Thailand Microeconomic Weekly Update #36

THAILAND MACROECONOMICS WEEKLY UPDATE

The upcoming week holds a potentially optimistic investment perspective as we await the formation of the new cabinet, while also anticipating industrial production, private consumption, and private investment data for July.

Thailand’s jobless rate edged slightly higher to 1.06% in the April-June period, up from 1.05% in January-March. The Pheu Thai Party is advocating for a debt suspension plan targeting 5 million borrowers grappling with 430 billion baht in non-performing loans due to the pandemic’s economic toll. Liquefied petroleum gas (LPG) retail prices are set to remain at 25.87 baht per kilogramme, despite the actual price being 30.27 baht per kg. In July, Thailand’s manufacturing production index (MPI) dipped by 4.43% year-on-year due to sluggish global demand and declining exports. Although the government considers offering free visas to Chinese tourists to boost demand, economic challenges and a weak currency, coupled with flight and staff shortages, may limit its impact, warns the Association of Thai Travel Agents (Atta). Private consumption saw a 1.0% month-on-month increase in July, driven by higher spending on services and non-durable goods, while private investment rose by 1.4% month-on-month.

                                                                                          

 

INDUSTRY

The Industrial Estate Authority of Thailand (IEAT) has joined forces with six Thai and Japanese companies to explore hydrogen fuel applications in the Map Ta Phut and Smart Park industrial estates in Rayong, in line with global climate change mitigation efforts. This partnership aims to promote carbon neutrality and attract investors interested in clean energy solutions for electricity and transportation. The IEAT’s previous announcement outlined plans to import hydrogen for use in transportation and logistics within these industrial complexes, including the Smart Park, covering 6,949 rai in Map Ta Phut and 1,383 rai in Smart Park, catering to the Eastern Economic Corridor’s S-curve industries.

ENERGY

Prime Minister Srettha Thavisin pledged to lower energy prices once his administration starts work. Mr. Srettha mentioned that the cabinet will cut energy prices soon after it gets down to work. At present, the household electricity tariff is currently THB 4.7 per Kilowatt-hour (unit), and the rate was set to end at the end of august 2023. The electricity Generating Authority of Thailand (EGAT) has been subsidising the cost since September 2021. The subsidy is estimated to have caused an accumulated loss of THB 135 billion for the state enterprises.

Electricity Generating Public Company Limited (ECGO)

The Electricity Generating Public Company Limited, a subsidiary of Thailand’s state-operated Electricity Generating Authority, plans to expand its energy portfolio to increase annual electricity generation capacity by 1,000 MW. After adding 101 MW in the first half of this year, they aim to secure approximately 900 MW more. They are in discussions and conducting due diligence for acquiring two assets in the United States and two in the ASEAN region, with the goal of finalizing these acquisitions within the current year, as communicated by Mr. Thepparat, the President of ECGO.

MEDIA 

Major Cineplex Group Public Company Limited (MAJOR)

Major Cineplex is pushing the M PASS subscription plan after a successful Q2 in 2023, with revenues exceeding 2,283 million baht and net profit growing by 306% compared to the previous year. This signals a strong cinema industry recovery, driven by strategic marketing efforts by major brands. The subscription plan offers unlimited monthly movies for students (200 baht) and working-age individuals (300 baht). The M PASS card holds value for consumers and serves as a tool for co-promotions, boosting product sales, and offering special privileges across brands. Past collaborations with True 5G, KTC, and Pepsi-Rockstar have been well-received and beneficial.

TOURISM

BCPG Public Company Limited (BCPG)

    BCPG Public Company Limited, a company that generates and sells electricity from renewable energy  as well as investments in related ventures, has disclosed company performance during the first half of the year with net profit of THB 713 million, a decrease of 57.9% from the same period of last year. This is due to profit recognition from 2022 sales and geothermal plant investments.  Furthermore, there was a temporary suspension of a hydropower plant in Lao PDR, aimed at augmenting electricity transmission for improved sales to Vietnam. Nevertheless, the hydropower plant has since resumed operations and is now engaged in selling electricity to the Electricity Authority of Vietnam. In addition, in the second half of the year 2023, the company will recognize the full operating results of the hydroelectric power plant in Lao PDR, the oil depot business in Thailand. And realized profit sharing from natural gas power plants that the company has invested in the United States. The total production capacity is 577 MW and another 280 MW is under acquisition.

TOURISIM

Prime Minister Srettha Thavisin has unveiled a proactive strategy to boost the economy swiftly by leveraging tourism as a key driver. Of particular focus is the Chinese tourist market, which has only recovered to about 30% of its pre-COVID levels in 2019. To address this, the Prime Minister is considering options like visa-free arrangements or simplified entry procedures for Chinese tourists, timed to coincide with the Chinese National Day extended holiday in early October 2023. Enhancing flight availability and improving airport facilities across the nation are also part of this effort to stimulate tourism during the upcoming peak season in the final quarter of the year.

ENERGY

Bangchak Corporation Public Company Limited (BCP)

Bangchak Corporation Public Company Limited, a prominent player in the oil refining and trading sector in Thailand, has engaged in a loan arrangement with Bangkok Bank. The accord stipulates a credit ceiling of up to THB 32 billion, earmarked for the acquisition of ESSO shares. The reimbursement timeline for this loan is set within 30 months from the initiation drawdown.

On the 11th of January, 2023, the company executed a share purchase agreement with ExxonMobil Asia Holding Pte. Ltd. The aim is to procure 2,283,750,000 ordinary shares, representing 65.99 percent of the total issued and fully paid-up ordinary shares of ESSO. Furthermore, the company has articulated its intention to initiate a tender offer encompassing the remaining 1,177,108,000 shares (equivalent to 34.01 percent).

IPO 

Big C Retail Corporation Public Company Limited  (BRC)

Mr. Asawin Techajaroenvikul, serving as the Chief Executive Officer and President of Big C Retail Corporation Public Company Limited (BRC), a prominent wholesale and traditional trade platform operating within Thailand and internationally, has revealed the company’s decision to postpone the implementation of its IPO plan. This strategic choice arises from a careful assessment encompassing both local and international capital market dynamics. The company has observed the influence of the global economy. In consultation with expert advisors, the conclusion has been drawn to temporarily defer the execution of the IPO plan.

SCG Chemical Public Company Limited  (SCGC)

SCG Chemical Public Company Limited, Thailand’s biggest industrial conglomerate Siam Cement, has decided not to proceed with the IPO of its unit SCG Chemicals due to unfavorable market conditions. 

SECTORAL UPDATE

               (The SET closed the week today at 1,561.51 points, down 4.43 points (-0.28%), trading value 48,763.61 million baht.)

The SET index is currently consolidating with potential testing of support at 1560 points and resistance at 1575 points, while the RSI shows an upward trend around 59. In the USD/THB exchange rate, volatility persists, and it is expected to remain within the range of 34.80 to 35.50, largely influenced by US labor data.

 

                                                       Foreign investors have sold off at the first day of the month of September 
 

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