COTTO collaborates with ‘SCG Decor’ to elevate itself as a leader in the surface decoration and sanitary ware business across ASEAN, seizing market expansion opportunities by 6 times, reaching nearly 560 million people and opening up a future for significant growth. Recently, the Board of Directors of SCG Ceramics Public Company Limited, or COTTO, has considered presenting to the extraordinary shareholders' meeting on May 23 to seek approval for delisting COTTO shares from the stock exchange as part of the restructuring plan in collaboration with SCG Decor Co., Ltd., the core company of SCG in the surface decoration and sanitary ware business in Thailand and ASEAN. SCG Decor will be listed on the stock exchange instead.

Mr. Nampol Malichai, Managing Director of SCG Ceramics Public Company Limited (COTTO) and President and CEO of SCG Decor Co., Ltd. stated, “COTTO is a continuously growing company with strong performance, holding the number one position in sales of floor and wall tiles in Thailand with a market share of 33.0%. Investors have consistently shown interest and confidence. However, COTTO still has opportunities to expand its market to cover all surface decoration materials. Therefore, restructuring by expanding products to encompass all surface decoration materials and sanitary ware, along with expanding the business into the high-potential ASEAN market under SCG Decor, is a significant step in strengthening the business for further growth.”

SCG Decor is the core company of SCG in the surface decoration and sanitary ware business (Decor Surfaces & Bathroom) with distribution channels throughout the ASEAN region, having subsidiaries operating in Thailand, Vietnam, the Philippines, and Indonesia. They include:

  1. SCG Ceramics Public Company Limited (COTTO) operates in the production and sale of floor and wall tiles in Thailand, holding the number one position in ceramic tile sales in the country with a market share of 33.0%.
  2. Siam Sanitary Ware Co., Ltd. (SSW) produces and sells sanitary ware in Thailand and exports abroad, holding the number one position in sanitary ware sales in the country with a market share of 32.8%.
  3. Prime Group operates in the production and sale of floor and wall tiles in Vietnam, holding the number one position in the country with a market share of 26.4%.
  4. Mariwasa-Siam Ceramics, Inc (MSC) operates in the production and sale of floor and wall tiles in the Philippines, holding the number one position in the country with a market share of 16.8%.
  5. PT Keramika Indonesia Assosiasi, Tbk (KIA) operates in the production and sale of floor and wall tiles in Indonesia, which has a population of 274 million, the highest in the ASEAN region.

Mr. Nampol stated, “The integration of each company in SCG's tile and sanitary ware business under SCG Decor strengthens and maximizes the benefits from the synergy between all companies, enhancing competitiveness and accelerating rapid growth into the ASEAN region with diverse products and services covering all surface decoration materials and sanitary ware, including distribution channels in Thailand, Vietnam, the Philippines, and Indonesia, can comprehensively meet the needs of customers at all levels.”

This business restructuring will benefit COTTO shareholders who will become shareholders of SCG Decor, elevating them to “shareholders of a leading surface decoration and sanitary ware business in ASEAN” while maintaining their status as “indirect shareholders of COTTO and companies in the SCG Decor group.”

5 Strategies for SCG Decor to Grow into a Leader in Comprehensive Surface Decoration and Sanitary Ware Business in ASEAN include:

  1. Expanding the sanitary ware business from Thailand to become a leader in ASEAN, where the sanitary ware segment in Thailand is a high-margin business, holding the number one position in sales and market share, by introducing new innovations such as “COTTO Smart Toilet” to meet health and hygiene trends.
  2. Building on the strength of the surface decoration business in Thailand and ASEAN by applying a strong business model from Thailand to transfer knowledge to accelerate growth, promoting brand recognition in each country, such as PRIME in Vietnam, MARIWASA in the Philippines, and KIA in Indonesia, while strengthening all sales channels and expanding exports worldwide with innovative design and research, offering diverse products to meet every lifestyle, from budget to premium segments, especially high-value-added products and services.
  3. Expanding into related products and services to reinforce leadership in providing comprehensive services to enhance operational capabilities in surface decoration, sanitary ware, and services through integrated solutions from group companies and related businesses.
  4. Managing the supply chain in production and procurement efficiently (Regional Optimization and Global Sourcing Powerhouse) by integrating cooperation between regional production bases and group companies to manage overall production capacity effectively and source leading products from various regions worldwide.
  5. Growing steadily and sustainably with world-class standards by developing eco-friendly products and processes, reducing production waste and recycling into eco-friendly products to generate income, reducing energy costs by increasing the use of renewable energy and solar power, aiming to achieve net-zero greenhouse gas emissions by 2050, in line with ESG (Environmental, Social, and Governance) guidelines.

Mr. Nampol added, “SCG Decor has shown continuous growth, with sales revenue from 2020 to 2022 at 24,378.6 million baht, 25,937.4 million baht, and 30,253.8 million baht, increasing by 6.4% and 16.6% respectively. In 2022, exports to ASEAN markets such as Cambodia, Laos, Myanmar, and others reached over 53 countries, generating export revenue of over 4,500 million baht, accounting for 15.0% of total revenue.”

Recently, the COTTO Board of Directors meeting on March 30, 2023, considered presenting to the extraordinary shareholders' meeting of COTTO to seek approval for the delisting of the company's shares from the stock exchange, which will be proposed at the extraordinary shareholders' meeting No. 1/2023 on May 23, 2023, for further consideration of approval under the restructuring plan with SCG Decor. A key condition is that COTTO must receive approval from the shareholders' meeting with at least 3 out of 4 votes from all shareholders, and no more than 10% of COTTO shareholders can oppose the delisting at the extraordinary shareholders' meeting No. 1/2023.

Mr. Samit Kosiyacharoen, Chief Financial Officer of SCG Decor Co., Ltd. stated, “The ceramic tile and sanitary ware industries in Thailand, as well as in Vietnam, the Philippines, and Indonesia, are high-potential markets supporting nearly 560 million people, with a combined market value of floor and wall tiles and sanitary ware exceeding 190 billion baht. This presents an opportunity for SCG Decor to expand and grow further in ASEAN.”

The average annual growth rate (CAGR) from 2022 to 2026 for the ceramic tile market in Thailand is projected to grow by an average of 1.2%, while the market in Thailand, including Vietnam, the Philippines, and Indonesia, is expected to grow by an average of 7.1%. The sanitary ware market in Thailand is projected to grow by an average of 2.1%, compared to the average annual growth of 8.6% for the three countries mentioned above (according to Euromonitor 2021).

Once COTTO receives approval from the shareholders' meeting, SCG Decor will submit a request for permission to offer securities and a registration statement for the securities offering (Filing) to the SEC to seek approval for the initial public offering (IPO) of common shares to the public. After the filing becomes effective, SCG Decor will begin to make a tender offer for all COTTO shares at a price of 2.40 baht per share, with payment for the shares made in common shares of SCG Decor only. This will occur simultaneously with the IPO of SCG Decor. After the tender offer concludes, COTTO will be delisted from the stock exchange, and COTTO shareholders who accept the tender offer will become shareholders of SCG Decor while still retaining indirect ownership of COTTO. Subsequently, SCG Decor will be listed on the stock exchange.” Mr. Samit stated.

Mr. Nampol concluded, “The company hopes to receive support and unanimous approval from current COTTO shareholders, as well as their trust in accepting this tender offer by exchanging shares and becoming shareholders of SCG Decor. We invite all shareholders and investors to join us in being a crucial force in leading SCG Decor to become a leader in the comprehensive surface decoration and sanitary ware business in ASEAN.”