MACROECONOMICS WEEKLY UPDATE

 The Bank of Thailand (BOT) expects Thailand’s GDP 3Q22 will grow more than 3% from the reopening of the country and lower inflation. The economic outlook is still inline with Bank of Thailand (BOT)  expectations despite concerns about the global economic slowdown.

Thailand’s GDP will come out next week. The National Economic and Social Development Council (NESDC) expects that GDP is +3% YoY from +2.5% in 2Q22 and +2.2% in 1Q22, while BOT expects that +3.3% for this quarter.

Thailand Baht is appreciating against the US dollar, compared to other major currencies and most Asian currencies. Meanwhile, the US dollar weakened as the US inflation came out lower than expected, specifically the CPI rose 7.7% YoY in October (market expected at 7.9%), while the core CPI rose 6.3% YoY (market expected at 6.5%). In addition, the greenback and US bond yields were pressured by Fed officials’ softening stance, reflecting that the Fed may scale down its aggressive rate hikes in coming meetings.

The key factors to be monitored  closely by Thailand are foreign fund flows and Asian currencies’ movements.

INDUSTRY   

REAL ESTATE AND PROPERTIES 

The Agency for Real Estate Affairs (AREA) reported decent launch activity in Oct-22 with 11,074 new residential units added in the BMA, up 29.4% MoM and 45.0% YoY. This reflected the higher confidence of developers to `introduce new projects.

10M22 newly launched units and launch value at 88,418 units and 380 bn Baht, which was close to the annual average in the 10-year pre-COVID period (2010-19) of 108,388 units.

This confirms the housing market in 2022 is on a clear recovery path, which will continue to boost the confidence of developers to launch new projects.

HEALTHCARE

The cabinet approved the Public Health ministry’s proposal to reduce the fee for medical treatment visa under the Non-MT category from 6,000 to 5,000 Baht, this visa allows multiple entries and is valid for 1 year. The visa holder can stay for 90 days and will start on 1 Jan 2023. The new visa will help to promote Thailand to be a medical hub and be medical tourism.

Thailand currently allows tourists coming for medical treatment if they apply for a tourist visa or non-immigrant visa that can stay for 60 days maximum.

This news will be positive for the hospital sector especially Bumrungrad hospital (BH) and Bangkok Dusit Medical hospital (BDMS) because their customer base is about 30-65%.

UTILITIES

The Energy Regulatory Commission (ERC) will be opening  for opinion sharing on November 14 – 27 about the new FT (Fuel Adjustment Cost) rate in Jan-Apr 2023 that  will be adjusted based on the higher gas price in the Energy Pool Price (EPP) in 3Q22. The 3 scenarios increased  +1.3155 Baht/unit, +0.9821 Baht/unit and +0.6488 Baht/unit.

The ERC is likely to pick the third scenario to minimize the impact of inflation and the impact on purchasing power.An increase in FT rate and limit upside of gas price will be positive catalyst to utilities stock that has contract with government (BGRIM, GPSC, SSP)

INFORMATION COMMUNICATION TECHNOLOGY 

TRUE and DTAC

The Central Administrative Court accepted a lawsuit in late October filed by the Thailand Consumers Council (TCC) against the NBTC that sought an emergency investigation into and a preliminary injunction against, the merger. TRUE expected the challenge. The court should deliver its judgment within a week to a month whether to grant the injunction sought by TCC.

But, the management believes the deal can legally proceed. If the court grants the injunction, TRUE and DTAC can file an appeal. However, the injunction will lead to a delay in the merger timeline from 1Q23.

If the court does not grant the injunction, the merger should be completed in 1Q23, which means the tender offer will be held late this year as expected.

ADVANC and JASIF

ADVANC informed the SET that its board of directors had approved that Advanced Wireless Network Co., Ltd. (AWN), a 99.99% subsidiary of AIS, would acquire 19% of TTTBB and JASIF despite that the condition to terminate the Rental Assurance Agreement and the amendment of the Main Lease Agreement were not approved at the JASIF unitholders meeting on Oct 18.

ADVANC has to ask the NBTC for approval before signing the purchase agreement. The transaction should be completed in 1Q23. The transaction is valued at THB32bn, of which THB19.5bn will be used to acquire 7.53bn of TTTBB shares (99.87%) and THB12.9bn will be used to acquire 1.52bn units (19%) of JASIF at THB8.5/unit, based on JASIF’s existing leasing conditions without the waiver of the revenue guarantee.

Thailand SET Index

TheSET index trade in 1610 – 1650 with PE 15.6X

Due to slowdown in US inflation and PPI make US dollar index going down, so TH Baht has appreciation against US dollar. This makes Foreign investors sell on Thailand’s equity market.

The Earning season will end this week. Most companies reported in- line earnings and forecast that earnings will continue to increase in 4Q22 from the expanded economy and the large number of tourists.