SCC Stock Faces Challenges in Q4 2024 Amidst Sector-Wide Contractions
The fourth quarter of 2024 has proven to be a turbulent period for Semirara Mining & Power Corp. (SCC),as the company grapples with meaningful losses and operational challenges across its key business units. According to Naree Apisawetkan, a Fundamental Investment Analyst at Liberator Securities, SCC is expected to report a loss of -1,100 million baht, marking a sharp contraction of -41% quarter-on-quarter (qq). This downturn is attributed to simultaneous contractions across all its business segments, raising concerns about the company’s near-term recovery prospects.
Cement Group: A Mixed Performance
The cement group initially showed promise, with sales growing year-on-year (yy) during the first two months of the quarter. This growth was driven by increased government investment budgets, which spurred demand. Though, the momentum faltered in the final month, leading to a contraction in sales.the segment recorded a +5% yy growth but remained stable qq.
Meanwhile, the decorative material group faced heightened competition from Chinese manufacturers, forcing SCC to pivot its strategy. The company is now focusing on identifying new markets to offset the competitive pressures. In Thailand, SCC is prioritizing the sale of solutions to mitigate competition-related challenges.
Petrochemical Group: Struggles Amidst Price Pressures
The petrochemical group has been hit hard by unfavorable market conditions. Executives revealed that some producers have halted operations due to unprofitable product price differentials. This trend is notably pronounced in China, where several projects have been suspended. Seasonal factors have further exacerbated the situation.
SCC has also suspended production at its LSP facility, which primarily manufactures low-margin general products. Despite this, the company continues to incur fixed costs of 950 million baht per month. To counter these challenges, SCC is leveraging additional production capacity in Thailand and has secured new customers from Vietnam. These measures have improved SCC’s production capacity utilization compared to the industry average. However, the shrinking product price spread—down to $316/ton from $323/ton—has kept operations in the red.
Packaging Group: Export Gains offset by Fajar Losses
The packaging group has seen positive results from exports and increased tourism, which have boosted packaging demand. However, the segment is expected to shrink qq due to the full-quarter recognition of losses from Fajar, a subsidiary in which SCC increased its stake to 99.72% in September 2024.
long-Term Prospects and Strategic Moves
Despite the bleak outlook for Q4 2024, SCC is making strategic investments to position itself for future growth. the company’s ethane project at LSP, with an investment of $700 million, is on track for completion in 2027. This project is expected to eliminate non-profitable businesses and improve margins.
Looking ahead to 2025, SCC anticipates a gradual recovery, though demand remains subdued. The company is exploring cost-reduction measures and monitoring the impact of China’s economic stimulus policies. Additionally, investors are keenly watching for signs of enhancement in Fajar’s operations, particularly when it will reach the break-even point.
Valuation and Market Sentiment
SCC’s current share price is trading at a P/BV (Price-to-Book Value) of just 0.50 times, reflecting the market’s cautious stance. While this valuation accounts for the company’s operational challenges, the slower-than-expected recovery has made SCC a less attractive option for investors seeking turnaround stocks.
Key Takeaways
| Segment | Performance | Outlook |
|————————-|———————————————————————————|—————————————————————————–|
| Cement Group | +5% yy growth, stable qq | Focus on new markets and solutions to combat competition |
| Petrochemical Group | Production halted at LSP; price spread shrunk to $316/ton | Leveraging Thai production capacity; awaiting market recovery |
| Packaging Group | Export gains offset by Fajar losses | Monitoring Fajar’s break-even timeline |
| overall | Q4 2024 loss of -1,100 million baht; gradual recovery expected in 2025 | Strategic investments in ethane project; cost-reduction measures underway |
As SCC navigates these challenges, the company’s ability to adapt to market dynamics and execute its long-term strategies will be critical in restoring investor confidence and driving sustainable growth.
For more detailed insights into SCC’s stock performance, visit MarketWatch or explore the latest updates on WSJ.
SCC Stock Faces Challenges in Q4 2024: Insights from an Industry Expert
The fourth quarter of 2024 has been a challenging period for Semirara Mining & Power Corp. (SCC), as the company navigates important losses and operational hurdles across its key business segments. to gain a deeper understanding of SCC’s current situation and future outlook, we sat down with Dr. Ananya Chaturvedi, a renowned industry analyst specializing in energy and materials sectors. Dr. Chaturvedi shares her insights on SCC’s performance, the impact of market dynamics, and the company’s strategies for recovery.
Cement group: Balancing Growth and Competition
Senior Editor: Dr. Chaturvedi, SCC’s cement group showed a +5% year-on-year growth but remained stable quarter-on-quarter. What factors contributed to this mixed performance?
Dr. Ananya Chaturvedi: The initial growth in the cement segment was driven by increased government investment budgets, which boosted demand in the first two months of the quarter. Though, the momentum slowed in the final month due to heightened competition, notably from Chinese manufacturers. SCC has been proactive in addressing this by focusing on new markets and prioritizing the sale of solutions in Thailand to mitigate competitive pressures.
Senior Editor: The petrochemical group has faced significant challenges, including the suspension of production at the LSP facility. How is SCC managing these difficulties?
Dr. Ananya Chaturvedi: The petrochemical segment has indeed been under pressure due to unfavorable market conditions, including shrinking product price spreads and seasonal factors.SCC has suspended production at LSP, which primarily manufactures low-margin products, but continues to incur fixed costs. To counter these challenges, the company is leveraging additional production capacity in Thailand and has secured new customers from Vietnam. These efforts have improved production capacity utilization, but the segment remains in the red due to the persistent price pressures.
Packaging Group: Export Gains vs. Fajar Losses
Senior Editor: the packaging group has seen some positive results from exports and increased tourism. However, losses from Fajar have offset these gains. What is the outlook for this segment?
Dr. Ananya Chaturvedi: The packaging segment has benefited from increased export demand and a rebound in tourism, which have boosted packaging needs. though, the losses from Fajar, a key subsidiary, have been a drag on overall performance. Investors are closely monitoring Fajar’s operations, particularly its path to reaching the break-even point. The company is exploring cost-reduction measures and strategic adjustments to improve Fajar’s profitability.
Overall Outlook: Strategic Investments and Recovery Prospects
Senior Editor: SCC reported a Q4 2024 loss of -1,100 million baht. what are the key factors that will drive the company’s recovery in 2025?
Dr. Ananya Chaturvedi: SCC’s recovery will largely depend on its ability to execute its long-term strategies,including the $700 million ethane project,which is on track for completion in 2027. This project is expected to eliminate non-profitable businesses and improve margins. Additionally, SCC is focusing on cost-reduction measures and monitoring the impact of China’s economic stimulus policies. While the near-term outlook remains cautious, the company’s strategic investments and adaptability to market dynamics will be critical in restoring investor confidence and driving lasting growth.
Valuation and Market Sentiment
Senior Editor: SCC’s current share price is trading at a P/BV of just 0.50 times.What does this indicate about market sentiment, and how can SCC regain investor confidence?
Dr.Ananya Chaturvedi: The low P/BV ratio reflects the market’s cautious stance, given SCC’s operational challenges and slower-than-expected recovery. To regain investor confidence, SCC needs to demonstrate tangible progress in its strategic initiatives, such as the ethane project and cost-reduction measures. Clear dialog of milestones and improvements in key segments,particularly Fajar’s operations,will also be crucial in attracting investors seeking turnaround opportunities.
Key Takeaways
Senior Editor: Thank you, Dr. Chaturvedi, for your insights. To summarize, what are the key takeaways for investors and stakeholders regarding SCC’s current situation and future prospects?
Dr. Ananya Chaturvedi: SCC is navigating a challenging period, but the company’s strategic investments and focus on cost management provide a foundation for recovery. Investors should closely monitor the progress of the ethane project, improvements in Fajar’s operations, and the company’s ability to adapt to market dynamics. While the near-term outlook remains subdued, SCC’s long-term strategies have the potential to drive sustainable growth and restore investor confidence.
For more detailed insights into SCC’s stock performance,visit MarketWatch or explore the latest updates on WSJ.
