Retail Boom in Thailand: How 400 Baht Salaries Are Putting a Pinch on Profits

politicsRaise the minimum wage to 400 bahtIt is quite clear that on October 1, 2024, the government will not be able to act in time. The impact must be seen from two perspectives, both from the side of the majority of workers who still cannot increase their spending power. (except for the group who were given ten thousand baht) As for entrepreneurs who rely on human labor to carry on their business, they may be relieved in terms of costs that may remain the same for a little longer .

However, if an incident does not occur that changes the administrative power of the country in such a way as to reverse the situation. Sooner or later, income-raising policies are likely to materialize.Of course, policy outcomes remain to be followed to see whether the increase in purchasing power will outpace the increase in inflation. As for business owners themselves, will they need to adjust their cost-cutting strategies by reducing labor and freeing up remaining people to make every drop more worthwhile than before?

Securities Company (Securities Company) Asia Plus It was revealed that due to the government’s policy of increasing the minimum wage to 400 baht, it is believed that this will have some impact on the cost of doing business. But if we consider only the titles studied by the research department It is expected to obtain resultsAnnual incidence approximately 1.7% – 11.5% This is not considered much because every company has a small percentage of employees who receive the minimum wage. Respect to all employees

The research department initially analyzed that the worst-case scenario is for wages to increase to 400 baht starting from October 2024. This will affect profits of commercial stocks studied by Asia Plus Securities by between 0.5% and 3.2% in 2024, while in 2025 it will be. Approximately 1.7% – 11.5%

CPALL It is likely to have the largest impact of approximately 11.5% (including the impact of all businesses, i.e. the retail or 7-Eleven business and the wholesale and retail or CPAXTT which operates both Makro and Lotus department stores) due to the number of employees they are distributed nationwide more than other companies, followed by CPAXTT, which expects earnings in 2025 to be impacted by approximately 6 ,9%.

However, if there was an actual announcement of a salary increase The impact of the salary increase is expected to be less than expected. Because it can be partially offset by 2 problems

1. The government sector is likely to have measures in place to reduce the impact that will occur on entrepreneurs. which is an issue that needs to be followed up on

2. Wage increase Help consumers, especially vulnerable groups, to have higher purchasing power. which has a positive effect on the purchase of various products. Sales of shares of the trading group are also increasing. Sales are expected to grow more than increases in labor costs.

However, the problem of increasing wages remainspostponedleave indefinitelyIt’s a good result.per share in each trading group Especially stocks that are expected to be hit harder than other stocks like CPALL.

Forinvestment consultancyKeeping Weight on Business Stocks ‘Better than Market’ While profits in the third quarter of 2024 are expected to slow compared to the second quarter of 2024, they will continue to grow compared to the same period last year (year over year).

And earnings are expected to return to growth in 4Q 2024 on expected rising sales and margins. Because he will be supported by the economic situation which should improve towards the end of the year, positive results from the season. and measures to stimulate public sector spending such as “digital wallets”

Therefore, overall, in 2024, the normal profits of the commercial stocks studied by the research department are expected to still grow 17% year-on-year, higher than the expected market growth of 13%.

Choosing actions CPALL and BJC are the best choices. of the group because in the short term it is expected that the price will outperform the market (Outperform) starting from the earnings of the 3rd quarter of 2024 which should be stronger than those of the group. From same-store sales growth (SSSG), which is still strong, it is estimated that CPALL will have a profit in 2024 that is expected to grow more strongly at 29% year-over-year, while BJC will have a profit in 2025 that will grow strongly at 26% on an annual basis.