Fitch Ratings expects the earnings of rated corporates in Thailand to continue recovering in 2022, although surging energy costs will be the key downside risk.

The retail, aviation and hospitality sectors are likely to remain affected by weak demand stemming from the Covid-19 pandemic.

Credit ratings are mostly steady, although there are Negative Outlooks on some corporate ratings due to high leverage from investments, said Fitch in a webinar on the outlook for Thailand corporates that was held today.

The earnings of Fitch-rated Thai corporate issuers should continue to improve in 2022, supported by a recovery in economic activity and a gradual reopening of the country from the pandemic, said Mr Lertchai Kochareonrattanakul, Senior Director of Corporate Ratings at Fitch Ratings Thailand. However, the hospitality, aviation and retail sectors, which were most affected by the resurgence of Covid-19 cases and travel restrictions in 2021, will take longer to fully recover. High energy costs also create headwinds for earnings growth for non-oil and gas sectors in 2022, particularly for state-owned power utilities and small power producers, which derive a high portion of sales from industrial users.

Rated Thai corporate issuers have demonstrated prudent cash flow management during the pandemic, with cautious capital expenditure and lower dividend payouts. Nevertheless, acquisitions have increased to capture opportunities to expand and facilitate low-carbon transition plans. These have mainly been debt funded, resulting in high financial leverage at some issuers. Fitch expects better operating cash flow from the earnings recovery to help absorb higher investment spending and dividend payouts in 2022.

Negative rating actions declined in 2021, with some positive rating actions in 1H21. However, there are still more Thai corporate ratings on Negative Outlook than prior to the pandemic. The Negative Outlooks on issuers in the oil, gas and petrochemical sectors are mostly due to large investments, while the Negative Outlooks on food retail issuers mostly reflect high financial leverage from acquisitions and weaker earnings amid pandemic-related disruption.

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

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