Kiatnakin Phatra Securities (KKPS) disclosed that PTT Global Chemical Public Company Limited (SET: PTTGC) and SCG Chemical (SCGC), a wholly owned subsidiary of The Siam Cement Public Company Limited (SET: SCC), have signed a non-binding memorandum of understanding (MOU) to explore the potential merger of their olefins and polyolefins businesses, forming a new joint venture.
The proposed JV would cover their cracker and polymer plants in Thailand, as well as relevant SCGC joint ventures in Thailand. Notably, SCGC’s Long Son Petrochemicals (LSP) operation in Vietnam is excluded from the deal.
The MOU is currently non-binding and contingent upon thorough due diligence, with completion of the evaluation expected in the third quarter of 2026. Should the merger proceed, the new entity would have an ethylene production capacity close to 5 million tons, making it the world’s tenth-largest polyolefins producer.
KKPS believed that the key rationale behind this merger initiative is to enhance competitiveness and ensure sustainability in a challenging market. PTTGC contributes a diversified domestic feedstock mix including ethane (44%), propane (41%), and naphtha (15%). Such diversity could provide valuable synergy, particularly through access to naphtha and other refined products given PTT’s role as a major stakeholder in Thailand’s refineries.
Additionally, SCGC’s reputation for research, innovation, and a high proportion (60%) of high value-added (HVA) product sales could allow the merged entity to upgrade its portfolio, enabling higher margins. Operational efficiencies are also expected, as all six cracker facilities—four owned by PTTGC and two by SCGC—are clustered at Map Ta Phut, offering potential integration benefits.
Kiatnakin maintains a “Buy” recommendation on PTTGC with a target price of THB 40.50, citing attractive valuation and a strong net profit after tax growth profile.
