Citi estimates that the proposed Thai chemicals joint venture could modestly dilute PTTGC’s EBITDA while lifting SCC’s, based on the planned ownership split. The analyst also cautioned that debt remaining at SCGC could disappoint investors anticipating faster deleveraging at SCC.
PTTGC would hold 56% of the venture and SCGC 44%. Using total EBITDA for 2024–25 as the benchmark, Citi calculated a potential 3% dilution for PTTGC and a 2% uplift for SCC. The outcome could reverse under a calculation using SCGC’s elevated attributable EBITDA from 2023. However, Citi considers that performance unlikely to recur given rapid commoditization.
Debt allocation is a key consideration. Around 60–70% of SCGC’s sales would leave its consolidated accounts following the merger, while approximately Bt130 billion of its Bt160 billion in third-quarter gross debt could remain with SCGC. Citi suggested this retained borrowing was likely linked to LSP financing, potentially limiting the deleveraging investors expect at SCC.
For the new entity, net debt-to-EBITDA is expected to stay below four times, with a minimum dividend payout of 60%.
Discounted cash flow valuations of the assets covered by the proposed transaction imply price-to-book multiples of approximately 1.22 times for PTTGC’s assets and 0.94–1.09 times for SCGC’s. Citi attributed the valuation gap to differences in debt allocation.
The proposed venture targets annual synergy benefits of Bt5.1–6.8 billion, compared with combined EBITDA of roughly Bt12 billion. While Citi views the potential benefits as substantial, it is awaiting greater clarity on implementation and timing.
