Fitch: Strong cash flow from Thailand SCG petchems business
by ChemOrbis Editorial Team - content@chemorbis.com
Thailand’s Siam Cement Group (SCG) is expected to be able to absorb annual capital expenditure (capex) of around THB60 billion ($2 billion) in 2021-22, Fitch Ratings said in a note.
SCG will be able to meet the committed capex due to strong cash flow generation from its petrochemicals business as well as THB40 billion ($1.3 billion) in proceeds from the initial public offer of its subsidiary - SCG Packaging Public Company, Fitch explained.
The majority of the capex will be spent on the Long Son Petrochemicals project in Vietnam which will only generate cash flow from 2023.
The ratings agency noted that SCG’s earnings before interest, tax, depreciation and amortization (EBITDA) rose nearly 10% in the first three quarters of 2020 despite a 9% fall in revenue due to strong petrochemical spreads amid supply disruption in Asia and strong demand, particularly from China.
SCG will be able to meet the committed capex due to strong cash flow generation from its petrochemicals business as well as THB40 billion ($1.3 billion) in proceeds from the initial public offer of its subsidiary - SCG Packaging Public Company, Fitch explained.
The majority of the capex will be spent on the Long Son Petrochemicals project in Vietnam which will only generate cash flow from 2023.
The ratings agency noted that SCG’s earnings before interest, tax, depreciation and amortization (EBITDA) rose nearly 10% in the first three quarters of 2020 despite a 9% fall in revenue due to strong petrochemical spreads amid supply disruption in Asia and strong demand, particularly from China.
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