Asia Plus Securities identified 4 groups of stocks – food – electronics – energy – benefited after the baht depreciated Because many companies have their main income from exports. and some companies import raw materials from abroad based on dollars especially food groups with the status of an exporter will benefit from the direction of the baht depreciating continuously This year’s profit trend will increase by 12%, but the power plant group Loss of benefits in terms of borrowing money in foreign currencies
Securities analysis from Asia Plus Securities Co., Ltd. (ASPS) revealed that the tightening of monetary policy of the US Federal Reserve There have been several interest rate hikes this year. Meanwhile, the Bank of Thailand kept interest rates low, resulting in foreign fund flows. causing the baht to depreciate by 6.5%YTD, affecting Thai listed companies in 2 dimensions:
1. The issue of companies with US dollar-denominated loans has little impact. Since most companies currently focus mainly on domestic borrowing, for example, companies with foreign debt such as PTTEP and BANPU are companies that have a high percentage of foreign trade transactions, so they use functional currency in dollars. To reduce the risk of converting currency results
2. Issues of companies whose business is based on the dollar for both imports and exports In practice, currency hedging is often carried out with the effect of changing the value of trade accounts receivable and account payable.
However, the depreciation of the baht in the quarterly financial statements is quite difficult. However, the research department has compiled the impact on stocks in various groups on issues related to the depreciation of the baht as follows:
1. Contractor-Construction Group
SCC : Chemical business, price quote, whether it is domestic market or export, will be Dollar Link, thus benefiting from the weak baht. As for the cement-building products and packaging business, it is somewhat neutral from the currency change, causing the Net Impact.
Approximately 2,000 million baht/year net profit compared to 40 billion baht/year profit base or accounted for approximately 5% of the projected profit for the year
TPIPL: It earns about 35% of total revenue from exports, mainly from EVA and clinker exports. Every baht depreciation of 1 baht/USD will have a positive effect on net profits around 2-300 million baht/. year, compared to a profit base of 3-5 billion baht/year or accounted for approximately 5-10% of the projected profit for the year
TASCO : Total Crude is imported in USD, with imported Crude producing almost all of the asphalt for export, with Crude accounting for 85-90% of the cost of production. Every baht depreciation by 1 baht/USD will have a positive effect on net profit of approximately 33 million baht/year, accounting for approximately 2% of our full-year earnings forecast.
STPI : There is approximately 60 MUSD in US dollar deposits. Since STPI’s main business is steel structure production and module assembly, every baht depreciation of 1 baht/USD will have a positive effect on net profit of approximately 30 million baht.
BJCHI: BJCHI has assets in US Dollars of approximately 50 MUSD because BJCHI’s main business is the manufacture of steel structures and module assemblies for foreign clients in the Oil & Gas business which requires working capital in USD currency. Net profit of about 50 million baht
VNG earns from exporting : Selling domestically, the proportion is 80:20, with the depreciation of the baht every 1 THB/USD will result in an increase in net profit by 48 million baht, accounting for 3.2% of the 2022 earnings forecast.
2. Agriculture-Food Group This group has export status. therefore benefiting from the direction of the baht’s continued depreciation Which is weaker than the 2022 baht assumption that the research department has set at 32 baht / USD. by the direction of the current baht Will positively affect the outlook for the 2022 net profit of the agricultural-food group to increase by 12.0% from the present (or about 3.9 billion baht) to 36 billion baht.
3. Electronic components group This group has export status. Because of the Thai parts segment, the revenue ratio is approximately 70-100% in US dollars, while the cost ratio is approximately 50% in US dollars. therefore benefiting from the direction of the baht’s continued depreciation The current baht value is higher than the 2022 baht assumption that the research department has set at 32 baht / USD. If the assumption of the baht is increased to 34.5 baht / USD This will positively affect the outlook for the 2022 net profit of the parts group to increase by 12.6% from the present (or approximately 1.9 billion baht) to 17.8 billion baht.
4. Energy group The energy sector has two companies with functional currency in dollars that will not be affected by the change in the baht, namely BANPU and PTTEP. Other companies in the energy sector (such as PTT, TOP, PTTGC, IRPC, etc.) will record a loss. from the exchange rate if the baht depreciates Because there are still debts in dollars. But the effects of AP and AR are also involved. while the profitability section will not affect much Because both revenue and cost legs are dollar links, most of the two legs are not affected in terms of profitability much.
In addition, there is a group of stocks that are disadvantaged, namely the power plant group. Because most companies If the baht depreciates, it will be affected in terms of borrowing in foreign currencies. In the event that the baht depreciates, the baht must be converted into a foreign currency in an increased proportion. and recorded as loss on exchange rate Examples of companies that lose from the weak baht are BGRIM, GULF, EGCO, BCPG, GUNKUL, TPIPP, etc.