Kiatnakin Phatra Securities (KKPS) has revised Thailand’s economic outlook downwards, adjusting GDP growth projections for 2025 and 2026 from the previous 2.3% and 2.4% to 1.7% and 2.0%, respectively. This downgrade assumes the continuation of a sustainable 10% U.S. tariff on global imports, excluding China, following a 90-day suspension period.
The primary impact on Thailand is expected through its export sector, which is projected to contribute between a 0.35 and 0.6 percentage point reduction in 2025 GDP growth. Moreover, the country’s structurally weak private consumption and investment, combined with a deceleration in certain production sectors, are anticipated to further exacerbate the economic downturn, contributing an additional decline of 0.25 to 0.6 percentage points to the GDP contraction. This is consistent with the analyst’s anticipated “growth shocks” of a macro/event-driven market impacted by global events.
Current projections suggest limited downside risk to KKPS’ top-down 2025 earnings per share (EPS) estimate of 77 baht, as the scenario of growth shocks has already been accounted for. This includes adopting a baseline EPS of 75 baht, reflecting economic stagnation since 2015, and applying a 20% recession-equivalent discount to normalized EPS trends.
For further adjustments, attention will be paid to first-quarter earnings outcomes, but the current EPS estimate of 77 baht will be maintained in the interim. Significant changes to market indices are more likely to be driven by shifts in risk premiums or multiple contractions rather than earnings variations.
KKPS’ sectoral analysis on the bottom-up EPS reveals variable earnings impacts, ranging from minimal in defensive sectors like Hospitals and Telecommunications to reductions as substantial as 30% in more vulnerable areas such as Materials and Industrial Estates.
Overall, market earnings are anticipated to face a 13% downside, predicated on stocks under the analyst’s coverage, which account for 70% of the SET Index market capitalization. This downturn would translate into a bottom-up 2025 EPS forecast drop from 96 baht to 83 baht. The disparity between top-down and bottom-up EPS primarily stems from the Energy and Materials sectors, which collectively account for a significant 25% of the market capitalization.
Given these updated macroeconomic assumptions, KKPS maintains an ‘Overweight’ stance on defensive sectors such as Hospitals and Telecoms, which exhibit resilience to lower growth sensitivity. Conversely, banks are adjusted to market weight due to the potential for accelerated economic decline to prompt more aggressive policy rate reductions.
Sectors such as Industrial Estates and Materials are downgraded to ‘Underweight’ due to persistent trade uncertainties and a weakening global economic environment, while Energy, Electronics, Transport, Property, and Utilities continue to be underweighted in the analyst’s portfolio.
