Thursday, January 26, 2012

THAILAND: Thai floods sink Siam Cement Q4 net profit, shares drop

Q4 net profit down 81 pct at 3.2 bln baht as f'cast

* To spend 30 bln baht, plans bond sales this year

* Stocks down, but in line with broader market fall (Adds details throughout, analyst comments)

BANGKOK,  Thailand's top industrial conglomerate, Siam Cement Pcl, reported an 81 percent fall in fourth-quarter profit on Wednesday, hit by severe flooding, a drop in equity income from chemical associates plus the absence of extra gains.

But analysts expect its earnings to recover in 2012 on the back of pent-up demand for cement and other materials for post-flood rebuilding, although a weak global economy may put pressure on its chemical unit.

"Though the current petrochemicals spread is weakened by global economic concerns, we remain positive on the medium- to long-term outlook due to limited new supply," an analyst at Tisco Securities said, giving a "buy" rating on the stock with a target price of 450 baht.

The shares were down 0.6 percent at 324 baht at 0826 GMT after the results, in line with the broad market. The stock hit an eight-day low of 323 baht at one stage.

It had risen 19.5 percent in the fourth quarter, compared with an 11.9 percent gain in the market.

Siam Cement, 30 percent owned by the royal family's Crown Property Bureau, is Thailand's third-largest company by market value. It earns up to half its profit from petrochemicals, the rest coming from paper, cement and other building materials.

Its October-December net profit came to 3.2 billion baht($101.75 million), well below the year-earlier profit of 16.7 billion baht but in line with the 3.27 billion forecast by seven analysts polled by Reuters.

The company, a barometer for Thailand's corporate health, made a 27.3 billion baht profit in 2011, or 22.73 baht per share, compared with 37.4 billion in 2010 when it booked a gain from the sale of a stake in PTT Chemical Pcl.

Siam Cement said in a statement its equity income dropped 19 percent to 6.77 billion baht last year. In particular, a large drop in equity income from chemicals associates due to a global economic slowdown hurt fourth-quarter earnings, it said.



MERGER DRIVE

Sales revenue in 2011 rose 22 percent to 368.6 billion baht as product prices in all business units rose.

Earnings before interest, tax, depreciation and amortisation (EBITDA) in the year were practically flat, rising just 1 percent to 46.3 billion baht.

Siam Cement could spend 30 billion baht on investments, including merger and acquisition deals this year, and is looking at overseas assets, especially in other Southeast Asian countries.

Chief Executive Kan Trakulhoon told reporters the company was interested in buying a stake in a cement maker in Vietnam and expected to spend less than 10 billion baht ($315 million) on the acquisition.

In September, the company agreed to buy 30 percent of Indonesia's Chandra Asri Petrochemical Tbk for $442 million in a deal mainly with Singapore state investor Temasek.

In December its board approved a plan to spend 6.2 billion baht to raise its stake in Thai Plastic and Chemicals Pcl to 69.3 percent from 45.6 percent.

The company plans to sell up to 25 billion baht of four-year bonds to refinance debt and help fund its expansion. It is to pay a dividend of 7 baht for its second-half performance.

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