Escalating geopolitical tensions between Thailand and Cambodia have led to the closure of key border checkpoints and halting bilateral trade. An analysis by Kiatnakin Phatra Securities provides insights into the potential economic and sectoral impacts for Thailand.
Limited Macroeconomic Impact
The overall impact on Thailand’s economy is expected to be limited. Exports to Cambodia constitute only around 3% of Thailand’s total exports, and Cambodia contributes a mere 0.01% of Thailand’s total imports. Key export products affected include petroleum oil, beverages, sugar, and fertilizers, which have a high proportion of shipments to Cambodia. However, disruptions may be contained as these goods could be delivered via alternative trade channels, despite border trade accounting for 70% of exports to Cambodia.
Sector-Specific Vulnerabilities
Certain Thai companies, particularly in the energy and consumer goods sectors, face more direct exposure:
• CBG (Carabao Group): This energy drink manufacturer generates approximately 15% of revenue from sales in Cambodia, with an estimated 20% bottom-line exposure. CBG has already switched to sea transport following border closures, and while its distributor usually covers freight costs, CBG may need to share additional expenses. Some second-quarter shipments were delayed to the third quarter, and increased risk to Thai product exports remains an “overhang.”
• OR (PTT Oil and Retail Business): OR has the highest direct exposure, generating Bt1.2 billion EBITDA from Cambodia (7% of its total EBITDA). OR distributes refined products through both commercial channels and its retail PTT petrol station network in Cambodia. The analysis indicates that finding alternative markets for these products in the short term would be challenging. Despite this, Kiatnakin Phatra Securities maintains a Neutral rating on OR, noting that its valuation appears to have already discounted negative incidents like geopolitical risk.
• TOP (Thai Oil): TOP sells 11% of its products to the CLMV (Cambodia, Laos, Myanmar, Vietnam) market, with a significant 80% of this going to Cambodia via lorries. Switching these exports from Cambodia to Singapore would result in a slight impact on its realised Gross Refinery Margin (GRM) by US$0.1/bbl, as exporting to Singapore yields a lower margin. SPRC, another refining company, has no exposure to Cambodia.
Retail and Telecommunications
The retail sector is anticipated to experience only a small impact, estimated to affect around 1–4% of retail sales. While 10–30% of products are imported from Thailand, the majority of SKUs are locally sourced within Cambodia. Retailers are exploring alternative import destinations such as Laos and Vietnam to mitigate risks. Interestingly, some Cambodian stores reported positive same-store sales in June despite the border closures.
In the telecommunications sector, 14 Thai firms, including Advanced Info Service (ADVANC) and True Corporation (TRUE), have internet connections with Cambodia. The potential impact on their service revenues is expected to be insignificant, as these links represent a small portion of their business. However, a prolonged conflict could hinder Thailand’s efforts to establish landline internet connections across the Indochina region, potentially affecting its ambition as a regional data centre hub.
In summary, while the overall macroeconomic impact on Thailand is projected to be limited, specific companies and sectors face direct, albeit potentially manageable, disruptions from the ongoing tensions with Cambodia.
