People had expected before that the packaging unit would fuel The Siam Cement Public Company Limited (SCC)’s profit…but when the operating performance in 3Q came out, the profit jumped 72% YoY to 7,202 million baht. Petrochemical unit that once was expected to be at risk of underforming, it turned out that the sales volume has increased 80% to 5,488 million baht, and the cement-building materials’ sales volume skyrocketed 176%.
While the company’s flagship unit, packaging segment’s sales volume dropped 9% to 1,335 million baht…quite disappointed the market.
Despite being at risk of underforming, petrochemical unit has significantly driven up SCC’s profit. Interestingly, how far will petrochemical go when the economy returns to normal.
Last week, SCC announced its petrochemical business sector expansion by investing 700 million baht through its subsidiary SCG Chemicals Co., Ltd. to subscribe 40 million shares equivalent to 9.22% in A.J. Plast Public Company Limited (AJ) at the offering price of 17.15 baht per share via private placement (PP).
SCC also approved the establishment of a joint venture with AJ to produce and distribute Biaxially Oriented Film (BO Film) in Vietnam, with the total capital value of 700 million baht, while SCG Chemicals will hold a 45% stake and the remaining 55% will be held by AJ.
AJ is a manufacturer and sale distributor of plastic films including BOPP film, BOPET film, BOPA film, CPP film and Metallized film, which are all used extensively in many industries, probably the aforementioned joint venture agreement and share acquisition by SCC could lead to the take over deal of AJ..?
SCC was originally found to only produce cement and building materials, later the Company has broadened its business to more varieties. SCC began its kingdom making by acquiring Phoenix Pulp & Paper Public Co.,Ltd. (PPPC), adding a paper mill to the portfolio.
This time SCC might go back to its old strategy. Petrochemical business is a midstream, therefore this would reinforce SCC’s strategy to move further downstream with a goal of enhancing the downstream products portfolio.
AJ has a high growth rate, for the first half of this year, AJ has recorded a profit of 214 million baht, almost the same amount as the year 2019’s profit of 236 million baht.