The Chairman of the Capital Market Opportunity Center (CMOC), Ms. Sopawadee Lertmanaschai, announced "The SET has analyzed those business sectors showing an upwards trend in line with expanding domestic consumption and found that those showing significant improvement in operational performance included Commerce, Communication, Household Goods, and the Entertainment and Recreation sectors. These are all examples of 'domestic consumption' industries, as their income is mainly derived from the sale of goods and services in the domestic market."
These sectors have demonstrated a recovery in line with the growth of domestic spending. The more people spend, the better these businesses become. Furthermore, there are many factors that are favorably affecting increased domestic spending, such as low interest rates, economic growth rate forecasts from the Fiscal Policy Office adjusted upwards from 3.6% to 4.0-4.25%, plus improved indicators of consumer confidence as seen in the rise of the Consumer Confidence Index from 72.7 in January 2002 to 87.7 in July 2002 - a rise of 20.63%.
"These four sectors had improved significantly, by 312% relative to the last quarter, and by 50% quarter-on-quarter. This has brought about much better returns to shareholders. The return on equity in Q2 stood at 4.09%, an improvement on the 2.92% of Q2 2001.
Sectors that outperformed are: the Entertainment & Recreation Sector, with a 205% increase in profits quarter-on-quarter, plus Commerce with 114%, and Household Goods with an increase of 110%. In terms of sales growth, the Entertainment and Recreation Sector was still the leader with a 19.33% increase in sales, followed by Communications, Household Goods, and Commerce with 14.03%, 7.05% and 4.6% sales growth respectively," Ms. Sopawadee said.
The CMOC Chairman also added that: "For the remainder of the year, if the Thai economy continues to be driven by domestic spending similar to the first half, this 'domestic consumption' group should continue to grow.
These domestic consumption sectors have not only gained from improved domestic consumption, but also from their own efficiency. These companies invested wisely to create good returns, which can be seen from the rate of return on assets in Q2 2002. These were significantly higher than at the same period last year. Their capital structure also appeared more appropriate with lower debt-to-equity (D/E) ratios. At the end of Q2 2002, the average D/E ratio of this group was only 1.87 times, a decrease from 1.97 during the same period last year.
