During Fitch Ratings’ 2024 Bangkok briefing on the global financial market and Thailand’s corporate credit outlook, it was highlighted that various sectors in Thailand are seeing improved earnings performance, although high levels of leverage persist due to substantial investments.
Obboon Thirachit, the Senior Director of Corporate Ratings at Fitch Ratings (Thailand), emphasized in his presentation that a gradual recovery in tourism and renewed government expenditures are expected to bolster ongoing earnings growth for Fitch-rated companies in the aviation, hospitality, and building material industries.
Meanwhile, lower fuel expenses are anticipated to support earnings in the power and utility sectors, the significant investments in renewables could exacerbate the already elevated leverage within utilities.
Fitch projects a moderation in earnings for oil and gas firms from a robust base, attributed to an anticipated softening in oil and gas prices, despite the outlook for sustained strong earnings. However, challenges such as weakened demand stemming from global economic deterioration and increased supply are impeding earnings progress in the petrochemical sector.
Thai corporate entities under Fitch’s coverage demonstrated prudent cash flow management during the Covid-19 pandemic, characterized by careful investment strategies and reduced dividend distributions. Nonetheless, there has been a rise in investments and acquisitions, particularly among oil and gas companies, in response to the long-term shifts driven by climate transitions and advancements in business and technology. Fitch anticipates that this trend will maintain heightened financial leverage levels, limiting opportunities for rating upgrades.
