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Citi upgraded Siam Cement PCL (OTC:SCVUF) from Sell to Neutral on Wednesday, raising its price target to THB180.00 from THB145.00, citing the company’s improved capital allocation strategy.
The upgrade follows Siam Cement’s plan to reduce its 10.57% stake in Chandra Asri and reclassify it from an associate company to other investment. While transaction details have not been finalized, Citi does not expect the valuation to fall below the 2021 equity offering price.
Citi’s analysis suggests Siam Cement could book approximately THB5.7 per share in disposal gains, amounting to roughly THB18.2 billion in proceeds. The transaction could also lower the company’s FY25E net debt-to-equity ratio by 6 percentage points to 71%.
The firm noted another positive factor is that Siam Cement may no longer need to book equity losses from Chandra Asri, which could raise FY25-26E earnings per share by approximately 10% and 7%, respectively.
Citi’s new target price of THB180 represents a significant increase from its previous THB145 target, based on a sum-of-the-parts valuation methodology.
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