SCC – 3Q26F: Core profit down QoQ but up YoY

We expect SCC to report a 3Q26 core profit of Bt3.2bn (down QoQ on plant shutdowns, narrowing chemical spreads, and lower dividend income, but up YoY off a low base). 4Q26 core earnings to soften QoQ due to MOC plant shutdown and seasonal weakness in cement business. earnings will be supported by the accelerated Ethane retrofit at the LSP plant in Vietnam, which is projected to generate an annual profit contribution of around Bt6bn once fully operational. We maintain our NEUTRAL rating with a mid-2027 target price of Bt276 based on SOTP valuation, as chemical spreads have likely passed their peak in 2Q26 for the year.

3Q26 core profit down QoQ but up YoY. We expect SCC to report a core profit of Bt3.2bn, representing a sharp sequential decline from Bt10.8bn in 2Q26, mainly stemming from: 1) LSP’s loss widening to about Bt3bn from Bt631mn in 2Q26, as the plant has been shut down since mid-May 2026, cutting earnings by Bt2.4bn QoQ; 2) narrower chemical product spreads, with HDPE spread down 27% QoQ to US$384/t, PP spread down 14% QoQ to US$377/t, and PVC spread down 21% QoQ to US$305/t; 3) ROC start-up costs of Bt100mn, following the plant restart on 17 September 2026; and 4) the absence of Bt2bn in dividend income from Toyota and Kubota (Thailand). However, we expect SCC’s core profit to rise YoY from Bt774mn in 3Q25 on a low base (low chemical spreads due to oversupply), with HDPE spread up 16% YoY and PP spread up 27% YoY. We expect SCC’s 3Q26 net profit to reach Bt3.5bn, including a Bt373mn inventory gain booked as an extraordinary item.

4Q26 outlook to lower QoQ but maintain YoY growth. We expect 4Q26 core earnings to soften QoQ due to the planned maintenance shutdown of MOC, a primary petrochemical plant, for 30–40 days in late 4Q26. The restart of ROC in late September 2026 will partially offset MOC's production loss by running HVA products. Moreover, the company needs to optimize feedstock sourcing to mitigate potential supply disruption risks stemming from the Strait of Hormuz. Regarding the LSP petrochemical plant in Vietnam, the company is considering suspending operations until next year to restart concurrently with the completion of the ethane project in 2H27. We also expect cement and building materials to decline due to seasonal demand troughs. The YoY improvement will be driven by a low comparative base from the depressed trough chemical spread levels seen in 4Q25.

To accelerate the Ethane project. SCC’s strategy to accelerate the Ethane retrofit project at the LSP plant in Vietnam substantially lowers operational cash costs by providing a feedstock benefit of over US$200/t relative to naphtha (based on a reference naphtha price of US$650/t). Once fully operational, with ethane replacing naphtha at up to 70–80% of the overall feedstock mix and running at its maximum capacity of almost 1mn t per year, the cost advantage expands further if naphtha prices rise, delivering an estimated annual cost saving contribution of Bt6bn. We assume a partial contribution in 2H27, with the full annualized benefit realized from 2028.

Action & recommendations. We maintain our NEUTRAL rating for SCC as we expect chemical spreads to have passed their peak level of the year in 2Q26 and will soften back to normal levels, despite potential upside from PTTGC-SCC JV synergy benefits. Our mid-2027 TP is Bt276, based on SOTP (8x EV/EBITDA for chemical, packaging, and cement, and 1.5x PBV for associates).

Key risks. Higher raw material costs, higher interest rate, exchange rate volatility, and oversupply in the cement and chemical businesses.