Grim 2024 outlook for small companies: analyst
Small and medium-sized companies may face a conundrum regarding debenture rollover next year, when over 1 trillion-baht worth of debentures are estimated to reach maturity, an analyst says.
When debentures reach the date on which their principal is due and payable, companies must issue new ones in their place. This process is called a rollover or refinance, explains Kavee Chukitkasem, head of research and content at Pi Securities Ltd. on Friday.
Several factors may hinder the rollover of debentures, especially those of small and medium-sized companies with limited funds, he said.
One factor is the slumping global economy shaped by skyrocketing interest rates and geopolitical conflicts.
“Furthermore, if the government were to push the digital wallet scheme next year by issuing government bonds, some 560 billion baht of funds will be pulled from the capital market,” he said.
This would make it difficult for small and medium-sized companies to secure funds for debenture rollover, putting them at risk of bankruptcy, he warned.
The economic stimulus scheme, whose details have yet to be finalised, could cost 560 billion baht if Pheu Thai Party keeps its election promise of giving 10,000 baht to all Thais aged over 16 to spend at local shops.
Kavee urged investors to avoid shares of small and medium-sized companies that have poor cash flow or accumulated debt, in order to minimise the risk caused by the coming debenture rollover.
He also predicted that the first half of next year will be a good time for investors to buy shares of companies with positive records, as the index of the Stock Exchange of Thailand is estimated to fall to 1,200 points by the end of the first half of 2024.
As the global economy improves in the second half of next year, the SET index is expected to rebound to 1,600 and could reach 1,700 by year end, he said.
Industries he recommended for investors in the coming year include healthcare, tourism, service, retail, restaurant, electric vehicle, logistics, large commercial banks and infrastructure.
Kavee estimated that the SET index by the end of this year will close at 1,400 points, following a declining trend in the past two years.
