Nomura initiates Siam Cement coverage with a 'buy'

Nomura initiated coverage of  Siam Cement Pcl, Thailand's biggest industrial conglomerate  with a 'buy' rating, citing strong cement business on the back of infrastructure spending and improving petrochemical cycle. The broker set a price target of THB530, according to reports by Reuters.

"The company's cement business has had strong performance in 2012 driven by government's massive infrastructure spending ... However, SCC underperformed Siam City Cement despite SCC's superior earnings per share growth in its cement business," it said.

Siam Cement shares rose 30 per cent in 2012 versus 80 per cent by Siam City Cement Pcl. Siam Cement share price performance was hampered by a poor performance of its petrochemical business in 2012, Nomura said.

"Given an improving petrochemical cycle expected in 2013/14F and estimated continued growth of 22 per cent in the cement business over the same period, we believe SCC's share price should re-rate toward that of SCCC," the broker said.