MAKERS OF BUILDING MATERIALS "BIGGEST GAINERS"

       The building material, steel, downstream petrochemicals, auto parts and discountstore sectors will benfit from the government's second economic stimulus package, according to a research paper by SCB Securities.
       Firms making building materials are expected to reap the biggest gains from the Thai Khemkhaeng (Invest for Strength) scheme phase I, worth Bt200 billion.
       About Bt59 billion of the Bt200billion package will be used to develop small reservoirs and repair irrigation systems, and PVC manufacturers such as Thai Plastic and Chemicals and Vinythai will enjoy the benefits.
       The brokerage said another Bt35 billion would be allocated for building and repairing roads, boosting asphalt demand and benefiting Tipco Asphalt.
       Tata Steel (Thailand) and G Steel will also be beneficiaries from the stimulus package, as steel bar and wire will be major raw materials in construction works related to irrigation systems, hospitals and electric trains, SCB Securities said.
       However, the brokerage is nor sure whether Sahaviriya Steel will also gain, as PVCpipe prices and maintenance costs are lower than those for steel pipelines.
       Cement-makers Siam Cement, Siam City Cement and TPI Polene are other expected gainers in the buildingmaterials sector.
       The brokerage estimates that the 10-12 electricrail routes will need 9 million10 million tonnes of cement.
       "It is too early to calculate cement demand for all the routes, but the Purple, Red and Blue lines alone will create 2.53 million tonnes of cement consumption over their fouryear construction periods," the paper said.
       For the consumption sector, Big C Supercentre and Siam Makro will be winners from the Thai Khemkhaeng programme, as about Bt20 billion will be allocated to village funds.
       From the previous village funds' budget in fiscal years 20042005, Big C and Makro reported sales growth in existing branches at 3 per cent and 6 per cent, respectively. This is well above Big C's current performance of minus 2.5 per cent to positive growth of 3 per cent, and Makro's growth of 13 per cent.
       Makro tends to receive greater benefits from such schemes than Big C as its products are more related to economic activities.
       This said, SCB Securities recommends "buy" on Big C with a 12month target price of Bt55 based on the dividend discount model, and "sell" on Makro with a 12month target of Bt67.
       However, as both firms will benefit from the government's economic stimulus measures, the brokerage will soon review its assumptions.
       Given that the package will bolster economic activities in rural areas, the demand for pickups and tractors will increase, making Somboon Advanced Technology a winner.
       The company is Thailand's largest axle-shaft manufacturer for pickups with a market share of 80 per cent. Moreover, it supplies shafts to Siam Kubota, the country's largest tractor producer.
       The brokerage recommends "buy" for the stock, with a 12month target price of Bt13.
       The government's plan to lower the ratio of students to computers from 38:1 to 20:1 will create demand for 200,000 PCs. IT City, the computer peripherals and equipment distributor, will therefore stand to gain.

       For the consumption sector, Big C Supercentre and Siam Makro will be winners from the Thai Khemkhaeng programme, as about Bt20 billion will be allocated to village funds.