Somboon Advance Technology Public Company Limited

The government is in discussions with the automotive industry to finalise the excise tax rate for electric vehicles, with a decision expected within September. A rate of around 30% may be levied on fully imported EVs, aimed at encouraging manufacturers to set up production bases in Thailand and expand the domestic supply chain. These details are part of a plan that the National Electric Vehicle Policy Committee, or EV Board, agreed on in principle last week, which proposes a three-tier excise tax on EVs: fully imported cars face the highest rate, cars produced in Thailand face the lowest rate, and cars assembled domestically but still relying on some imported parts face the middle rate. Dao Securities views this as positive for the Thai automotive industry and the automotive sector over the medium to long term, given the opportunity to expand the share of auto parts sales to EV makers that set up production bases in Thailand. Currently, the revenue share from EV parts remains low, with AH at around 5%, while SAT still has a very small share. For the automotive sector, the brokerage maintains an Underweight investment weighting, while for SAT it recommends a "hold" rating with a target price of 16.50 baht.

Mr. Yeap Su Chuan, Executive Chairman of Aapico Hitech Public Company Limited, or AH, said the government's increase in import taxes on electric vehicles is aimed at encouraging operators to set up production bases in Thailand, which will benefit domestic auto parts manufacturers. AH is ready to produce parts for EV cars immediately, because many key components such as body structures, wheels and seats remain similar to those of conventional combustion-engine cars. However, receiving orders from new car models takes at least 12 months before parts delivery can begin. For the outlook in the second half of 2026, the business in Thailand has received new product orders worth a total of about 100 million baht, similar to the business in Portugal, which has begun producing parts under new orders. Meanwhile, the car dealership business in Malaysia remains a key growth driver, supported by strong Proton sales from new EV models. Yuanta Securities (Thailand) Company Limited said the Electric Vehicle Policy Committee approved in principle a restructuring of the excise tax on electric vehicles, divided into three tiers based on the level of investment, production and use of local content in Thailand: the lowest tax rate for domestic manufacturers using a high proportion of Thai parts, a middle rate for importers who enter to test the market and have plans to produce in Thailand, and the highest rate for importers selling without plans to invest in the country. It views this as a positive factor for Thai auto parts makers including AH, SAT and STANLY over the medium to long term, and expects AH's operating results in the second half of 2026 to recover continuously both half-on-half and year-on-year, driven by its cost-control strategy for selling and administrative expenses, and expects orders from new car models to come in the third quarter of 2026. It therefore raised its 2026 full-year profit forecast by 13% to 841 million baht, up 14% year-on-year, and its 2027 forecast by 15% to 908 million baht, up 8% year-on-year. It also upgraded its recommendation to "Buy" and raised its 2027 base valuation from 16.80 baht to 19.20 baht.

Yuanta Securities maintains a "Buy" recommendation on SAT, or Somboon Advance Technology Public Company Limited, keeping its 2027 fundamental value at 18.80 baht, based on a 5-year average PER of 9.50 times. This follows the company's expectation that 2026 profit will grow 8% from the previous year to 792 million baht. Although revenue is expected to slow in line with the Federation of Thai Industries' car production target of 1.45 million units, down 0.4% from the previous year, it is supported by cost control and increased capacity utilization, rising from around 65% in the second quarter of 2026 to more than 70-75% in the second half of the year, driven by the recovery of the agricultural machinery business after Kubota relaxed credit conditions. Meanwhile, the company is in the process of securing new orders under LOIs worth around 300-400 million baht, which will gradually contribute to revenue in 2027-2028. It is also expected to pay an annual dividend of 1.65 baht per share, representing a yield of approximately 10.2%.

The government is considering restructuring the excise tax for electric vehicles, with a plan to impose higher tax rates on imported EVs that have no production base in Thailand. Meanwhile, manufacturers that set up factories and use domestic production networks will receive more benefits. The proposal is expected to be submitted to the cabinet meeting by September 2026. Auto parts manufacturers have proposed increasing the tax differential between imported EVs and domestically produced EVs to at least 30 to 50 percent, up from the current gap of about 8 percent. Yuanta Securities Thailand views this as a positive factor for auto parts stocks, especially SAT, which is the top pick in the sector, and maintains a buy recommendation with a target price of 18.80 baht per share.

Yuanta Securities recommends a defensive strategy for auto stocks, selecting SAT as the standout pick with an expected dividend yield of 10% at the current price. The research team notes that the Federation of Thai Industries reported June vehicle production at 120,391 units, down 8% year-on-year, with production for exports falling 20%, while domestic sales rose 17% driven by battery electric vehicles. The production target for 2026 has been revised down to 1.45 million units, a 3% decline from the previous year. The research team expects combined normalized profit for AH, SAT, and STANLY in the second quarter of 2026 to total 633 million baht, down 35% quarter-on-quarter but flat year-on-year. Although revenue is projected to drop 7% in line with a 10% decline in vehicle production, cost reductions are helping to support a recovery in profit margins. The outlook for the second half of 2026 anticipates a recovery from a low base and new model launches, with the group's 2026 profit forecast at 3.578 billion baht, up 6% year-on-year. However, risks remain from heavy reliance on internal combustion engine vehicles. The research team maintains an underweight rating on the auto parts sector, as the recovery is constrained by global economic uncertainty, energy cost risks, and the structural transition from internal combustion engines to electric vehicles, from which Thai parts makers are still seeing limited benefits.

Asia Plus Securities research reports that four major Chinese technology and automotive companies are preparing to expand investments in Thailand worth a combined 70 billion baht this year, focusing on two future industries: AI and data center technology, where Innolight Technology and Eoptolink Technology will expand production bases for optical transceivers to support AI and cloud data center growth, and the electric vehicle industry, where Xiaomi Corporation is considering setting up an EV production base and research and development center in Thailand, while Changan Automobile is moving ahead with expanding production capacity from 100,000 to 200,000 units per year by 2030, along with establishing a regional headquarters and an EV R&D center. Stocks expected to benefit include industrial estate groups such as AMATA, WHA, ROJNA, and PIN; automotive groups such as AH, SAT, and STANLY; parts groups such as HANA, DELTA, KCE, and SMT; and energy groups such as GULF.

Four major technology and automotive companies from China are preparing to expand their investments in Thailand, totaling 70 billion baht within this year, focusing on the electric vehicle industry and AI and data center technology, according to a report by Asia Plus Securities. In the EV sector, Xiaomi Corporation is considering expanding its EV production base and establishing a research and development center in Thailand, while Changan Automobile is moving forward with expanding production capacity from 100,000 to 200,000 units per year by 2030, along with setting up a regional headquarters and an EV R&D center. In the AI and data center group, Innolight Technology is preparing to build a third factory in Saraburi province to expand production of optical modules, and Eoptolink Technology is preparing to expand production capacity at its factories in Chonburi and Rayong. Stocks expected to benefit include industrial estate groups such as Amata, WHA, Rojana, and Pin, automotive groups such as AAPICO Hitech, Somboon Advance Technology, and Stanley Electric, component groups such as Hana Microelectronics, Delta Electronics, KCE Electronics, and Stars Microelectronics, and energy groups such as Gulf Energy Development.