Thailand Microeconomic Weekly Update #33

THAILAND MACROECONOMICS WEEKLY UPDATE

The Energy Regulatory Commission (ERC) recently approved a resolution to apply a fuel tariff rate (FT) of 66.89 satang per unit for electricity bills from September to December 2023, leading to an average reduction of the electricity cost to 4.45 Baht per unit. Thailand witnessed a more than 20% surge in credit card expenditures during Q2 this year, a trend w to persist throughout 2023, maintaining the growth at no less than 20%. The average occupancy rate for hotels rose to 57.5% in July across all regions, attributed to school vacations in foreign countries, and is projected to reach 54.4% in August.

The Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce revealed that the consumer confidence index for July 2023 was 55.6, a decrease from June’s index of 56.7. This marks the first drop in 14 months.

The consumer price index (CPI) increased by 0.38% in July, largely driven by substantial rises in energy prices that have remained elevated.In regards with the view for the week, it’s expected that the SET index will experience an upward sideways movement, attributed to the resolution of domestic issues within the country and the ongoing earnings season.Looking ahead to the upcoming week, there will be a report on the Thai GDP for the second quarter of 2023.

INDUSTRY

COMMERCE

Central Retail Corporation Public Company Limited (CRC)

Mr. Yol Phokasub, the Chief Executive Officer of Central Retail Corporation Public Company Limited, has devised a plan to convert Family Mart, a convenience store brand under CRC’s umbrella, into TOPS. This strategic change aims to rapidly respond to prevailing market trends. Consumers are in search of convenience stores that provide a broader range of products. TOPS fits perfectly into these preferences by offering a 250-300 square meter space filled with a diverse product selection, aligning with and fulfilling consumer demands.

Furthermore, this initiative responds to the declining trajectory of Family Mart’s presence from 2019 to 2021. Formerly boasting approximately 1,000 branches, the number of Family Mart stores shrink to 805 across 17 provinces by 2021. This contraction was also reflected in reduced net sales area and average net sales area per store. Notably, the average net sales area of Family Mart, characterized as a convenience store, stood at 126 square meters. This transition to TOPS stores signifies a strategy to cater to shifting consumer behaviors and optimize retail operations in light of these changing dynamics.

TRANSPORTATION AND LOGISTICS

Thailand’s shippers group anticipates a notable upsurge in exports during the fourth quarter, driven by agricultural products and automobiles. Despite the influence of a global production slowdown on export demand, the overall export forecast for the year remains in the range of a 0.5% decrease to a 1% increase. In the third quarter, the group foresees a 0.6% growth compared to the previous year, followed by a substantial 12% surge in the fourth quarter, as highlighted by Mr. Chaichan Chareonsuk, Chairman of the Thai National Shippers’ Council. Furthermore, the chairman expects the export growth to be supported by shipments of specific agricultural products and automobiles over the upcoming five months.  Meanwhile, the ban on rice exports by the Indian government should boost the selling price of Thai rice.

HEALTHCARE

Bumrungrad Hospital Public Company Limited (BH)

Bumrungrad Hospital Public Company Limited has announced impressive earnings amounting to THB 6,147 million, reflecting a substantial 24.1% rise from the THB 4,954 million reported in the second quarter of 2022. During the second quarter of 2023, BH achieved a notable net profit of THB 1,748 million, marking a significant 49.9% surge from the THB 1,166 million recorded in the same period of the previous year. This translates to a net profit margin of 28.4%, an improvement compared to the 23.5% seen in the second quarter of 2022. LH Securities noted that BH’s financial performance exceeded expectations, largely attributed to increased revenue from international patients, which has displayed an upward trend.

INFORMATION AND COMMUNICATION TECHNOLOGY

Thaicom Public Company Limited (THCOM)

Thaicom Public Company Limited, a leading Satellite and related business, has announced the signing of a partnership agreement between Space Tech Innovation Limited (STI), Thaicom’s subsidiary, and Eutelsat Asia PTE. LTD. (Eutelsat Asia), a subsidiary of Eutelsat SA, one of the world’s leading satellite operators. This partnership relates to the new satellite to be launched at the orbital slot of 119.5 degrees East. Under the agreement, Eutelsat is committed to lease and operate the service for 50% of the satellite capacity during its lifetime of 16 years. Thaicom is currently finalizing the procurement process of the satellite.

Advanced Info Service Public Company Limited (ADVANC)

Advanced Info Service Public Company Limited has reported  operating result for the second quarter of 2023 was THB 7.18 billion or increase 14% from the same period of the previous year. The most contribution was fixed broadband revenue which increase 15% from the same period of the previous year and core service revenue of IC and NT partnership increase of 6.9%.Overall SG&A showed a decline of -6.7% YoY with marketing expense dropping -20% YoY reflected from a tight cost control. Admin & others expenses declined -0.9% YoY from operational efficiency improvements.

BANKING

Bangkok Bank Public Company Limited (BBL)

Bangkok Bank Public Company Limited has entered into a partnership with SABUY Technology Public Company Limited, a fintech and service provider known for its SABUY ECOSYSTEM. This collaboration aims to establish SABUY as a banking agent, enabling convenient deposit and withdrawal services through the SABUY COUNTER using only an ID card. This strategic alliance will streamline cash-related transactions, leveraging SABUY’s expansive network, SABUY SPEED, which spans across 22,000 branches throughout Thailand.

PROPERTY AND CONSTRUCTION 

TCL Public Company Limited (TTCL)

TTCL Public Company Limited, an integrated Engineering, Procurement, and Construction (EPC) company, has made an official announcement regarding its subsidiary, TTCL Vietnam Corporation Limited (TVC). TVC has successfully secured a contract for the construction of a new petrochemical project in Quang Yen City, Quang Ninh District, Vietnam. This project, known as the YHP LPG Refrigerated Terminal Project, is owned by Yen Hung Petrochemical Joint Stock Company. The total project value stands at approximately 4,300 million baht.

The scope of work encompasses various aspects, including engineering design, machinery and equipment procurement, material sourcing, construction, and the subsequent commissioning.The duration of the project is approximately 29 months

SECTORAL UPDATE

Stock Exchange of Thailand

The Stock Exchange of Thailand (SET) has unveiled its plans to introduce two new indices, namely the SET50 Free Float Adjusted Market Capitalization Weighted Index (SET50FF) and the SET100 Free Float Adjusted Market Capitalization Weighted Index (SET100FF), at the beginning of 2024. These upcoming indices are designed as alternatives to the current SET50 and SET100 Indices.The selection criteria for the new indices will closely resemble those used for the existing SET50 and SET100 Indices. However, a distinctive feature of the new indices is that the weighting of constituents will take into account the free float of each listed security. The comprehensive rules governing these new indices will be updated and made available on the SET website. The SET is targeting the launch of these two indices starting from January 1, 2024, onwards.

             (The SET closed the week today at 1,535.16 points, an increase of 1.75 points (+0.11%), trading value at 61,820.21 million baht.)

The SET Index has established a support and resistance range between 1510 and 1555 points, maintaining a sideways movement, while the RSI stands at 54, reflecting growing market clarity amid ongoing political uncertainties; investors are adopting a wait-and-see approach as the Pheu Thai party takes charge of forming a new government, with August 16th being the notable date for a potential vote.

The USD/THB is expected to remain volatile within a range of 34.85 to 35.35, having significantly depreciated against the USD post-election due to capital outflows, with foreign investors being major net sellers of Thai equities and bonds.In the beginning of August Foreign investors have continued to be net sellers due to the delay of the government formation.

                       (Foreigners have been the net monthly seller for the month due to signs of slowdown in consumption.)

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