Brokers maintain 'buy' rating for Siam City Cement

Siam City Cement (SCCC), the country's second biggest cement-producer, is expected to show solid earnings growth over the next two years despite higher operation costs.

Capital Nomura Securities (CNS) revised its buy rating for SCCC shares though it was being oversold with bad news priced in.

The SCCC stock on Friday closed at Bt166, up 3.11 per cent from the previous trading day. The broker expected demand for domestic cement to increase by 2 per cent during 2009-2010, excluding the BTS Skytrain extension project.

CNS still maintains its forecast for SCCC's net profit growth of 28 per cent in 2009 and 2010.

SCCC also has a potential upside from the extension of the BTS project, noted the broker.

The company posted Bt768 billion in net profit, down 24 per cent on quarter and 19 per cent on year, in the second quarter. For the first half, SCCC reported total revenue of Bt11.10 billion and net profit of 1.78 billion. However, KGI Securities (Thailand) stated in its research that it had revised its net-profit forecast for SCCC, down 6-8 per cent to Bt3.2 billion in 2008 and Bt3.4 billion in 2009, mainly on subdued demand despite the stock outperforming the market.

The brokerage house trimmed 2009's domestic cement sales growth to 1.5 per cent from 5 per cent due to delays in mega-projects. The broker estimated SCCC's full-year sales of Bt20.61 billion and net profit of 3.21 billion in 2008.

Kim Eng Securities (Thailand) has lowered its forecast for SCCC's 2008 earnings growth from 10 per cent to only 4 per cent to Bt3.36 billion.