Thailand’s retail sector is poised for a brighter outlook in the coming quarters, driven by expectations of supportive policies from the newly formed government. According to CLSA Securities, a clearer political landscape is setting the stage for a series of consumption-boosting initiatives intended to revive consumer spending and confidence.
Government Policy: The Key Catalyst
With the new government prioritizing economic recovery, CLSA anticipates a rollout of measures designed to stimulate local demand and ease household pressures. While specifics are pending, initiatives are likely to include co-payment schemes to supplement consumer spending, reductions in living expenses to boost disposable income, and emergency loans or debt moratoriums to enhance household liquidity. These actions are set to drive a broad-based consumption boost, lifting retailers across various segments
Although previous co-payment programs primarily targeted small, independent businesses, CLSA expects larger listed retailers such as CP All (SET: CPALL) and CP Axtra (SET: CPAXT) to benefit indirectly. As household purchasing power rises, spending on everyday items should increase, feeding through to these major players. The report also highlights B2B operators like Makro, which weathered the COVID-19 downturn better than peers due to continued demand from small business clients. This resilience could once again be on display as liquidity improves sector-wide.
Lessons from Past Schemes
Thailand has a track record of targeted consumption-boosting policies, most notably the 2020 co-payment scheme and the 2021 “Shop for the Nation” tax deduction program. CLSA notes that while these measures provided only moderate support in a tough economic environment, they nonetheless offered critical short-term lift to the sector. Major retailers recorded an uptick in same-store-sales growth (SSSG), demonstrating policy effectiveness in spurring demand—even during widespread economic slowdowns and lockdowns.
Preferred Stocks: CPALL and CPAXT
Looking forward, CLSA sees several tailwinds for the Thai retail sector. The combination of bottoming SSSG trends, a likely recovery in tourist arrivals, potential interest rate cuts, and expected fresh stimulus measures position Thailand’s consumer sector for improved performance over the next 1-2 quarters.
CPALL and CPAXT remain CLSA’s preferred picks. Both companies stand to benefit from lagging valuations, potential surges in tourist-driven consumption, and any new government efforts to drive local demand.
