The Nasdaq and Thai tech stocks have been hammered this year as rising interest rates, slowing economic growth and soaring inflation form a perfect storm of negative catalysts. But are they in the same cycle? The answer is yes and no—yes for hardware stocks (ELTRON) and no for software stocks. It’s difficult for ELTRON to withstand the global semiconductor downturn. However, Thai software stocks should hold up better, as they are in the “early adoption stage” vs. the maturity stage for US market.
Thai tech in the early adoption stage
Amid this challenging backdrop of macro uncertainty, US investors have shifted their focus from revenue growth to margins for US software firms. However, for Thai software firms, demand remains solid, proven by strong revenue growth in 1Q22—up 25-100% YoY for DITTO, YGG, SABUY and IIG. We see big opportunities in Thailand for the tech firms under coverage. Less than 10% of companies in Thailand have deployed CRM systems in their organizations. Most ERP systems in Thailand are on-premises. About 95% of all transactions in Thailand are still of the traditional paper variety. We believe that their growth cycles lag behind the US market by at least 3-5 years.