Fitch ratings reveal Thailand’s economic recovery to boost corporate earnings in 2023

Recovery of the domestic economy and alleviation of inflationary pressures are set to bolster the performance of corporations in Thailand this year, suggest analysts from Fitch Ratings during the 2023 Thailand Corporate Credit Outlook & Asean ESG conference, held recently in Bangkok.

Corporates at Fitch Ratings (Thailand)’s Lertchai Kochareonrattanakul, a senior director, indicated in his talk that a boost in local consumer demand coupled with a resurgence in activities related to tourism should foster continuous earnings growth for Fitch-rated firms in food and beverage, telecom, aviation, and hospitality verticals.

While earnings are pegged to enhance for the power and utility sectors, which previously felt the burn of high fuel expenses in 2022, expectations predict an ease in cost pressures. The recovery journey for petrochemical businesses may face hurdles due to softening international demand, escalated cost of raw materials and energy, and new supply that could potentially shrink petrochemical profit margins.

A prediction by Fitch anticipates oil and gas firms to experience a plateau in earnings from a previous peak but should remain comparatively elevated. These companies are expected to be cushioned by stronger cash flow from operations which require less working capital, reported Bangkok Post.

Emphasising the ASEAN ESG (environmental, social, and governance) market trends and developments, Nneka Chike-Obi, who heads the APAC ESG ratings and research for sustainability at Fitch, stated that sustainability challenges lie ahead for Thailand and the ASEAN region. These include the urgent need to transition to a green economy whilst ensuring the protection of jobs and maintaining economic stability.

Such challenges, she added, could be bridged using sustainable finance, the sustainable bond market specifically presents a potential solution to the climate financing gap. She observed that investors were taking a growing interest in a broad range of ESG issues, notably the environment, gender diversity, and supply chain management, and were engaging more actively with firms over these matters.

Insights into the ESG trends and challenges that Thai corporates currently face were shared in a roundtable discussion by a panel constituting Wanlapa Sophiskhaunkhant from Global Green Chemicals, who is the chief financial officer, Government Pension Fund’s deputy secretary general, Man Juttijudata, and Aaron Wei, director for ESG and sustainable finance, business relationship management of Fitch Ratings Hong Kong.

The conference had a strong turnout of over 100 attendees, a mix of corporate treasurers, bankers, insurers, asset managers, and representatives from regulatory institutions.