Last Traded Price (9 Jul 2021): Bt420.0 (SET : 1,552.09)
Price Target 12-mth: Bt496 (18% upside)
Duladeth BIK, CFA, FRM, CAIA +66 28577833

2Q21F supported by chemical unit

Investment Thesis:

A resilient company during tough times. We believe SCC is one of resilient stocks during the COVID-19 pandemic with its FY21F net profit projected to grow c.35% y-o-y. Its business diversification into chemical and packaging products has enabled it to benefit from the surge in demand for such products during the pandemic. Moreover, SCC is relatively cheaper than peers with an FY21F PE of c.11x (vs. regional peers’ c.13x) and a decent dividend yield of 4%.

LSP project in Vietnam (76% completed). SCC has invested in a 100% stake in the Long Son Petrochemicals (LSP) cracker in Southern Vietnam. LSP is a fully flexible cracker (with propane flex of up to 80%) with a total capacity of 1.35mta for polypropylene (PP, 400kta) and polyethylene (PE, 950kta). The capex of the project is c.US$5.4bn with a debt to equity ratio of 60:40 and will be funded by loans, debenture and internal cash flow. The project is expected to start up in 2023F.

Maintain BUY rating with FY21F TP of Bt496. Our view is premised on: i) recovery of cement and building material demand, ii) strong chemical margins on increasing demand for hygiene products, and iii) its packaging business expansion in the Asian region that is seeing robust demand.