CLSA wrote in its analysis that The Siam Cement (SET: SCC) and PTT Global Chemical (SET: PTTGC) have announced details of their upcoming joint venture in the olefins and polyolefins businesses.
This JV, structured with 56% ownership by PTTGC and 44% by SCGC—a wholly owned subsidiary of SCC—is poised to become the world’s 10th largest petrochemical company. The combined entity will feature a total olefins production capacity of 7.1 mtpa and a polyethylene and polypropylene capacity of 4 mtpa.
The partnership is expected to deliver annual synergy benefits ranging from $150-200 million within three years of its launch, driven by optimized feedstock and supply chain management, as well as improved logistics and marketing strategies. Integration is expected to be highly efficient due to both companies’ facilities being located within the same Map Ta Phut industrial estate.
According to the brokerage, SCGC will continue to operate its business in areas outside the JV, including LSP chemical operations, the vinyl chain, fabrication, technology solutions, and green business initiatives. The JV’s governance will consist of seven board members—four from PTTGC and three from SCGC. Leadership will be shared, with a CEO from PTTGC and a deputy CEO from SCGC.
An Extraordinary General Meeting is scheduled for December 3, with regulatory approvals still pending. Completion of the deal is expected in the second half of 2027.
Financially, the JV is set to start with total assets of $7.5 billion and net debt of $1.5 billion, resulting in a net debt/EBITDA ratio of no more than 4.0x. The joint venture will maintain a 0.26x debt/equity ratio and has secured a THB 30 billion credit facility, adopting a dividend payout policy of at least 60% of net profit.
CLSA bases the JV’s valuation on a discounted cash flow method, reflecting an enterprise value of $7 billion and equity values of $3.1 billion for PTTGC and $2.4 billion for SCGC. As a result, the brokerage maintains its ‘Outperform’ rating on SCC, with a target price of THB 280 per share, emphasizing that this JV represents a significant turning point for the company’s chemicals businesses.
