As Thailand navigates the complexities of potential new trade agreements with the United States, following the precedent set by Vietnam’s recent deal, InnovestX Research has provided a detailed analysis of how various Thai stock groups and individual companies could be impacted. The report highlights specific stocks that stand to benefit or suffer under two distinct trade scenarios, offering a crucial guide for investors.
Scenario 1: Impact of Thailand Eliminating All US Import Tariffs
Should Thailand follow Vietnam’s lead and agree to eliminate import tariffs on US goods, InnovestX anticipates a mixed impact across different industrial sectors, with some facing increased competition and others benefiting from reduced costs.
Negative Impact Stocks:
- Automotive and Parts Sector: This sector, including companies like AH, SAT, and STANLY, is expected to face a significant negative impact. Thai producers will encounter higher price competition from lower-cost US vehicles and components, as Thailand currently imposes high tariffs on these US imports (e.g., 80% on automobiles, 20–80% on parts). The primary customers for these companies are Japanese car manufacturers based in Thailand, whose competitiveness and market share could diminish.
- Agriculture Sector: Companies involved in agriculture are expected to be most severely affected. Currently, Thailand levies high import duties on US agricultural products such as corn, soybeans, fruits, and processed products, and even prohibits fresh pork imports. Eliminating these tariffs would force Thai farmers and producers to compete with lower-cost US agricultural goods.
- Beverage Sector (Specific Stocks): CBG, OSP, and SNNP from the beverage group could face increased competition from new US products entering the market.
Positive Impact Stocks:
- Beverage Sector (Specific Stock): HTC within the beverage group is expected to benefit from a reduction in imported concentrate costs.
- Machinery Sector: This sector stands to gain significantly, as the elimination of import tariffs would allow Thailand to access more modern and advanced technologies from the US, thereby improving production efficiency.
- Energy and Petrochemicals Sector: Companies in this sector would benefit from reduced import costs for fuels and raw materials such as LNG, propane, and ethane. This would enhance their competitiveness in export markets. GPSC, BGRIM, and GULF from the power plant group are specifically noted for a slight positive impact due to lower US LNG import prices.
- Food Sector (General): Companies like CPF, BTG, GFPT, and TFG are expected to see a positive impact from reduced import costs for raw materials like corn and soybean meal, which are crucial for animal feed. However, the impact on pork imports remains neutral/negative, pending any changes to regulations on red meat additives.
Neutral/Mixed Impact Stocks:
- Industrial Estates Sector: AMATA, WHA, and FTREIT are assessed to have a relatively limited impact on overall land demand. While electronics and electrical appliance companies using Thailand as a production base for US exports might face negative effects from lower-tariff US imports and regional competition, the influx of US goods could also positively impact warehouse usage.
Scenario 2: Impact of Thailand Facing 20% US Export Tariffs
InnovestX also evaluated the impact if Thailand were to face a 20% export tariff on goods shipped to the US, similar to Vietnam’s agreement.
Negative Impact Stocks:
- Food Sector: TU is expected to see a negative impact on profit due to reduced sales and profit margins, as its export revenue to the US accounts for 39% of total revenue (18% from Thai production). This projected slowdown in sales volumes is more significant than the company’s expectation of a 10% export tariff in 2H2068. ITC, with 60% of its revenue tied to US exports, is also anticipated to be negatively affected.
- Industrial Estates Sector: AMATA, WHA, and FTREIT could face negative impacts if the 20% tariff is higher than anticipated, potentially leading to a reduction in investment scale for clients exporting to the US. However, if this tariff rate is consistent with the region, Thailand’s competitiveness might be maintained, leading to clearer investment decisions.
Neutral Sentiment / Negative Profit Impact Stocks:
- Electronics Sector: Companies like DELTA (35% of revenue from US), HANA (43%), and KCE (13%) are projected to experience a neutral sentiment impact if the tariff is the same as Vietnam’s, as their competitiveness relative to others would remain unchanged. However, there would be a negative impact on profit due to increased tariff payments from a previous base tariff of approximately 10%.
Neutral Impact Stocks:
- Food Sector: CPF (1% of revenue from US), BTG, GFPT, and TFG (no US exports) are not expected to be significantly impacted.
- Beverage Sector: CBG and OSP, with less than 1% of revenue from US exports, are expected to have a limited impact.
