SCG sizing up partner for Vietnam plant
SET-listed Siam Cement Group (SCG) expects to get a new partner to start investing in a US$4.5-billion petrochemical complex in Vietnam within the first quarter of this year.
The move is expected to help advance the project, which has been delayed for a few years because of the withdrawal of the previous partner, Qatar International Petroleum Marketing Co Ltd, in 2015.
President and chief executive Roongrote Rangsiyopash said the two existing partners remain SCG and Petro Vietnam & Vinachem.
"We are already in talks," he said.
The company is increasing its investment budget for the project to over $4.5 billion because of rising construction and labour costs.
"We expect the investment details to be concluded by the first half of this year, with construction slated to start in the second half," said Mr Roongrote.
The company's revenue this year is projected to grow by 5-6% from the 423 billion baht it posted in 2016.
The higher revenue outlook this year is largely because of massive government investment in infrastructure projects, which should support the Thai economy, especially demand for cement and construction material, its core businesses.
SCG expects the country's cement consumption to rise by 1-3% to 40 million tonnes this year, thanks to the government investment in infrastructure projects.
If the government investment drives economic growth, that could spur private investment and other related industries such as real estate that would indirectly push demand for cement higher, said Mr Roongrote.
SCG has domestic cement production capacity of 23 million tonnes per year. It has capacity of 2.0 million tonnes a year in Cambodia, and 1.8 million a year each in Myanmar, Laos and Indonesia.
He said the company set aside 100 billion baht for an investment budget for 2016-2017. Of that, 35 billion was used last year.
Mr Roongrote said most of this year's budget would be spent on a petrochemical refinery in Vietnam, investment expansion at home and in Asean countries, and mergers and acquisitions (M&A).
"SCG is looking for new M&A opportunities because of our interest in a new cement plant in Vietnam. Any deal would be concluded by this year," he said.
SCG posted a 6% drop year-on-year in revenue to 99 billion baht in the final quarter of 2016 because of falling petrochemical product prices. However, net profit for the quarter rose 9% to 12 billion baht thanks to a better profit margin.
Its 2016 full-year net profit rose 24% to 56 billion baht.
Siam Cement Group (SCC) shares closed yesterday on the SET at 508 baht, up 12 baht, in trade worth 1.76 billion baht.