SCGP Debuts Its First Day by Kicking TCAP Out of SET50, Analyst Recomm. “BUY” at ฿41

The analyst expected SGCP to debut the first trading day above its IPO price. The coming of SCGP in SET50 by fast-track criteria will push TCAP from the 50th place to SET100. The company expected to expand its business in Asian using the “Packaging Solutions” model. The analyst gave a “BUY” recommendation with a target price at ฿41.00/share.

 

The Stock Exchange of Thailand (SET) will list SCG Packaging Public Company Limited, a fully integrated packaging chain leader in Southeast Asia, on October 22, under the ticker symbol “SCGP”. The company has a market capitalization at its initial public offering (IPO) of 148.87 billion baht (approx. USD 4.76 billion).

 

SET Senior Executive Vice President Manpong Senanarong said that SCGP would list and start trading on SET in the Industrials industry group, Packaging sector.

 

SCGP has a registered paid-up capital of 4.25 billion baht, consisting of 3.126 billion existing common shares and 1.128 billion newly issued shares, with a par value of 1 baht each (excluding 169.13 million over-allotment shares). It offered the entire newly issued shares to the public during September 28 – October 7, 2020 at 35 baht each for a total of 39.46 billion baht. Siam Commercial Bank pcl is its financial advisor while SCB Securities Co., Ltd. and Bualuang Securities pcl are co-lead underwriters.

 

SCGP Chief Executive Officer Wichan Jitpukdee said the company is confident that being a SET-listed firm will help enhance the business expansion, debt repayment and working capital. SCGP has plans to continuously invest in ASEAN region aiming to meet customers’ diverse needs, especially packaging for consumer products in high growth potential segment. In addition, the company also offers packaging solutions that keep pace with all customer needs with innovation value and state-of-the-art technology. SCGP committedly operates in accordance with circular economy principles to secure leadership in packaging products tailored to suit across all groups of customers.

 

SCGP’s dividend policy is to pay no less than 20 percent of net profit as recorded in the consolidated financial statement after corporate income tax, legal reserves and company’s provisions. However, the company’s dividend payout may be different from this policy subject to the company’s performance, liquidity and necessity to utilize working capital for business management and future business expansion as well as the economic situation.

 

SCGP’s major shareholder after IPO is Siam Cement pcl (SCC) (68.81 percent). The shareholding ratio will not lower than 70 percent of the paid-up capital after the share allocation upon the return of the borrowed shares.

 

SCGP is a holding company with core businesses focusing on integrated packaging chain, and fibrous chain. The company’s total packaging solution business generates over 80 percent of total revenue and can create 120,000 stock keeping units (SKUs) of diverse products and services that respond to multitude of customer needs across all segments. According to the 2019 survey, the company was considered Southeast Asia’s largest containerboard and corrugated container producer with 36 percent of market share, way ahead of its closest competitor’s market share at 12 percent. The company is recognized as the region’s largest packaging paper manufacturer with an annual production capacity of 4 million tons. SCGP has 40 production plants across business lines in 5 ASEAN countries: Thailand, Vietnam, Indonesia, the Philippines and Malaysia.

 

In the second quarter of 2020, SCGP reported a net profit of 1,904 million baht, increased 94% compared to a year ago and 10% compared to a quarter earlier, mainly due to the gain on the exchange rate from PT. Fajar Surya Wisesa Tbk (Fajar)’s USD loan in the second quarter compared to FX loss in the first quarter of 2020. The revenue from sales was 21,636 million baht, increased 6% from a year ago, but decreased 11% from a quarter earlier.

 

In 1H20, profit for the period increased by 40% YoY to 3,636 million baht, primarily due to the adjustment for the severance pay of employees as a result of the amendment to the Thai Labor Law, which resulted in an employee benefit expense of 527 million baht in 2019, and the increase of revenue from sales by 11% YoY to 45,903 million baht.

 

SETTRADE and Asia Plus Securities stated that SCGP is expected to be included in SET50 through fast-track inclusion as the company has a market capitalization at its initial public offering (IPO) of 1.4 hundred billion baht with the IPO price of 35 baht. However, the fast-track SET50 inclusion of SCGP may cause Thanachart Capital Public Company limited (TCAP) to be excluded from SET50.

 

Asia Plus Securities saw SCGP as Southeast Asia’s leading total packaging solution provider with an outstanding growth rate in the last 5 years, giving a target price at ฿41/share.

 

Capital Nomura Security has given a target price on SCGP at ฿38/share as the company has high opportunities for business growth, which could provide a positive sentiment to its parent company the Siam Cement Public Company Limited (SCC)