KGI Securities (Thailand) stated that while the share price of SCG Packaging Public Company Limited (SET: SCGP) has rallied approximately 20% from its December 2025 lows, the brokerage has adopted a more constructive view on the packaging giant, citing expectations for 4Q25 earnings to surpass forecasts.
Contributing to this optimism are a rebound in China’s containerboard imports for November 2025, resilient manufacturing PMI readings across ASEAN, and a downtrend in oil prices.
Despite the recent share price recovery, KGI believes that the market has yet to factor in several incremental positives. This includes:
1) Wider-than-anticipated spreads, with recycled paper prices at a five-year low, allowing for inventory build ahead of the year 2026, and the potential for a stronger benefit from sales price hikes initiated in the late 4Q25 extending into the first half of next year.
2) Volume growth in 2026, supported by sustained ASEAN manufacturing activity—with Purchasing Managers’ Index recovered to 53 from sub-50 levels seen in mid-2025—alongside the policy rate easing cycle.
3) Falling oil prices, which reduce distribution expenses and enhance margins in the polymer packaging segment, which accounts for 12% of SCGP’s sales.
4) An upbeat outlook from management and the upcoming analyst meetings scheduled for January 11 and 27.
KGI projected that SCGP will report a fourth-quarter 2025 net profit of THB 1.1 billion—a sharp turnaround from a net loss of THB 57 million a year prior, and a 15% quarterly gain. Core profit is forecast at THB 1.12 billion, climbing 3,193% year-on-year and up 12% quarter-on-quarter.
The rebound is attributed to improved margins from a 7-9% QoQ drop in recycled paper prices, which constitute roughly a quarter of input costs, as well as higher selling prices achieved during the period. Enhanced EBITDA at Fajar, driven by revenue growth and reductions in expenses, coupled with lower finance costs, is also expected to support earnings.
The year-on-year profit surge comes off a low base and the absence of maintenance at the company’s FB unit. In addition, Indonesia’s Indah Kiat—a market heavyweight—raised prices after optimizing new capacity, giving Fajar room to follow suit. Notably, China’s corrugated paper prices spiked 17% from CNY 2,700 per ton in September to CNY 3,164 per ton in November last year.
Looking toward the first quarter of 2026, KGI anticipates core profit momentum to continue, underpinned by the full-period impact of improved margins and ongoing price adjustments in line with the broader region. Lower distribution outlays and increased imports of packaging paper from China present further upside, the brokerage said.
KGI has raised SCGP’s rating to Outperform and lifted its target price to THB 20.50 per share, reflecting a higher EV/EBITDA multiple of 7.4x and upwardly revised earnings for 2025-2027 by 4-13% to account for lower raw material and SG&A costs. KGI flags weaker-than-expected growth in China and Thailand as primary risks to its revised outlook.
