SCC Cement in Myanmar

7/27/2019 SCC Cement in Myanmar

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Flash Note 26 August 2013Thailand

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Company Update

Thailand27 August 2013

Siam CementEstablishing a firm footing in MyanmarMaintain BUY: By investingTHB12.4bn in a fully integrated cement plantin Myanmar, SCC enters that market in the best possible way, in our view,and putting the Group well-placed to benefit from the potential surge ofdemand arising from fast development activities characteristic of youngdeveloping nation. The investment cost looks high because this isGreenfield. However, with prospective EBITDA north of 50%, the paybackperiod is short. Its investment in Myanmar, to start commercial run in 2Q16will add one more source of ROE enhancements for the group. The recentscaremongering has shed 6% off SCC market value and is creating agood opportunity to accumulate the stock. Maintain BUY.

Via cement SCC conquers: Cement is very basic need in the early

stage of development in any country. SCC fully integrated cement plant+ in-house power will cash into this trend in Myanmar. The plant has apotential payback period of about five years, based on our estimate.Given the long economic life of the cement plant in conjunction with along limestone mining license, there is high economic value add here.

More than fully-integrated: The investment cost of the cement plant isequivalent to US$206/ton slightly expensive versus historic norm ofUS$150-175/ton (best technology) because the plant is Greenfield andlays down foundation for a substantial capacity expansion in the future.There is also a jetty facility that will handle transport of cement as well asthe incoming coal from Indonesia. The coal-fired power plant will costUS$1/MW, in line with industry average, but its value is to provide SCCplant a stable source of electricity. If the waste heat recovery program issuccessful, there is scope for SCC to sell some power to the grid until the

expansion comes along.Short payback: The operating conditions in the Myanmars plant issimilar to that of Thailand - proximity to the limestone mine, stable power,coal imported so the cash production cost is most likely to be similar ifnot cheaper if we allow that the kiln is new, hence more efficient. At aselling price of US$80-90/ton, as per SCC, nearly on par that ofThailands we see EBITDA margin potentially north of 50%. Theinvestment has a short payback period.

Expansion is return enhancing: SCC mgt guides that the basicinfrastructure of the plant is designed for a significant expansion in thefuture. No specific capacity is guided but we note that at 10% demandgrowth for the next five years and assuming SCC can keep its marketshare at 40%, the output from the new cement plant can be absorbed by

the market. If the market share gains are higher or demand growth isfaster, then the capacity expansion can follow in a short time, thuslowering fixed costs further.

SCC Summary Earnings Table

FYE: Dec 31 (Btmn) 2011 2012 2013F 2014F 2015FRevenue 368,579 407,601 437,154 465,696 485,398EBITDA 43,732 42,171 51,554 63,448 67,136Recurring Net Profit 27,281 23,580 33,348 42,538 46,789Net Profit 27,281 23,580 34,848 42,538 46,789EPS (Bt) 22.73 19.65 29.04 35.45 38.99EPS growth (%) (27.0) (13.6) 47.8 22.1 10.0DPS (Bt) 12.50 11.00 14.50 17.72 19.50

PER 18.0 20.9 14.1 11.6 10.5EV/EBITDA (x) 14.3 15.1 12.5 10.1 9.5Div Yield (%) 3.0 2.7 3.5 4.3 4.8P/BV(x) 3.5 3.4 3.0 2.6 2.3

Net Gearing (%) 94.4 99.7 91.0 78.3 67.4ROE (%) 20.0 16.6 22.6 24.0 23.1ROA (%) 7.4 6.1 8.6 10.0 10.3Consensus Net Profit (Btmn) - - 34,932 40,347 46,641Source: Company reports and MBKET

Buy(unchanged)

Share price: THB410.00Target price: THB550.00 (Unchanged)

Maria LapizInstitutional Research [email protected](662) 257 0250

Surachai [email protected](02) 658 6300

Stock Information

Description: SCC is a holding company with businessecovering the cement, building products, pulp and paper anPetrochem industries. It also has a strong distribution antrading activity and recently acquired 30% stake in listed SiaGlobal Services, a home improvement retailer. SCC is thlargest construction material conglomerate in Thailand anaims to be one of the major players in the ASEAN market. SCwas listed in on the SET in January 1976. It is owned by thCrown Property Bureau the entity managing the wealth of thCrown.

Ticker : SCCTBShares Issued (mn) : 1,200Market Cap (US$mn): 16,291

3-mth Avg. Daily Turnover (US$mn): 20.9

SET Index: 1,329.18

Free float (%): 67.69

Major Shareholders : %

Crown Property Bureau 30.00

Thai NVDR 12.59

Key Indicators: 2014

ROE annualised (%) 24.0

Net gearing (% ): 78%

NTA/shr (Btmn): 158

Interest cover (x): 7.9

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SCC SET

Performance

52-week High / Low THB502/ THB325

1-mth 3-mth 6-mth 1-yrs YtdAbsolute (%) -8.9 -12.8 -13.5 25.0 -6.8Relative (%) 1.2 4.6 -0.4 16.0 -2.4
mailto:[email protected]:[email protected]


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Siam Cement (SCC)

27 August 2013 Page 2 of 10

Highlights

Sizable Seed Investment in Myanmar

The Press ReleaseSCC announced Board approval of the THB12.4bn investment plan for a

1.8mn tonner of a Greenfield Cement Plant with ancillary facilitiesincluding a power plant and port facilities in Myanmar. The investment willbe set up under Myanmars Foreign Investment Law (M -FIL) that isexpected to start-up by mid 2016. The integrated plant will startoperations in 2Q16 after the M-FIL comes into effect.

The plant will be strategically located in Mawlamyine (pronounced asMoo Lam Yai) where there is long term supply of limestone (miningconcession already secured) that is complemented by a water access toYangon, Myanmars primary commercial hub according to the pressrelease of the SCG. With the majority stake, cement plant will subscribeto SCGs principle of sustainable development. The 40MW coal-firedpower plant will use the latest clean-technology, a 9 megawatt waste-heat

generator system for reduced electrical usage. The coal will be importedfrom Indonesia. It could end up cheaper than import cost to Thailandbecause it will be using water transport all the way up to the Mawlamyineplants jetty. Import coal cost in Thailand has two components: seabornefreight and land transport to the Saraburi plant.

Mawlamyine, Myanmar just across the sea to Yangoon and fromIndonesia

Source: Google Maps

High Investment CostSCC is replicating the approach it used in Indonesia. The cement plantand ancillary facilities will cost US$370mn (US$206/ton) and this alreadyincludes the basic infrastructure to support the second production line toadd to the 1.8mn tons initial capacity. The power plant will cost another


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US$40mn, about US$1/MW, in line with the industry average (note coalpower plants are more expensive that gas-fired power).

Given the recent flooding in Thailand in late 2011, we were a bitconcerned that Mawlamyine is only 30 meters above sea level (ASL) andwith the proximity to a river it seems be a place of high flood risk.

Saraburi was spared from the 2011 flooding because it has higherelevation at the highest point the elevation is 329m ASL. However, themanagement assured that the topography of the site has already beenduly noted during the survey.

SCC already has the mining concession and license on a limestonedeposit that can support very long production profile on an expandedcapacity basis. The mining license is renewable every 20 years similarto Thailand. We note that close proximity to a mine is one of the keyfactors why Thailand is highly cost competitive in cement production.

The Market

In 2012 the total cement demand in Myanmar was 4.0mn tons, accordingto SCC of which the company accounted for 40% market share (1.7mntons). Locally-produced cement accounted for slightly over 1.0mn andthe rest are imports. According to SCC, about 40% of the demandemanates from the area surrounding Yangon, and this would remain tobe the key growth area supporting the estimated incremental growth of10% per year.

By the time the cement plant becomes operational in 2Q16, Myanmarscement demand could be up to 5.3mn tons. Assuming that SCC can keepits market share of 40%, the volume that would come from the Groupwould be 2.1mn tons more than enough to get the plant fully utilized so it will just be a matter of climbing the learning curve.

It is possible that the total demand in the country is far higher than what isvisible to SCC as another estimate puts the market size closer to 6-7mntons in 2012. If this is the case, then we argue that there is growthpotential for SCCs market share from the current 40% that can be gainedby having a localized cement plant. Adding the second production line willnot be too long from 2016, we expect, and by then per unit fixed cost ofthe plant could be significantly lower.

Myanmars cement market is underdeveloped, in our view. Capacityestimates vary widely from 2mn tons to as high as 6m based onregistered capacity permits. Likewise demand is figure is also variantfrom SCCs 4mn tons for 2012 to 7.0mn tons this year. We think all these

numbers are correct! We also hypothesize that Myanmars cementmarket is similar to Chinas in the early days of development wherebynearly 50% of the capacity is considered sub-standard. As the marketevolves there will be increasing demand for higher standard cementproduct a possible to an early bird like SCC.

The ReturnWe are very optimistic in the project because the integrated plantcontains all the elements necessary for success limestone concession,proximity to water transport (barge is always cheaper than land) andpower supply. The SCC brand is already very much present in Myanmar.

Cement prices in Myanmar ranges from US$80-90/ton, according to

SCC, nearly on par that of Thailand and given the similarities in the basicconditions we expect SCC EBITDA margin to be at 50 -55% factoring inhigher efficiency credits for the new plant, and this would imply a paybackperiod of five years. Considering the long economic life of the assets, theresidual cashflow to equity holders is promisingly high.


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More importantly, establishing a base in Myanmar via the cementindustry gives SCG a strong growth platform into Myanmar and catchingthe market in the pre-development surge. Myanmars per capita cementconsumption is about 70-80kgs per year based on some estimates.

Chart 1: Myanmar low cement consumption per capita

Source: Company reports.

Maintain BUYSCC share price suffered a beating in this round of sell-off, falling 6% inthe past week. We take this as a good opportunity to accumulate the

shares. There is a worry that Thailand is due to repeat a variation of 1997crisis and we view this as scaremongering that could fizzle as we enter4Q.

Based on our estimates, SCC enters into the stage of sustainable ROEexpansion from 16% in 2012 top mid 20s in the next three years. At thisstage it has more sources of positive surprise than negatives so earnings(cashflow) upgrades are highly likely.

We value SCC based on PBV to capture rising ROE trends. We peg thefair value at LTM PBV + 1SD giving us a 12M price target of THB550. Atour price target the stock would trade at 15x 2014PE, and this is justifiedby a 23% EPS growth and supported by dividend yield at nearly 4%.

Chart 2: SCC is trading nearer LTM but outlook is positive Chart 3: PBV our key valuation metric

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Source: Bloomberg and MBKET Source: Bloomberg and MBKET


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Siam Cement (SCC)


Relative to the region, SCC is trading cheaply considering its growthhigher ROE and yield.

Table 1: Regional Peer

Name Country Beta 2013 2014 2013 2014 2013 2014 2013 2014

SIAM CEMENT PUBLIC CO LTD TH 1.04 14.3 12.2 2.9 2.6 22.0 22.6 3.5 4.1

SIAM CITY CEMENT PUB CO LTD TH 1.09 19.1 16.6 4.8 4.4 25.9 27.3 3.9 4.6

TPI POLENE PUBLIC CO LTD TH 1.05 16.9 12.8 0.4 0.4 2.1 2.7 1.5 2.2

SEMEN INDONESIA PERSERO TBK ID 1.13 13.3 11.6 3.7 3.1 29.2 28.4 3.1 3.5

INDOCEMENT TUNGGAL PRAKARSA ID 1.15 12.9 11.4 3.0 2.5 24.5 23.5 2.2 2.5

HOLCIM INDONESIA TBK PT ID 1.02 15.3 13.5 2.0 1.8 13.0 13.6 2.6 2.4

LAFARGE MALAYAN CEMENT BHD MA 0.97 20.1 18.2 2.5 2.5 12.8 13.6 4.3 4.7

TASEK CORP BHD MA 0.97 19.3 18.9 NA NA 9.9 9.8 3.9 3.9

LAFARGE REPUBLIC INC PH 0.49 16.6 13.6 3.4 3.1 18.6 21.0 4.4 4.7

HOLCIM PHILIPPINES INC PH 0.61 19.1 16.7 NA NA 20.6 22.2 3.4 4.2

Average - Bloom berg consensus 0.95 16.7 1 4.6 2.8 2.5 1 7.9 1 8.5 3.3 3.7

P/E (x) P/B V (x) ROE (x) Yield(%)

Source: Bloomberg

Chart4: SCC Continues Deepen its Penetration in the ASEAN

Source: Company reports.


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Siam Cement (SCC)


Rating Date Targe t Pr ice

Buy 08/27/13 550.00

Buy 08/01/13 550.00

Buy 07/09/13 550.00

Buy 06/06/13 550.00

Buy 04/25/13 506.00

Buy 04/24/13 506.00

Buy 04/11/13 506.00

Siam Cement Summary of FinancialsINCOME STATEMENT (Btmn) BALANCE SHEET (Btmn)

FY December 2012 2013F 2014F 2015F FY December 2012 2013F 2014F 2015F

Revenue 407,601 437,154 465,696 485,398 Fixed Assets 165,292 176,784 183,334 189,934EBITDA 42,171 51,554 63,448 67,136 Other LT Assets 101,015 118,316 136,617 152,688

Depreciation & Amortisation 14,047 13,508 13,450 13,400 Cash / ST Investments 32,741 20,000 20,000 25,000Operating Profit (EBIT) 28,124 38,046 49,998 53,736 Other Current Assets 96,526 98,558 100,093 101,914Interest (Exp) / Inc 6,321 6,385 6,355 5,125 Total Assets 395,573 413,657 440,044 469,536

Associates 1,561 9,801 10,801 11,071One-offs 0 1,500 0 0 ST Debt 48,900 47,377 47,039 47,430Pre-Tax Profit 23,364 41,462 54,444 59,682 Other Current Liabilities 49,831 50,656 51,319 52,088Tax 4,742 7,039 10,106 11,092 LT Debt 126,570 122,629 121,753 122,765Minority Interest (4,958) 1,075 1,800 1,800 Other LT Liabilities 9,149 9,149 9,149 9,149Net Profit 23,580 34,848 42,538 46,789 Minority Interest 17,937 19,012 20,812 22,612Recurring Net Profit 23,580 33,348 42,538 46,789 Shareholders' Equity 143,186 164,834 189,972 215,492

Total Liabilities-Capital 395,573 413,657 440,044 469,536

Revenue Growth % 10.6 7.3 6.5 4.2EBITDA Growth (%) (3.6) 22.2 23.1 5.8 Share Capital (mn) 1,200 1,200 1,200 1,200EBIT Growth (%) (7.9) 35.3 31.4 7.5 Gross Debt / (Cash) 175,470 170,006 168,791 170,195

Net Profit Growth (%) (13.6) 47.8 22.1 10.0 Net Debt / (Cash) 142,730 150,006 148,791 145,195Recurring Net Profit Growth (%) (13.6) 41.4 27.6 10.0 Working Capital 46,695 47,902 48,774 49,826Tax Rate % 21.7 22.2 23.2 22.8 BVPS 119.32 137.36 158.31 179.58

CASH FLOW (Btmn) RATES & RATIOS

FY December 2012 2013F 2014F 2015F FY December 2012 2013F 2014F 2015F

Profit before taxation 23,364 41,462 54,444 59,682 Gross Margin % 13.2 14.9 16.8 17.2Depreciation 14,047 13,508 13,450 13,400 EBITDA Margin % 10.1 11.5 13.2 13.5Net interest receipts / (payments) 6,321 6,385 6,355 5,125 Op. Profit Margin % 6.7 8.5 10.4 10.8Working capital change (1,995) (1,206) (872) (1,052) Net Profit Margin % 5.6 7.8 8.9 9.4Cash tax paid (4,742) (7,039) (10,106) (11,092) ROE % 16.6 22.6 24.0 23.1Others (inc. exceptional items) (9,255) (6,146) (8,811) (6,621) ROA % 6.1 8.6 10.0 10.3Cash flow from operations 27,740 46,963 54,460 59,441 Net Margin Ex. El % 5.6 7.4 8.9 9.4

Capex (27,417) (25,000) (20,000) (20,000) Dividend Cover (x) 1.8 2.0 2.0 2.0Disposals / (purchases) 0 0 0 0 Interest Cover (x) 4.4 6.0 7.9 10.5Others 17,106 (7,500) (7,500) (5,000) Asset Turnover (x) 1.0 1.1 1.1 1.0Cash flow from investing (10,311) (32,500) (27,500) (25,000) Asset / Debt (x) 1.7 1.8 1.9 2.0Debt raised / (repaid) 13,202 (5,464) (1,215) 1,404 Debtors Turn (days) 37.5 36.5 35.0 34.2Equity raised / (repaid) (4,833) 1,075 1,800 1,800 Creditors Turn (days) 43.9 46.7 45.5 44.5Dividends (paid) (13,774) (13,200) (17,400) (21,269) Inventory Turn (days) 48.8 50.3 49.0 48.0Interest payments 6,321 6,385 6,355 5,125 Net Gearing % 99.7 91.0 78.3 67.4Others (15,961) (16,000) (16,500) (16,500) Debt / EBITDA (x) 4.2 3.3 2.7 2.5Cash flow from financing (15,045) (27,204) (26,960) (29,441) Debt / Market Cap (x) 0.3 0.3 0.3 0.3Change in cash 2,384 (12,741) 0 5,000

Source: Company reports and MBKET estimates.

MBKET Rating and PT Trends

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SCC's Share Price

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Source: Bloomberg and MBKET estimates


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RESEARCH OFFICESREGIONAL

Francis Seow

Acting Head, Research & Economics(65) 9894 9575 [email protected]

WONG Chew Hann, CARegional Head of Institutional Research

(603) 2297 8686 [email protected] Seng YeowRegional Products & Planning(65) 6432 1453 [email protected]

ECONOMICSSuhaimi ILIASChief Economist Singapore | Malaysia(603) 2297 8682 [email protected]

Luz LORENZO Philippines

(63) 2 849 8836 [email protected]

Tim LEELAHAPHAN

Thailand(662) 658 1420 [email protected]

JUNIMAN

Chief Economist, BII Indonesia(62) 21 29228888 ext 29682 [email protected]

Josua PARDEDEEconomist / Industry Analyst, BII Indonesia(62) 21 29228888 ext 29695 [email protected]

MALAYSIAWONG Chew Hann, CAHead of Research(603) 2297 8686 [email protected] Strategy Construction & InfrastructureDesmond CHNG, ACA(603) 2297 8680 [email protected] Banking - RegionalLIAW Thong Jung(603) 2297 8688 [email protected] Oil & Gas Automotive ShippingONG Chee Ting, CA(603) 2297 8678 [email protected] Plantations- RegionalMohshin AZIZ(603) 2297 8692 [email protected] Aviation Petrochem

YIN Shao Yang, CPA(603) 2297 8916 [email protected] GamingRegional MediaTAN CHI WEI, CFA(603) 2297 8690 [email protected] Power TelcosWONG Wei Sum, CFA(603) 2297 8679 [email protected] Property & REITsLEE Yen Ling(603) 2297 8691 [email protected] Building Materials Manufacturing Technology

LEE Cheng Hooi Head of [email protected] Technicals

HONG KONG / CHINAIvan CHEUNG,CFA(852) 2268 0634 [email protected] HK Property IndustrialJacqueline KO,CFA(852) 2268 0633 [email protected] ConsumerAndy POON(852) 2268 0645 [email protected] Telecom & equipmentAlex YEUNG(852) 2268 0636 [email protected] IndustrialKaren KWAN(852) 2268 0640 [email protected] China PropertyWarren LAU(852) 2268 0644 [email protected] TechnologyRegionalJeremy TAN(852) 2268 0635 [email protected] Gaming

INDIAJigar SHAHHead of Research(91) 22 6623 2601 [email protected] .in Oil & Gas Automobile CementAnubhav GUPTA(91) 22 6623 2605 anubhav@maybank -ke.co.in Metal & Mining Capital goods PropertyUrmil SHAH(91) 22 6623 2606 [email protected] Technology MediaVarun VARMA(91) 226623 2611 va [email protected] Banking

SINGAPOREGregory YAP Head of Research(65) 6432 1450 [email protected] Technology & Manufacturing Telcos - RegionalWilson LIEW(65) 6432 1454 [email protected] Property & REITsJames KOH(65) 6432 1431 [email protected] Logistics Resources Consumer Small & Mid Caps

YEAK Chee Keong, CFA(65) 6432 1460 [email protected] Offshore & MarineAlison FOK(65) 6432 1447 [email protected] Services S-chipsONG Kian Lin(65) 6432 1470 [email protected] REITs / PropertyWei Bin(65) 6432 1455 [email protected] S-chips Small & Mid Caps

INDONESIALucky ARIESANDI,CFA(62) 21 2557 1127 [email protected] Base metals Mining Oil & Gas WholesaleRahmi MARINA(62) 21 2557 1128 [email protected] Banking MultifinancePandu ANUGRAH

(62) 21 2557 1137 [email protected] Automotive Heavy equipment Plantation Toll roadAdi N. WICAKSONO(62) 21 2557 1128 [email protected] GeneralistAnthony YUNUS(62) 21 2557 1139 [email protected] Cement Infrastructure Property

PHILIPPINESLuz LORENZOHead of Research(63) 2 849 8836 [email protected] StrategyLaura DY-LIACCO(63) 2 849 8840 [email protected] Utilities Conglomerates TelcosLovell SARREAL

(63) 2 849 8841 [email protected] Consumer Media CementLuz LORENZO(63) 2 849 8844 mark_race@maybank-atrke .com Conglomerates Property Ports/ Logistics GamingKatherine TAN(63) 2 849 8843 kat_tan@maybank -atrke.com Banks ConstructionRamon ADVIENTO(63) 2 849 8845 ramon_adviento@maybank-atrke .com Mining

THAILANDSukit UDOMSIRIKUL Head of Research(66) 2658 6300 ext [email protected]

Maria LAPIZ Head of Institutional ResearchDir (66) 2257 0250 | (66) 2658 6300 ext [email protected] Consumer/ Big Caps

Andrew STOTZ Strategist(66) 2658 6300 ext 5091

[email protected]

Mayuree CHOWVIKRAN(66) 2658 6300 ext 1440 [email protected] StrategyPadon Vannarat

(66) 2658 6300 ext 1450 [email protected]

StrategySurachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 [email protected] Auto Conmat Contractor Steel

Suttatip PEERASUB(66) 2658 6300 ext 1430 [email protected] Media CommerceSutthichai KUMWORACHAI(66) 2658 6300 ext 1400 [email protected] Energy PetrochemTermporn TANTIVIVAT(66) 2658 6300 ext 1520 [email protected] PropertyWoraphon WIROONSRI(66) 2658 6300 ext 1560 [email protected] Banking & FinanceJaroonpan WATTANAWONG(66) 2658 6300 ext 1404 [email protected] Transportation Small cap.Chatchai JINDARAT(66) 2658 6300 ext 1401 [email protected] ElectronicsPongrat RATANATAVANANANDA(66) 2658 6300 ext 1398 [email protected] Services/ Small Caps

VIETNAMMichael KOKALARI, CFA Head of Research(84) 838 38 66 47 [email protected] StrategyNguyen Thi Ngan Tuyen(84) 844 55 58 88 x 8081 [email protected] Food and Beverage Oil and GasNgo Bich Van(84) 844 55 58 88 x 8084 [email protected] BankingTrinh Thi Ngoc Diep(84) 844 55 58 88 x 8242 [email protected] Technology Utilities ConstructionDang Thi Kim Thoa(84) 844 55 58 88 x 8083 [email protected] ConsumerNguyen Trung Hoa+84 844 55 58 88 x 8088 [email protected] Steel Sugar Resources
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Siam Cement (SCC)


APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS

This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as anoffer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and thateach securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technicalratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information

extracted from the relevant jurisdictions stock exchange in the equity analysis.Accordingly, investors returns may be less than the original sum invested. Pastperformance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into accountthe specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seekfinancial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by MaybankInvestment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness of thisreport by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively,Representatives) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Anyinformation, opinions or recommendations contained herein are subject to change at any time, without prior notice.

This report may contain forward looking statements which are often but not always identified by the use of words such as anticipate, believe, estimate,intend, plan, expect, forecast, predict and project and statements that an event or result may, will, can, should, could or might occur or beachieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and aresubject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readersare cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forwardlooking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, fromtime to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business fromsuch issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments relatedthereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act uponor use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officersand/or employees of MKE may be a director of the issuers of the securities mentioned in this report.

This report is prepared for the use of MKE clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in wholeor in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actionsof third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country orother jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under suchcircumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories ofinvestors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical locationof the person or entity receiving this report.

Malaysia

Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings

as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia SecuritiesBerhad in the equity analysis.

Singapore

This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (MaybankKERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact MaybankKERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expertinvestor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for thecontents of this report, with such liability being limited to the extent (if any) as permitted by law.

Thailand

The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of theOffice of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailandand the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from theperspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in theCorporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) PublicCompany Limited (MBKET) does not confirm nor certify the accuracy of such survey result.

Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET.MBKET accepts no liability whatsoever for the actions of third parties in this respect.

US

This research report prepared by MKE is distributed in the United States (US) to Major US Institutional Investors (as defined in Rule 15a-6 under the SecuritiesExchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (Maybank KESUSA), a broker-dealer registered in the US (registered underSection 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borneby Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is notdirected at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourselfbefore reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations.

UK

This document is being distributed by Maybank Kim Eng Securities (London) Ltd (Maybank KESL) which is authorized and regulated, by the Financial ServicesAuthority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Servicesand Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility forits comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accountingor tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

DISCLOSURES


9/10

Siam Cement (SCC)


Legal Entities Disclosures

Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of BursaMalaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued anddistributed in Singapore by Maybank KERPL (Co. Reg. No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim EngSecurities (PTKES) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET(Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and ExchangeCommission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities andExchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of

Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India PrivateLimited (KESI) is a participant of the National Stock Exchange of India Limited (Reg. No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No.INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No.INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA Broker ID 27861. UK: Maybank KESL (Reg. No2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest

Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further actas market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment bankingservices, advisory and other services for or relating to those companies.

Singapore:As of 27 August 2013, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.

Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in theresearch report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connectedparties and/or employees may from time to t ime have interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph

16.5 (a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.As of 27 August 2013, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market inissues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investmentservices in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered inthis report.

OTHERS

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of theresearch analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder

Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable ofunderstanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political

factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of anyissuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its ownprofessional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings

Maybank Kim Eng Research uses the following rating system:

BUY Return is expected to be above 10% in the next 12 months (excluding dividends)

HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends). Trading Buy ratings are only

relevant for retail clients.

SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings

The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable

to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do

not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings

BV = Book Value FV = Fair Value PEG = PE Ratio To Growth

CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio

Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter

CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset

DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On EquityDPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders Funds

EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital

EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year

EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date

EV = Enterprise Value PBT = Profit Before Tax


10/10

Siam Cement (SCC)

MalaysiaMaybank Investment Bank Berhad(A Participating Organisation ofBursa Malaysia Securities Berhad)33rd Floor, Menara Maybank,

100 Jalan Tun Perak,50050 Kuala LumpurTel: (603) 2059 1888;Fax: (603) 2078 4194

SingaporeMaybank Kim Eng Securities Pte LtdMaybank Kim Eng Research Pte Ltd9 Temasek Boulevard#39-00 Suntec Tower 2

Singapore 038989

Tel: (65) 6336 9090Fax: (65) 6339 6003

LondonMaybank Kim Eng Securities(London) Ltd6/F, 20 St. Dunstans HillLondon EC3R 8HY, UK

Tel: (44) 20 7621 9298Dealers Tel: (44) 20 7626 2828Fax: (44) 20 7283 6674

New YorkMaybank Kim Eng SecuritiesUSA Inc777 Third Avenue, 21st FloorNew York, NY 10017, U.S.A.

Tel: (212) 688 8886Fax: (212) 688 3500

Stockbroking Business:Level 8, Tower C, Dataran Maybank,No.1, Jalan Maarof59000 Kuala LumpurTel: (603) 2297 8888Fax: (603) 2282 5136

Hong KongKim Eng Securities (HK) LtdLevel 30,Three Pacific Place,1 Queens Road East,Hong Kong

Tel: (852) 2268 0800Fax: (852) 2877 0104

IndonesiaPT Kim Eng SecuritiesPlaza BapindoCitibank Tower 17th FloorJl Jend. Sudirman Kav. 54-55Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188Fax: (62) 21 2557 1189

IndiaKim Eng Securities India Pvt Ltd2nd Floor, The International 16,Maharishi Karve Road,Churchgate Station,Mumbai City - 400 020, India

Tel: (91).22.6623.2600Fax: (91).22.6623.2604

Philippines

Maybank ATR Kim Eng SecuritiesInc.17/F, Tower One & Exchange Plaza

Ayala Triangle, Ayala AvenueMakati City, Philippines 1200

Tel: (63) 2 849 8888Fax: (63) 2 848 5738

Thailand

Maybank Kim Eng Securities(Thailand) Public CompanyLimited999/9 The Offices at Central World,20th - 21st Floor,Rama 1 Road Pathumwan,Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales)Tel: (66) 2 658 6801 (research)

Vietnam

In association withMaybank Kim Eng Securities JSC1st Floor, 255 Tran Hung Dao St.District 1Ho Chi Minh City, Vietnam

Tel : (84) 844 555 888Fax : (84) 838 38 66 39

Saudi Arabia

In association withAnfaal CapitalVilla 47, Tujjar JeddahPrince Mohammed bin AbdulazizStreet P.O. Box 126575Jeddah 21352

Tel: (966) 2 6068686Fax: (966) 26068787

South Asia Sales TradingKevin [email protected]: (65) 6336-5157US Toll Free: 1 -866-406-7447

North Asia Sales TradingEddie [email protected]: (852) 2268 0800US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.maybank-keresearch.com

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