Limited companies send signals of "lack of funds" with high interest accruals.

It may spread. Found 9 companies rushing to find a solution.

Businesses in Thailand are facing a new problem called high interest rates. This means that they will have to pay more when borrowing money. This also means that selling bonds is difficult for them. They are like special documents that people can buy to help businesses. For this reason, many people are not buying bonds at this time. This is a big problem for businesses in Thailand. And they need to find a way to deal with it quickly.

Some companies are having trouble having enough money to pay back what they are owed. They are asking for help from their boss and the big company where they live. Those who invest in loans are less confident. Therefore, some companies are unable to obtain new loans to replace the old loans they owe.

“Thairath Money” collects listed companies that signal they may face liquidity problems in early 2024 amid high interest rates. It was found that the total debt value was approximately more than 18 billion baht, some of which had to postpone repayment of bond debt. or request financial assistance from company directors and the parent company

Companies that request a postponement of repayment of bond debt, such as
  1. Global Consumer Public Company Limited or GLOCON shares – would like to extend the maturity period of the bonds for another 2 years, total value 300 million baht.
  2. Italian-Thai Development Public Company Limited or ITD shares – requests a waiver of maintaining the debt-to-equity ratio (D/E Ratio) and extending the bond redemption date for another 2 years for all 5 bonds. Set total value 14 billion baht
  3. JKN Global Group Public Company Limited or JKN Shares – requests a resolution to extend the maturity date of bonds without being considered an event of default, with a total value of 3.2 billion baht.
Companies that request financial assistance from connected persons/company directors such as
  1. E for L Aim Public Company Limited or EFORL shares – use the money to repay loans to financial institution creditors. To maintain credit with financial institutions This is the main source of credit for the company’s commercial transactions. Because the said transaction is a management of limited liquidity, the total value is 83.75 million baht.
  2. GFPT Public Company Limited or GFPT shares – to be used as investment in business expansion. and is the company’s working capital with a total value of 90 million baht.
  3. Asphere Innovations Public Company Limited or AS shares – extends the loan period with Mr. Pramote Sudjitphon and Sabai Technology Public Company Limited or SABUY shares, which are connected persons. to maintain liquidity and is the company’s working capital with a total value of 80 million baht.

Companies that extend the time to repay principal, such as

  1. EMC Public Company Limited or EMC shares – extends the short-term loan period for another 6 months from the due date of the loan contract with Rayong Wire Industries Public Company Limited or RWI shares. which has more than 10% of the same shareholder with a total value of 30 million baht
  2. Zen-X Public Company Limited or SENX shares – Extend the loan period from Sena Development Public Company Limited or SENA shares, which holds 49.72% of shares, total value 470 million baht, in order to maintain liquidity. and is the working capital of the company
  3. Wow Factor Public Company Limited or W shares – would like to extend the repayment of short-term loans to One to One Contacts Public Company Limited or OTO shares for another 6 months from the original date, January 25, 2024, total value 100 million baht

The main reason is high interest rates.

Nattaphon Khamthakruea, Director of Securities Analysis Department Yuanta Securities (Thailand) Co., Ltd. revealed to “Thairath Money” that the main issues causing this situation are This is a result of the policy interest rate increase. The interest gradually Increased from the end of 2022 by approximately 40 bps or 0.4%, with a significant impact on listed company profits. This is because every 10 bps or 0.1% increase in interest will pull down the overall profits of listed companies by approximately 2.5%.

However, the increase in the policy interest rate has an impact on companies with high debt levels. For example, some companies prepare cash flow to repay debt at the original interest rate. When the interest rates rose, they were unable to pay. And it is enough to issue a new set of bonds to replace the old ones (Rollover) with a high market interest rate. It can’t be done.
In addition, it is seen that investors do not have confidence in the bond market. and did not dare to invest Especially companies whose financial status is not good and have a lot of debt, resulting in higher financial costs. And if the rollover is not possible, in the next period the company is unlikely to have problems. may encounter problems. However, it is believed that the situation will be improved. If the policy interest rate adjusts downward In addition, stakeholders must build confidence in the bond market.

Interest rates don’t go down..risk spreads Advice on looking at financial status – cash flow

Nattaphon Khamthakruea, Director of Securities Analysis Department Yuanta Securities (Thailand) Company Limited

Said that the overall picture of the amount of debt that must be rolled over in the 1st quarter of 2024 is large. If the first quarter has passed, It is seen that there will be fewer companies with problems. In terms of listed companies that we monitor may be at risk. It was almost completely visible.

However, if interest rates continue to remain high like this Although the total amount of debt to be rolled over tends to decrease, there is an opportunity for more and more problematic companies to emerge.
For factors to consider investing To avoid the risk of encountering such a company, Nattapon said he advises investors to mainly look at the financial position. Especially the debt-to-equity ratio (D/E), if it is at a high level, there is a risk. along with considering cash flow from operations whether it is positive enough to pay back the debt or not If cash flow is negative then it is worrying that there could be a problem.
It is also recommended to consider the overall performance. or profit/loss statement If there is continuous loss It will cause the equity to decrease. and resulting in the debt-to-equity ratio increasing. If you touch the trigger in Rollover, there is a chance that problems will arise again.
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