SCGP Jumps 4.5% as Analysts See Long-Term Growth in Packaging Business with a TP at ฿48

The share price of SCG Packaging Public Company Limited (SCGP) rose ฿1.75/share or 4.49% to trade at ฿40.75/share with a trading value of 2.1 billion baht as of 11:32 local time in Thailand on November 26, 2020.

 

Maybank Kim Eng has given a “BUY” recommendation on SCGP with a target price at ฿48.00/share, seeing constant growth as a leader of integrated packaging chain in Southeast Asia.

Maybank stated that SCGP operates a fully integrated packaging chain and is the leader in Southeast Asia in terms of capacity and geographic spread of its production facilities. It offers both fibre-based as well as polymer-based packaging materials. Its strong R&D (total spending of THB1.7b since 2016) has resulted in high-value-added products accounting for 51% of its 2019 sales and the differentiating factor is its ability to offer packaging solutions. The THB39.5b IPO proceeds will remove the capital constraints thus allowing business growth through capacity expansion (organic) and / or M&A (inorganic).

SCGP’s FY20-22E net profits were forecasted to grow by 20% YoY on average. Thus, Maybank initiated a BUY  recommendation with a target price of THB48, based on a target 25.6x FY21E PE, weighted by a 5-year average forward P/E of sectors in the commerce (69%) and packaging (31%) sectors.

 

Aside from Maybank Kim Eng, DBS Vickers Securities (DBSVS) also gave a “BUY” recommendation on SCGP with a target price at ฿44.00/share, stating that the packaging business has a potential long-term growth.

 

Morgan Stanley also initiated its coverage on SCGP, giving a “BUY” recommendation with a target price at ฿48.00/share as well.