The Thai cabinet has approved the measure to collect global minimum corporate tax (GMT) from January 2025, according to the statement made by the finance ministry. The kingdom is expected to implement a GMT of 15% on multinational enterprises from the beginning of next year.
Bualuang Securities stated that the introduction of a Global Minimum Corporate Tax (GMT) at 15% for multinational enterprises with annual revenues exceeding 750 million euros is anticipated to reverberate through the financial landscape of Thai Union Group Public Company Limited (SET: TU). With the company’s average tax rate at approximately 8% in 2024, projections indicate a potential dip in profits by about 7% in 2025 as they align with the new tax norms.
Thai Union’s subsidiary, i-Tail Corporation Public Company Limited (SET: ITC), which currently operates at an average tax rate of 4% annually, is expected to meet the revenue threshold by 2029. This alignment with the GMT could impact ITC’s profits by an estimated 11% in the same year.
A source from Thai Union Group told “Kaohoon” that the company has been cognizant of these forthcoming tax measures for some time and is currently evaluating their implications on its financial standings.
Regarding the performance outlook for Q4 2024, TU anticipates a robust financial showing, likely bolstering the group’s collective revenue growth for the entire year by approximately 3-4% compared to the previous year’s total sales revenue of 137,212 million baht, with a forecasted gross profit margin of 18.5-19%, hitting their targeted goals.
Conversely, a source from ITC shared with “Kaohoon” that the Global Minimum Tax at 15% is relatively new territory for the company, as they have yet to meet the revenue criteria of 750 million euros annually. ITC plans to closely monitor developments and potential policy shifts that might arise from this tax framework, adopting a neutral stance until clarity is established.
In terms of performance trajectory for Q4 2024, ITC projects to see significant growth compared to previous quarters and the same period last year, citing increased sales orders during peak season across various markets. Consequently, ITC is optimistic about achieving annual sales growth of 15-17% from the previous year, while setting a heightened gross profit margin target of 26-28%, driven by the ongoing expansion in the pet food markets across America, Europe, and Asia.
Additionally, Bualuang Securities recommended “Hold” on TU at a target price of THB16.50 per share, while maintaining a “Buy” recommendation on ITC at THB29.00 per share.
