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The Siam Cement Company (SCC), a Thai industrial conglomerate, announced its plan for a public offering of its subsidiary SCG Chemicals after restructuring, expecting to finalize the process by the end of 2022.
SCC notified the Stock Exchange of Thailand late Wednesday that it has started studying the feasibility of restructuring its chemical business arm, including the possibility of a public offering to list it on the market.
The move would seize an opportunity for growth in the chemical sector with “potential to further expand its capacity in ASEAN”, company president Roongrote Rangsiyopash said in the statement.
The statement also said that an investment project to relieve a bottleneck and boost feedstock capacity at the operations of Map Ta Phut Olefins Co., Ltd., a joint venture between SCG Chemicals and Dow Chemical Company from the US, had completed construction and would be starting production by May. SCC owns a 67 per cent of stake in the joint venture.
The proposed restructuring would also see SCG Chemicals, through its subsidiary SCG Chemicals Trading in Singapore, acquire a 70-per-cent stake in the largest plastic recycling company in Portugal, Sirplaste-Sociedade Industrial de Recuperados de Plástico, S.A. The transaction is expected to be completed by the end of 2021, the SCC said.
SCC reported better-than-expected earnings in the first quarter of 14.9 billion baht, up 113.9 per cent year-on-year, beating market consensus by 27.5 percentage points. The strong performance was driven by improvement in all business units, namely chemical, cement, and packaging.
According to KGI analysts, the conglomerate could still see an earning upside of 8.2 per cent in 2021 and 3.9 per cent in 2022, mainly from the chemical segment as prices of chemical spread are surging, and from higher demand in the packaging arm.
KGI maintains a ‘Buy’ rating for SCC at the target price of 484 baht per share, while the stock was trading at 462 baht as of 12.18 am on Thursday, up 2.21 per cent, with the second-biggest transaction value of the morning session at 2.22 billion baht.