Thai corporate earnings improving in many sectors: Fitch Ratings


Thailand's corporate earnings are improving across multiple sectors, but leverage remains high due to large investments, according to Fitch Ratings' 2024 Bangkok briefing on the global financial market and Thailand's corporate credit outlook, released on Wednesday.

The report painted a mixed picture of recovery in corporate earnings across various sectors: company earnings are improving but leverage remains high due to substantial investments.

The event also explored asset allocation strategies and the framework for credit investment, offering valuable insights into Thailand's corporate landscape as it navigates post-pandemic recovery and long-term strategic investments.

Fitch Ratings' senior director of corporate ratings, Obboon Thirachit, highlighted that the steady recovery in tourism and resumed government spending are supporting continued earnings growth for Fitch-rated corporates in the aviation, hospitality, and building material sectors. 

"Lower fuel costs are also benefiting the power and utility sectors, although high renewables investment could further increase the already-high leverage in utilities," he noted. 

Meanwhile, the oil and gas sector is expected to see earnings moderate from a high base, in line with softening oil and gas prices, but should remain strong overall with healthy profits. Conversely, weak global economic conditions and new supply are hindering a recovery in the petrochemical sector.

Thai corporate earnings improving in many sectors: Fitch Ratings

He noted that while Fitch-rated Thai corporate issuers demonstrated prudent cash flow management during the Covid-19 pandemic, the outlook indicated that investment and acquisitions had increased, particularly in the oil and gas sector.

These investments are intended to address long-term changes resulting from climate change, as well as business and technological transformation. According to Fitch, this trend is likely to keep financial leverage elevated and may limit rating upgrades. 

The briefing also featured Arsa Indaravijaya, deputy secretary-general of Thailand's Government Pension Fund, who discussed the fund's asset allocation framework and credit investing strategy. The fund uses tactical asset allocation during economic regime changes or volatility caused by monetary policy shifts in the short term.