The government's decision to legalise commercial hemp growing in Thailand is likely to lift stock prices for sectors standing to gain from hemp oil and extracts derived from the crop in fields such as cosmetics, food and beverage, and pharmaceuticals, market analysts say.
According to KTBST Securities Research, stocks related to hemp plantation have high potential for future growth.
Applications for commercial hemp plantations were opened for the first time on Jan 29.
"We see legalisation as a good sign for companies entering this business. We expect the government will allow companies to put hemp in more types of products," the research stated.
Hemp oil and extracts were approved for cosmetics, effective from Jan 12.
Businesses likely to benefit from the legalisation can be divided into two groups: plantation and refinery companies; and manufacturers of beverages, food supplements and cosmetics that use hemp extracts as an ingredient.
Listed plantation and refinery businesses should expect stock upticks as they are likely to be the first group to receive licences to grow hemp or extract the plant. KTBST's picks include DOD Biotech (DOD) and R&B Food Supply (RBF).
Manufacturers of beverages, food supplements and cosmetics that plan to use hemp extracts in their products are also expected to benefit.
The equities in this group include beverage stocks such as Carabao Group (CBG), Osotspa (OSP), Sappe (SAPPE), Malee Group (MALEE) and Ichitan Group (ICHI); dietary supplement stocks such as RS (RS), JKN Global Media (JKN) and MEGA Lifesciences (MEGA); and cosmetics stocks such as Do Day Dream (DDD) and Beauty Community (BEAUTY).
"There is a high possibility the extracts will be used in beverages," an analyst at KTBST said.
According to DBS Vickers Securities, MEGA is among the stocks that should benefit from the easing of restrictions on hemp and cannabis usage in cosmetics, food, beverage and pharmaceutical products. MEGA's core strength is a strong brand presence as it is among market leaders that have penetrated the Indochina market, with high potential for future growth, said DBS Vickers.
The company's product line also focuses on disease prevention, treatment and anti-ageing or nutraceutical products that are expected to be in great demand as global society ages.