Equity Analysis /
Thailand

SCG Packaging PCL: 4Q22 to be the best of 2022

  • Consumer-linked demand sustained strong in 3Q22…

  • ...easing cost pressure to boost 3Q22 earnings

  • Margin enhancement to boost 4Q22 profit growth

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

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Bualuang Securities
12 October 2022

SCGP’s 2H22 prospects look more favorable now, buoyed by strong consumer-linked demand and margin expansion which should trigger a share price rally. Moreover, there is a scope for upside to our forecasts and valuation from new investments/acquisitions.

Consumer-linked demand sustained strong in 3Q22…

Despite concerns that a potential global economic slowdown might adversely affect the appetite for discretionary goods/durable goods, the demand for F&B and FMCG (consumer-linked products) has sustained resilient regardless. Also, the third-quarter normally sees a seasonally high demand for packaging products, boosting sales volume during the quarter. Meanwhile, weaker demand from China tied to economic issues and COVID-19 lockdowns dampened the packaging paper demand in 3Q22 to some extent, pressuring the benchmark packaging paper price (up 1% YoY but down 8% QoQ to US$480/t). Given these trends, we expect 3Q22 sales volume to rise YoY, but to soften marginally QoQ.