The performance of Thai corporations should gradually improve this year as the domestic economy recovers and inflationary pressures ease, according to analysts at Fitch Ratings' 2023 Thailand Corporate Credit Outlook & Asean ESG conference in Bangkok recently.
Lertchai Kochareonrattanakul, senior director of corporates at Fitch Ratings (Thailand), said in his presentation that a pick-up in domestic demand and recovery in travel-related activity should support continued earnings growth for Fitch-rated corporates in the food and beverage, telecom, aviation and hospitality sectors.
Earnings should improve for the power and utility sectors, which were hit hard by high fuel costs in 2022, as cost pressures ease.
However, petrochemical companies' recovery pace will be challenged by weak demand from the deterioration of the global economy, high feedstock and energy costs, and new supply that may reduce petrochemical margins.
Fitch expects earnings for oil and gas companies to moderate from a high base along with an expected softening in oil and gas prices, although earnings should remain relatively high. Stronger cash flow from operations with lower working-capital requirements should provide a cushion for oil, gas and petrochemical companies' leverage metrics.
Nneka Chike-Obi, head of APAC ESG ratings and research for sustainable at Fitch, said in her presentation on Asean ESG (environmental, social and governance) market trends and developments that Thailand and the Asean region face a number of challenges related to sustainability, particularly the need to decarbonise the economy while maintaining economic stability and ensuring the protection of livelihoods.
Sustainable finance, and the sustainable bond market in particular, is a key tool in addressing the climate financing gap. In addition, investors are increasingly engaged with companies on a growing range of ESG issues, including the environment, gender diversity, and supply-chain management.
A roundtable discussion addressed the ESG trends and challenges faced by Thai corporates. The panel comprised: Wanlapa Sophiskhaunkhant, chief financial officer of Global Green Chemicals; Man Juttijudata, deputy secretary general of the Government Pension Fund; and Aaron Wei, director for ESG and sustainable finance, business relationship management of Fitch Ratings Hong Kong.
The conference brought together more than 100 corporate treasurers and bankers, insurers, asset managers and regulatory officials.
