Siam City Cement Co is expected to post strong 4Q03 results thanks to the firm cement price and QoQ improvement in cement demand. Outlook for 2004 appears bright with cement demand remaining strong and selling price remaining firm. However, SCCC’s earnings growth compared with other cement stocks is relatively flat. Although the management disclosed that it is under negotiation to acquire cement firm in India, the results have yet to be concluded making the assessment at this point impossible. This is mainly due to the firm cement price and QoQ improvement in cement demand from the low season in 3Q03 as residential construction was fastened before tax incentive ended. The healthy QoQ rise was also partly because there were extra expenses recorded in 3Q03. In all, SCCC’s net profit for 2003 would be Bt3.46bn, a big rise of 51 per cent from 2002, largely brought on by firm cement price and interest savings.
As such, 2003 projections have been revised up by three per cent. Given expectation of persistent strong private construction and a big rise in public works, cement demand is projected to grow by 10 per cent this year followed a five per cent growth in 2003. Based on strong demand, prices should remain firm with a good chance on the upside, while price cut is unlikely. 2004 profit forecast has been revised up by nine per cent as cement price assumption has been raised to better reflect current market price.
