Company Overview
The Siam Cement Public Company Limited is a Thailand-based industrial company. The Company’s segments include Cement-Building Materials Business, Chemicals Business and Packaging Business (SCGP). Cement-Building Materials Business segment manufacture and distribute grey cement, ready-mixed concrete, white cement, dry mortar, roof tiles, ceiling and wallboard, wood substitute, concrete paving blocks, ceramic tiles, sanitary wares and sanitary fittings; distribute cement, building and decorative products, including service and solutions for home and residence through active omnichannel, and provide logistics, delivery services, import and export services. Chemicals Business segment manufacture and sale of olefins, polyolefins, vinyl and other chemical products. SCGP segment offers an integrated packaging chain, including fiber-based packaging, packaging paper and performance and polymer packaging, and fibrous chain, including foodservice products, pulp and paper products.
Investment Overview
Challenging chemical outlook ahead. We expect the chemical downcycle to persist through 2026–27F as significant new capacity continues to come onstream. China's PE capacity growth is forecast to peak at 6–7% in 2027F. Meanwhile, abundant US ethane supply is expected to support new ethane-based PE plants in Asia, where imported ethane remains more cost competitive than naphtha. We estimate at least 51mn tonnes of additional US ethane supply will be added during 2025–30F
LSP project in Vietnam. SCC owns 100% of LSP, a fully flexible 1.35mtpa cracker comprising 950kta of PE and 400kta of PP capacity. The project cost c.USD5.1bn, around 6% below budget, funded by loans, debentures and internal cash flow. After commercialisation in Oct 2024 and a brief operating period in Aug 2025, the plant is currently offline.
Chemical spreads and domestic GDP growth are key earnings drivers. SCC's core businesses (c.70% of earnings) are driven by chemical margins (PE/PP/PVC) and demand for building materials. We expect a softer chemical environment in 2026F due to weak global demand and additional Asian supply. Naphtha prices also remain a key share price driver through inventory gains and losses
Maintain HOLD with an FY26F TP of THB212, based on an SOTP valuation using a WACC of 11.4% and a terminal growth rate of 0%. Our cautious stance is supported by: i) we believe business performance has peaked out in 2Q26 as chemical margins dip in 3Q26TD; ii) a challenging long-term chemical outlook as additional PE/PP capacity comes onstream during 2026–2028; iii) sluggish CBM demand from both the commercial and residential sectors; iv) ongoing operational risk, as the timing of ROC/LSP resumption remains uncertain amid renewed US–Iran tensions; and v) a share price that has already priced in much of the positive from outstanding 2Q26 performance.
Risks
Slowing demand for cement and building materials due to delayed investments in infrastructure projects, as well as volatility in oil and petrochemical product prices.