CLSA Securities (Thailand) recently hosted a two-day non-deal roadshow in Canada, where The Siam Cement Public Company Limited (SET: SCC) management, led by CEO Thammasak Sethaudom, met with seven leading institutional investors.
According to CLSA, investor discussions focused on the ongoing chemical downturn, SCC’s macroeconomic outlook, and corporate strategy. Despite subdued chemical spreads, optimism is growing. SCC’s ethane feedstock project is progressing on schedule and expected to complete by the end of 2027. The company projects stronger operational performance for 2026-2027, citing a likely upturn in the broader chemical cycle in 2028.
SCC’s footprint remains firmly rooted in ASEAN, with 51% of assets in Thailand, 27% in Vietnam, and 14% in Indonesia. The company is set to benefit from the recent electoral victory of the Bhumjaithai party, which is expected to foster foreign direct investment and strengthen Thailand’s political stability. Stimulus measures also add further momentum.
SCC foresees that major infrastructure projects, particularly the “land-bridge” initiative, could significantly drive domestic cement demand over the next 5 to 10 years. Meanwhile, Vietnam’s robust GDP growth, projected at 6-7%, continues to provide a fertile environment for SCC’s group businesses.
While chemical industry spreads are expected to remain soft, SCC anticipates better supply-demand balance due to limited new supply. As part of ongoing restructuring efforts, the group expects annual cost savings of THB 4.3 billion starting this year. The ethane project in Vietnam is seen as a pivotal factor for turning around the LSP business in 2028.
SCC has also revised its capital expenditure plan, cutting back from THB 50 billion to a more conservative THB 30 billion. A key goal is reducing net debt to EBITDA from 5.5 times at the end of 2025 to a targeted range of 3.0–4.0 times within two years.
Operations at LSP and two Thai crackers have rebounded to 90% capacity, thanks to high-value-added downstream products. Furthermore, management sees opportunities for mergers and acquisitions, especially within SCGP, given the relatively weak position of Chinese players in downstream fiber packaging.
China’s announcement of a $300 per ton consumption tax on domestically produced naphtha is poised to pressure margins for stand-alone petrochemical producers, while generating additional state revenue. Moreover, starting April 1, 2026, China will eliminate the VAT rebate on PVC exports, a move CLSA views as likely to benefit regional producers at the expense of Chinese companies.
Persistent geopolitical tensions between the U.S. and Iran are maintaining upward pressure on oil and naphtha prices, creating a near-term headwind for the chemical sector. However, CLSA views these risks as short-lived and believe they are already largely reflected in current market valuations, limiting further downside in the sector.
