CLSA has reiterated its OUTPERFORM rating on SCG Packaging Public Company Limited (SET: SCGP) with a 12-month target price of Bt35.00, implying 16% upside from Bt30.25, after the company posted a strong set of second-quarter 2026 results that beat both CLSA’s and consensus estimates.
According to a research note by CLSA, SCGP reported a 2Q26 net profit of Bt2.3 billion, or Bt0.54 earnings per share, up 47% quarter-on-quarter and 128% year-on-year. The result beat CLSA’s forecast by 5% and consensus estimates by 20%.
The strong performance was driven by both the company’s integrated packaging and fibrous businesses. Sales revenue rose 11% QoQ and 3% YoY, while EBITDA grew 25% QoQ and 37% YoY, broadly in line with revenue growth. Overall EBITDA margin improved to 18%, up 2 percentage points QoQ.
A key highlight was the turnaround at Fajar, SCGP’s Indonesian operation, which posted a net profit of Bt200 million in 2Q26 compared with a Bt40 million loss in 1Q26. The Integrated Packaging Business, which makes up 78% of revenue, saw revenue rise 11% QoQ and EBITDA climb 19% QoQ to Bt5.2 billion, posting a 20% EBITDA margin. Testliner paper prices rose in 2Q26, but AOCC (recycled paper) costs increased by a similar magnitude, keeping the spread flat at US$237 per ton.
The fibrous business also contributed, with sales revenue up 10% QoQ and 3% YoY, and an EBITDA margin of 9%.
CLSA noted that domestic selling prices for paper in Indonesia are now in line with regional testliner paper prices, suggesting Fajar’s operations are running well. However, sales volume at Fajar could be flat or soften quarter-on-quarter in the third quarter due to the rainy season, though restocking ahead of the festive season in the fourth quarter is expected to cushion the seasonal weakness.
On costs, testliner paper and AOCC prices both rose in July, by US$7 per ton and US$10 per ton respectively, to US$413 and US$179 per ton. CLSA said this should not significantly squeeze margins, given packaging demand remains healthy in Thailand, Indonesia, and Vietnam.
SCGP also announced an interim dividend of Bt0.40 per share, with the ex-dividend date set for 4 August 2026.
CLSA maintains its OUTPERFORM call and DCF-based target price of Bt35.00, implying a 17.7x price-to-earnings multiple for 2026. The brokerage forecasts SCGP’s net profit to reach Bt7,998 million in 2026, up sharply from Bt4,069 million in 2025.
