Rising border tensions weigh on investor sentiment
Mongkol Puangpetra, executive vice-president for strategy research at Daol, issued a cautious investment outlook, highlighting specific downside risks for companies with significant exposure to Cambodia.
The firm singled out Samart Aviation Solutions (SAV) and Carabao Group (CBG) as the most vulnerable in this climate.
SAV, which derives all of its revenue from its air traffic control concessions in Cambodia (valid through 2051), is viewed as highly sensitive to any deterioration in Thai-Cambodian relations. Daol recommends postponing investments in SAV until the situation stabilises, citing heightened geopolitical risk.
Meanwhile, CBG, a major energy drinks producer, earns roughly 13% of its revenue from Cambodia, where it commands a market share of more than 50%. The company has a three-month inventory buffer and has shifted to sea freight to mitigate risk, though shipments now take 3-4 days longer than land transport.
Despite the tension, Cambodian distributors report stable sales and consumption levels. However, should exports halt between July and December, CBG could face a 340-million-baht loss in net profit, equal to around 10% of its earnings.
The brokerage believes this downside is largely priced in, and maintains its full-year profit forecast for CBG at 3.3 billion baht. Meanwhile, CBG's new factory in Cambodia is still slated to open on Dec 1.
Other beverage firms such as Osotspa (OSP) have only limited exposure, with Cambodian exports accounting for just 1% of revenue.
According to Daol, retail operators have reported minimal risk from border unrest. Siam Global House (GLOBAL), which operates two stores in Cambodia through a 55%-owned joint venture, earns less than 2% of its revenue from the Cambodian market, while CP Axtra (CPAXT) operates three stores in Phnom Penh and Siem Reap, contributing less than 1% of revenue.
CP All, the local operator of 7-Eleven, has 112 stores in Cambodia, but the revenue impact remains less than 1%, noted the brokerage.
For the retail oil sector, PTT Oil and Retail (OR), which has a significant presence with 186 petrol stations and 71 convenience stores in Cambodia, has reported no operational disruptions so far.
Likewise, the food sector reported minimal impact, with Thai Union Group (TU) reporting just 0.01% of revenue from Cambodian exports, and GFPT Plc, which relies on Cambodian labour for 20% of its workforce through third-party agencies, reporting no repatriation requests or labour disruptions.
According to Daol, Thai construction firms appear insulated from immediate fallout. CH Karnchang (CK) has no direct Cambodian labour, while Stecon Group (STECON) and SEAFCO Plc report 5% and fewer than 10% of its workforce as being Cambodian, respectively. All these firms have confirmed that their operations are functioning normally at present.
However, the border conflict may discourage travellers, with the brokerage warning that escalating tensions could negatively affect inbound tourism. Several countries have issued travel advisories, cautioning against travel to areas near the border.
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