-- Potential benefits from a proposed joint venture will materialize for PTT Global Chemical (BKK:PTTGC) only if it achieves cost synergies, S&P Global Ratings said in a recent release.
The joint venture plans with SCG Chemicals Public could make PTT Global Chemical more competitive, but it also needs to ease pressure on feedstock sourcing and keep an efficient cost structure, the rating agency said.
The company could increase its cash flow due to the deal through capital release, increased scale and diversity, and cost synergies, which would be credit positive, S&P said.
However, less feedstock self-sufficiency or a more expensive cost structure would be credit negative, according to S&P.
The company may also face limits to control and cash flow access due to a joint venture framework, the rating agency said.
S&P forecasts the company's EBITDA for this year to exceed past estimates by 40% to 50% given increased prices for petrochemicals and refined fuel products.