Fitch says Thai corporate earnings will continue to recover in 2022

Fitch Ratings expects that the earnings of Thai-rated corporates will continue to recover in 2022, although there will be a key negative risk of rising fuel costs.

The retail, aviation and hospitality sectors could suffer due to weak demand from the Kovid-19 epidemic.

Credit ratings are mostly stable, although some corporate ratings have a negative outlook due to high leverage from investment, Fitch said in a webinar of outlook for Thai corporates held today.

Mr Lerchai Kochareonratnakul, senior director of corporate ratings at Fitch Ratings Thailand, said Fitch-rated Thai corporate issuers’ earnings should improve in 2022, supported by a recovery in economic activity and a gradual recovery from the epidemic. However, the hospitality, aviation and retail sectors, which were most affected by the Covid-19 case and the resumption of travel bans in 2021, will take longer to fully recover. High energy consumption also makes headwinds for revenue growth in the non-oil and gas sector in 2022, especially for state-owned power utilities and small power producers, which account for a high share of sales from industrial users.

Rated Thai corporate issuers have demonstrated prudent cash flow management with cautious capital expenditures and low dividend payments during epidemics. Nonetheless, acquisitions have increased to capture opportunities to expand and facilitate low-carbon conversion plans. These are mainly loan financing, which has resulted in high financial leverage for some issuers. Fitch expects better operating cash flow from recovering earnings in 2022 to help absorb higher investment costs and dividend payments.

Negative rating actions decreased in 2021, with some positive rating actions in 1H21. However, the negative outlook still has much higher Thai corporate ratings than before the epidemic. Issuers’ negative outlook in the oil, gas and petrochemical sectors is largely due to large investments, while negative outlooks from food retail issuers often reflect high financial gains from acquisitions and poor earnings amid epidemic-related disruptions.

A replay of today’s webinar will be available soon at

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