Recommendation: Long-term buy

Securities house: Kim Eng Securities (Thailand)

Siam Cement's first-quarter earnings are expected to surge 58 per cent quarter on quarter from Bt5.1 billion to Bt8.08 billion, as full capacity has been the norm at the petrochemical plant after a 35-day shutdown in the fourth quarter and the firm's petrochemical spread has remained good.

However, earnings will be down from the same period last year by 19 per cent due to a lower petrochemical spread last year and because cement and paper operations were affected by higher energy costs. The broker forecasts that Siam Cement's 2006 net profit would increase slightly year on year to Bt32.58 billion from Bt32.34 billion.

Siam Cement is expected to offer an attractive 6.3-per-cent dividend based on the stock's fair value estimate at Bt270 each.

However, the broker expects that Siam Cement shares will perform worse than the market based on concerns about a downtrend in the petrochemical business cycle, in addition to a slowdown in construction activity in both the private and government sectors and high energy costs.

Stock: Shin Satellite Plc (SATTEL)

Recommendation: Fully valued

Securities house: DBS Vickers Securities (Thailand)

Shin Satellite should post a normalised loss of Bt37 million in the first quarter. But the broker expects it to book a Bt98-million foreign exchange gain, given that 13 per cent of its US$350 million (Bt13.3 billion) in foreign debts are not hedged, and the 5.2-per-cent appreciation of the baht against the US dollar, which has resulted in a Bt61-million net profit.

The new iPSTAR satellite is running at less than 1 per cent of capacity with 38,865 subscribers. The satellite has a capacity of 4 million subscribers and needs 200,000 subscribers to break even.

Although 200,000 subscribers account for only 5 per cent of its total subscriber capacity, they could generate 10 per cent of iPSTAR's utilisation rate, given that most subscribers in the early stages consume huge bandwidth.

The management expects revenue this year to come from terminal sales rather than service income. This implies that the take-up rate should remain slow. In the broker's view, iPSTAR revenue is unlikely to catch up with the increase in expenses in the near future.

Shin Satellite has said that it will not break even unless it has contracts in India and China.

The broker has set a 12-month target price for the stock at Bt12.10 apiece.

oranan@nationgroup.com