Political upheaval in Myanmar could hamper the business of many Thai companies operating there, including the risk of sanctions against the country, an analyst said Monday.
A coup could hurt the country’s economy or even result in sanctions, an analyst at MayBank Kim Eng Securities warned. “There are many Thai entities that have been increasing their business presence” in Myanmar and were therefore exposed, said head of institutional research Maria Lapiz.
Sanctions could set back Myanmar’s national income and consumption, and the growth of its market. According to MayBank Kim Eng, Thai food and beverages businesses with exposure to the political vulnerability include Mega Lifesciences (MEGA), Osotspa (OSP), Carabao Group (CBG), and Berli jucker (BJC).
Each of those companies is affected by “Myanmar being a reasonably sizable market for Thailand’s exports,” the analyst pointed out. Osotspa and Carabao Group take around 10 per cent of their sales revenue from the Myanmar market.
Vivek Dhawan, Mega’s chief executive, told Thai Enquirer that there is no effect at the moment. “Our partners and supplies are from Asia. We do not see disruption unless borders are closed, and a full revolution happens on the streets. So, we need to wait and see.”
Myanmar accounts for 70 per cent of the Maxxcare business, a sub-segment brand of Mega, which in turn is 58 per cent of group sales and 28 per cent of pre-tax profit.
Mega’s stock responded to the unpleasant news by dropping 3.70 per cent to 39 baht per share by midday, with a trading value of 283 million baht. CBG declined 4.12 per cent to 139.50 baht per share, accounting for over 1.4 billion baht in transactions.
Another risk will be posed to the real estate firm Amata Corporation (AMATA). The 809-hectare Yangon Amata Smart and Eco City project is still in its initial stage to gather core investors in planned power plants.
The smart city project is likely to be delayed, said Lapiz, warning that “investors will hesitate to commit to long term projects if Myanmar turns to be subject to sanctions.”
AMATA also fell 3.53 per cent to 16.40 baht per share, with a trading value of 303.4 million baht during mid-day.