SCGP to Enter SET50 upon Arrival, Expecting to Drive SCC to a TP of ฿402!

The share price of The Siam Cement Public Company Limited (SCC) continued to edge higher in today’s session after a surge yesterday over the news of SCGP’s listing.

 

As of 15:40 local time in Thailand (GMT+7) on September 1, 2020, SCC increased ฿3.00/share or 0.85% to ฿357.00/share with a trading value of 910 million baht. Yesterday, the share gained 3.21% amid the market plummet.

The company planned to allocate no more than 169,132,500 shares for an IPO to existing shareholders of SCC under pre-emptive rights at the ratio of 7.095 SCC’s shares to 1 new ordinary share of SCGP with an Excluding Other Benefit (XB) date on September 10, 2020, and the Record Date on September 11, 2020.

 

Land and Houses Securities (LHS) pointed out four factors that made SCGP an interesting share, giving a “BUY” recommendation with a target price at ฿402.00/share.

1) SCGP contributes 27% to SCC’s EBITDA in the first half of 2020 while having the potential to create the highest EBITDA margin among the group.

2) SCGP has a consecutive growth, recording 22,000 million baht (+6 YoY) in 1H20, while operating profit is 2,200 million baht (+11% YoY).

3) 2021E profit is expected to grow as SCGP would utilize the funds from IPO as a short-term loan repayment, which would lower its burden on interest expenses next year.

4) LHS expects the market value of SCGP at the time of listing would be higher than 100 billion baht, which would automatically be listed in SET50, boosting SCGP’s attractiveness.