JUDGING by how many times he has seen Tos Chirathivat, chief executive of the Central Group, at the Ho Chi Minh airport over the past year, US-based equity broker Mark Decker believes Thailand's largest retailer must have something big in its investment p
Decker is the founder and CEO of Decker & Co, the only equity brokerage in the world that focuses solely on Asian frontier markets, including the Greater Mekong Subregion. He is particularly bullish on the future of the GMS economies, which he believes will share the same growth trajectory that China has been on for a couple of decades. And because of that, Decker told The Nation he was very bullish on Thai stocks, especially small and medium-sized enterprises in consumer goods, non-bank financial firms, and other nimble SMEs that are poised to gain from the GMS growth.
The GMS is made up of countries bordering the Mekong River, namely Cambodia, Laos, Myanmar, Vietnam, Thailand and southern China.
“I think this [GMS] is much bigger than everyone is talking about. China has grown from nothing to where they are now in only 20 years. GMS has a 700-million population, almost equal to China,” he said.
GMS shares some of the “myths” that China had in the 1990s when people were sceptical about the future of its economy. And Decker has no doubt that GMS will share China’s path of double-digit growth for a decade to come.
Due to Thailand’s strategic location as the centre of the GMS, and the relatively good management of Thai companies, Decker has advised his US institutional investor clients to buy selective Thai stocks that are poised to gain from the upcoming “massive economic boom” of the GMS countries.
“It doesn’t matter [what] Thai politics will be,” he said. “I met Carabao executives a month ago. Its sales in Thailand [had grown] by just 5 per cent, but in Myanmar and Cambodia it grew by 35-40 per cent.
“Amata Vietnam will contribute 50 per cent of Amata’s revenues in three years because in Vietnam they could not develop the land fast enough to serve [the flood] of investments, while in Thailand they have to do a lot of presentations to persuade investors,” he said.
But for equity investment, Decker said he was “very bullish” on Thai stocks because the stock market is the most developed and Thai firms will increasingly reap benefits from the GMS’s economic boom. Considering liquidity and other issues, Vietnam’s stock markets still have only about eight “investible names”, despite the country’s growing economy.
“We can view Thai politics as a positive factor. Because the Thai economy is not good, so Thai companies have to move out” to the GMS, he said.
Decker predicts that Thai banks will be seeing 15-25 per cent of their income from the GMS market excluding Thailand within 10 years. The GMS’s contribution will be even bigger for Thai consumer brands and engineering, infrastructure and industrial-estate companies.
He favours small and mid-cap companies operating in the consumer-brands sector because of “the ability of brands to [more easily] move out to other countries” and non-bank finance firms for the same reason, as well as “creative entrepreneurial” companies.
Decker’s top picks are three Thai stocks, namely Beauty Community, Srisawad Power 1979, and Forth Smart Service; two Philippine stocks, Xurpas and Puregold Price Club; one Indonesian stock, PT Telecom; and one Vietnamese stock, Mobile World Investment Corp. Other Thai stocks that he loves – either because of their GMS exposure, track record of revenue growth, or their quality management – include Group Lease, PlanB Media, Carabao, and MC Group.
Nevertheless, Decker acknowledged that Thai stocks were currently not inexpensive, even after a big drop in the stock index during recent months.
“Finding value in quality companies in Thailand is very difficult. You have to pay the price,” he said.
Decker has 25 years of experience in Asia including positions in Hong Kong with Bear Stearns, Lehman Brothers, and CLSA, and with SCB Securities in Thailand. Based in California, Decker & Co has Broadcort, a division of Bank of America Merrill Lynch, as its clearing partner, and Kasikorn Securities as its Thai partner.