemical Spread

Thailand

Siam Cement Group (SCG) is a diversified industrial conglomerate operating in cement-building materials, chemicals, and packaging. It manufactures and distributes products such as cement, ready-mixed concrete, olefins, polyolefins, and integrated packaging solutions. The company is headquartered in Bangkok, Thailand, and was founded in 1913.

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Siam Cement (SCC TB)

SCC : 4Q20 Net Profit Was Bt8.0bn +13% YoY, -17%QoQ

SCC 4Q20 net profit was Bt8.0bn (+13% YoY, -17% QoQ). While the YoY increase came from strong profitability in packaging and petrochemical businesses,

Pi Securities PCL, Thailand

SCC : Strong 3Q20 Thanks to Petrochemical Spread

SCC TB posted impressive result in 3Q20. However, the QoQ momentum in 4Q20 should slowdown given the petrochemical unit shutdown. We recommend HOLD...

Pi Securities PCL, Thailand

SCC : Solid Petrochemical Spread Spiked 2Q20 Earnings

We downgrade our recommendation to SELL, from HOLD rating, with a new 2021E target price of Bt343.00, from Bt306.00, derived from 13.0x PE, which...

Pi Securities PCL, Thailand

SCC: Covid Hit to Limit Upswing

We maintain our HOLD rating on SCC with new 1H21E target price of Bt306.00, derived from 12.0x PE, which is its 5 years trading average.•We cut...

Pi Securities PCL, Thailand

SCC: Overshadow by Weak Petrochemical Spread

We downgrade our recommendation on SCC to HOLD rating, from BUY, with new 2020E target price of Bt361.00, derived from 12.9x PE, which is PE’20E of...

Pi Securities PCL, Thailand

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