Equity Analysis /

Thailand (Bualuang): Consumer - 3-R strategy

  • Re-start business

  • Re-opening Thailand

  • Rebound in laggard

Bualuang Securities
20 September 2021

We recommend three ideal calls in 4Q21. First, for re-starting business after easing lockdown, CRC, M and AU are the best plays on bottom-line turnaround. Second, for re-opening country, AOT and AWC are leadership plays due to flagships in Thai tourism sector: also bullish times for BH and BDMS on medical tourism demand recovery. Finally, it is good timing to call ResProp sector on ‘rebound in laggard’ before YE21: we pick SPALI and LPN.

Re-start business

Business in Thailand has re-started since eased lockdown in September 2021. In the first three-months after lockdown, retail and recreation businesses have proven recovery leaders before: mobility index in Thailand rebounded from a bottom-out at 45-55% below the baseline (5-week period) in 2Q20 lockdown to peak at 11% above the baseline in July 2020: 25-35% below the baseline in August’s 2021 lockdown. Most importantly, economic cycles in Thailand tend to jump from recession to the early growth cycle. Our study illustrates high positive correlations between Thai GDP growth and core profit growth in top-three sectors comprising restaurant (82% positive correlation), consumer staple (79%), and consumer discretionary (78%). Business re-start will push CRC, M and AU to turn from core losses in 3Q21 to profits in 4Q21.