CLSA maintains OUTPERFORM on SCC with 280 baht target after SCG's transformation drive

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Summary · why it matters

Siam Cement Public Company Limited, or SCG, has outlined a business strategy focused on a transformation restructuring to drive sustainable growth, increase business flexibility, and strengthen long-term cash flow. An analysis by CLSA highlights three key points. First is the synergy from a joint venture project with PTTGC; although SCG holds a smaller stake, it is significant. The combined larger asset base and the benefits of consolidation, including raw material management and improved olefins production efficiency, as well as opportunities to expand downstream businesses, will enhance competitiveness and support net profit over the long term. Second, the strategy will return strong cash flow to the parent company on a significant scale by 2028, helping reduce debt and support growth in low-carbon, construction materials, and chemicals businesses in the ASEAN region. Third, this joint venture deal is one of SCG Group's major transformation projects, alongside the shift to ethane gas feedstock at the Long Son Petrochemicals project, or LSP, in Vietnam, which is nearly 70% complete and is expected to finish ahead of schedule, as well as expanded investment in the cement business in Vietnam. The analyst maintains a positive view and keeps an OUTPERFORM rating on SCC shares with a target price of 280 baht.

Impact on assets 3

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Off-coverage companies 1

Long Son Petrochemicals Co., Ltd.i
Private▲ PositiveTechnologyrelevance

The Long Son Petrochemicals project's shift to ethane gas feedstock is nearly 70% complete and expected to finish ahead of schedule.