Fitch Ratings (Thailand) Limited has assigned SCG Packaging Public Company Limited’s (SCGP, A(tha)/Stable) proposed THB40 billion medium-term note programme (MTN) a senior unsecured rating of ‘A(tha)’.
The MTN programme, which allows SCGP to issue senior unsecured baht notes, is rated at the same level as SCGP’s National Long-Term Rating because it will constitute SCGP’s direct, unconditional, unsubordinated and unsecured obligation.
SCGP’s rating reflects its Standalone Credit Profile (SCP) of ‘a(tha)’. The SCP incorporates the company’s solid business profile as the leading producer of paper-based packaging in Southeast Asia. Fitch expects SCGP’s gradually improving earnings and moderating capex to support deleveraging over the medium term.
Key Rating Drivers
EBITDA Recovery Supports Deleveraging: Fitch expects SCGP’s EBITDA net leverage to decrease to 3.2x in 2026 and 3.0x in 2027 from 3.7x in 2025 (end-1H26: 3.1x), supported by a gradual EBITDA recovery. Fitch expects SCGP’s EBITDA to improve to THB16 billion-17 billion a year in 2026-2027 (2025: THB14 billion) and to THB18 billion in 2028. Fitch believes a gradual recovery in demand, modestly rising selling prices and moderating raw material and energy costs will widen SCGP’s EBITDA margin to 13%-14% in 2026-2028 (2025: 11.2%).
Moderating and Flexible Capex: Fitch expects SCGP’s capex and investments to decline to about THB10 billion a year during 2026-2028 from a peak of about THB29.3 billion in 2024 (2025: THB9.7 billion). Fitch believes SCGP has some flexibility to manage its capex, including deferring expansion capex if the recovery in demand is slower than it expects.
Parent-Subsidiary Linkage: Fitch assesses that SCGP has a stronger credit profile than its parent, The Siam Cement Public Company Limited (SCC). SCGP’s rating can be above its parent’s profile due to ‘Porous’ access and control and ‘Open’ legal ring-fencing under the Parent and Subsidiary Linkage Rating Criteria. The ‘Porous’ access and control assessment is based on SCC and SCGP being separate publicly listed entities, with some board separation and SCGP’s independent treasury. The ‘Open’ legal ring-fencing assessment reflects the lack of formal legal restrictions in SCGP’s financing documents that prohibit upstreaming cash flow to SCC.
Leading Regional Paper-Packaging Producer: SCGP’s ratings reflect its leadership as Southeast Asia’s largest producer of packaging paper and corrugated containers. SCGP’s total fibre-based packaging capacity for upstream packaging paper and downstream packaging reached 6 million tonnes per annum. Acquisitions have significantly increased the capacity of its food-grade and polymer packaging from a low base.
Product Diversity to Support Demand: Fitch expects SCGP to broaden its capacity and product diversity over the medium term, which will boost demand. Around 75% of SCGP’s packaging revenue comes from consumer-linked end- markets, which have defensive demand across economic cycles or are in a fast-growth stage. SCGP’s business is also supported by its integration between upstream and downstream fibre-based packaging, which provides some margin protection against higher raw material costs.
Peer Analysis
SCGP’s SCP is comparable to that of Siam City Cement Public Company Limited (SCCC, A(tha)/Stable), as both companies benefit from strong market positions in their sectors. SCCC is Thailand’s second-largest cement producer, but its cash flow is more susceptible to economic downturns because of its exposure to construction and real estate end-markets. SCGP is also more diversified geographically and across end-markets, which, together with more defensive demand from end-customers, supports higher leverage than SCCC’s for the same rating.
SCGP is much larger than Eastern Polymer Group Public Company Limited (EPG, A-(tha)/Stable), a leading manufacturer by revenue and EBITDA in ethylene propylene diene monomer rubber insulation, polymer and plastic automotive parts. EPG serves more end-markets and products, but this is offset by SCGP’s leading position in the paper-based packaging business in Southeast Asia. SCGP has materially higher financial leverage, but its stronger business profile results in a one-notch higher rating.
Fitch’s Key Rating-Case Assumptions
- Revenue to increase by 1%-4% annually in 2026-2028, supported by higher sales volumes and a modest improvement in average selling prices.
- EBITDA margin to improve to 13%-14% in 2026-2028 (2025: 11.2%), supported by a recovery in selling prices and continuous cost-saving measures;
- Capex and investment of around THB10 billion annually in 2026-2028;
- Dividend payout ratio of 45%-50%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
- A downward revision in SCGP’s SCP;
- Weakening of SCC’s consolidated profile;
- Revision of access and control linkage assessment to ‘Open’.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
- An upward revision in SCGP’s SCP together with an upward revision of SCC’s consolidated profile.
For SCGP’s SCP:
Factors that Could, Individually or Collectively, Lead to a Lower SCP
- EBITDA net leverage above 3.5x for a prolonged period.
Factors that Could, Individually or Collectively, Lead to a Higher SCP
- A significant improvement in SCGP’s business profile and operating scale, which would be reflected in
an increase in EBITDA as well as geographical and product diversification.
Liquidity and Debt Structure
SCGP has THB30 billion in debt maturing within the 12 months to end-June 2027. This includes around THB24 billion in bank working-capital facilities, which are likely to be rolled over in the normal course of business. The remaining debentures and term-loan maturities of around THB6 billion should be covered by cash on hand of about THB12 billion as of end-June 2026. Liquidity is further supported by SCGP’s strong refinancing capability through the local debt market and bank funding.
Symbol: SCGP