SCC’s Advancement in Indonesia, Regaining Investors’ Confidence for the “฿400 Shares”

The Siam Cement Public Company Limited (SCC) had made an interesting move at the beginning of the month by announcing the restructuring of SCC’s Indonesian ceramic business.

 

As part of this ongoing internal restructuring with the purpose of production centralization and operational adjustment of Keramika Indonesia Assosiasi Tbk (KIA), a subsidiary of SCC, the shareholders of KIA had approved to dissolve and liquidate PT KIA Sepih Mas (KSM) which is located in Cileungsi and Karawang, West Java.

After seeing the entrance of SCC’s subsidiary, SCG Retail Holding Company Limited, in Indonesia to acquire 29% stake of PT Catur Sentosa Adiprana Tbk (CSA) for the construction and designing material business at a value of 2,400 million baht, it has been anticipated that the purpose of this restructuring is to pave the way for SCC to fully penetrate the Indonesian market.

The investment in CSA is not only an advancement to the international market, but also can be seen as a preparation for future distribution.

 

The reason for investing in CSA is due to the fact that CSA has two main construction and designing material businesses which are MITRA10 and ATRIA.

MITRA10 is a retail store for maintenance and construction material just like Thai’s GLOBAL with its 27 branches in the main cities in Indonesia. Meanwhile, ATRIA is a retail store for home designing material just like Thai’s HMPRO. Moreover, CSA also has a distribution business including construction material, chemical products and consumer goods, to other retail stores over 30,000 shops across the country.

 

This leads to the initiation of SCC to restructure its ceramic business in Indonesia in order to create high and efficient distribution channels. This gives SCC an opportunity to create a distribution route both in Indonesia and Thailand.

This could be SCC’s strategy to make Indonesia its second home.

 

Do not forget that SCC’s cement and petrochemical business are doing not so good for quite a while, and if the company just sit there idling by doing nothing, its performance and revenue could get worse. This is why setting its target to Indonesia that has a population of over 200 million could be a great idea as of now.

To make things more interesting, the construction material business might even be the stepping stone to penetrate cement business in Indonesia. Seeing SCC’s cement factory in Indonesia might not be a daydream anymore while the cost could be even lower than what SCC has to pay currently in Thailand.

Now, what is left is to keep an eye on its progress to measure how successful the business plan is. Will this be enough to regain investors’ trust and recover the share price to the level of ฿400.00/share again?