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Improved prospects in store

The Commerce sector outlook is better than forecast earlier this year and opportunities next year are expected to be about the same.

As the companies in the sector are trading firms and marketers of consumer goods, including many essentials, they expect demand to grow despite the poor economy. Most of them have posted satisfactory performances after adjusting to economic changes by expanding product ranges and finding market niches.

Among the 12 firms in the sector ranked for Total Shareholder Return, ICC International, a Saha Group affiliate that makes a wide range of goods including cosmetics and apparel, led with a one-year return of 134.1%, followed by O.C.C. Plc, another cosmetics and apparel distributor, at 81.7%. Minor Corp (-11.8%) and Loxley Plc (-81.6%) trailed the field.

Retailers such as Big C, Makro and Diana department store reported declines in sales and weaker profit growth in the third quarter because of heavy competition and price-cutting. However, their performance over the first nine months was up on the same period of the previous year.

"There is an opportunity despite the recession. It depends on how well we make products to meet changes in buyer preferences," said Boonkiet Chokwatana, the president of ICC International Plc.

He said his company's fashion apparel sales had recovered to pre-recession levels. Production cost increases had been kept lower than sales growth. Maintaining net profit had been given priority over sales growth.

"If we focus on market growth, we have to spend heavily to achieve it. That would be too risky because we are not confident about consumer purchasing power," he said.

Mr Boonkiet said he expected sales revenue to grow by 8% this year, down from 10% projected earlier. The same 8% growth rate was likely to be maintained next year.

Suchada Ithijarukul, president of Siam Makro Plc, said the cash-and carry wholesaler had adjusted its focus early this year to better meet the needs of its core customers _ caterers and small retailers.

As a result, Makro's performance had been satisfactory, she said, with sales to these customers growing by 17%, particularly sales of consumer items such as dry snacks and confectionery which increased by almost 9% year-on-year in the third quarter.

However, Suttathip Peerasub of Yuanta Securities said investor interest in the sector remained muted because of low trading liquidity. He believed discount stores such as Big C had better investment potential than Makro because it sold consumer products at low prices.

- Sukanya Jitpleecheep