Why Thailand's Stock Market Profits Look Good on Paper But Hide a Struggling Economy

The Thailand Stock Exchange has published its 2025 full-year earnings report, revealing a troubling divergence: while aggregate net profit jumped 20.5% to reach ฿1.1 trillion, core operating profit fell 9.5% and total sales contracted 7.2%. According to the Stock Exchange of Thailand, the apparent paradox stems from a surge in one-time windfalls—mergers, asset sales, and financial restructuring gains—masking a deteriorating business environment for most listed firms.

Why This Matters

• Revenue contraction is real: Sales across SET-listed companies dropped ฿1.3 trillion year-on-year, reflecting weak domestic demand and falling commodity prices.

• Profit growth is artificial: The headline 20% net profit increase is driven by extraordinary gains from a handful of large conglomerates, not operational strength.

• Dividend bonanza: Despite weak fundamentals, according to SET data, 581 companies paid out a record ฿651 billion in dividends, up nearly 10% from 2024.

• 2026 outlook is cautious: Over 80% of surveyed CEOs expect modest revenue growth of 0–10%, constrained by household debt and geopolitical uncertainty.

The Reality Behind the Numbers

When analysts strip out the extraordinary gains booked by companies like Gulf Energy Development (GULF), Siam Cement Group (SCC), and Thai Airways International (THAI), the picture darkens considerably. Core profit—the metric that reflects actual business performance—declined nearly 10% across the Thailand Stock Exchange of Thailand (SET) universe, while firms listed on the smaller Market for Alternative Investment (mai) saw core profit tumble 13.9% and net profit crater 64.3%.

The mai collapse was particularly stark: a combination of impairment charges on investment portfolios and rising sales and administrative expenses wiped out earnings for many smaller firms, even as revenue dipped only 2.7%. The divergence between the two markets underscores a bifurcated recovery, with mega-cap firms leveraging M&A activity to inflate bottom lines while mid-tier companies struggle with the basics.

What Drove the Slowdown

Multiple headwinds converged in 2025 to choke off revenue growth. Oil prices fell sharply through the first three quarters, hammering energy and petrochemical sectors—historically the largest contributors to SET revenue. The Thailand central bank cut its policy rate four times during the year, compressing net interest margins for banks and financial institutions. Meanwhile, the Thai baht appreciated against major currencies, eroding export competitiveness and translating foreign earnings into fewer baht.

Domestic consumption remained anemic. Household debt sits above 90% of GDP—at over 90% of GDP, Thai household debt ranks among the highest in Southeast Asia, limiting consumer spending power and constraining economic growth. Tourism, while recovering to near pre-pandemic levels in absolute numbers, delivered diminishing marginal returns to GDP growth. Export momentum also faded as global trade slowed and China's economy sputtered.

The M&A Mirage

The standout feature of 2025 earnings was the role of mergers, acquisitions, and corporate restructuring in inflating net profit. GULF's consolidation of Intuch Holdings (INTUCH) alone contributed tens of billions of baht in one-time gains, propelling GULF to the number two spot in absolute net profit rankings, just behind perennial leader PTT.

Other large-cap firms followed suit, booking profits from asset disposals, joint venture formations, and balance sheet restructuring. These gains are non-recurring by nature, meaning they will not repeat in 2026 unless companies execute fresh deals. The reliance on extraordinary items to hit earnings targets raises questions about the sustainability of profit growth and the health of underlying operations.

Impact on Residents and Investors

For expatriates and long-term residents holding Thai equities or mutual funds, the 2025 results carry mixed implications. On one hand, the record dividend payout of ฿651 billion represents a windfall for income-focused investors, with the energy, banking, and telecommunications sectors accounting for nearly 58% of total distributions. Dividend yields on blue-chip SET constituents remain attractive relative to regional peers, particularly as the Thailand debt-to-equity ratio improved to 1.28 times from 1.34 times the prior year.

On the other hand, the 7% sales contraction and 9.5% core profit decline signal that Thai corporations are losing pricing power and market share. For retirees or foreign professionals relying on portfolio income, the key question is whether firms can maintain dividend levels in 2026 if revenue pressures persist. Many companies paid out more than 100% of core earnings in 2025, tapping reserves or one-time gains to fund distributions—a pattern that cannot continue indefinitely.

The mai market collapse is particularly concerning for growth-oriented investors. The 64% net profit plunge and widespread impairment charges suggest that smaller companies lack the scale and financial flexibility to weather the current downturn. Residents considering direct equity investments should exercise heightened caution with mid-cap names absent a clear catalyst for revenue recovery.

Sector Performance: Winners and Losers

Not all industries suffered equally. The food and beverage sector posted strong gains, buoyed by rising chicken and palm oil prices that lifted margins for agribusiness conglomerates. Healthcare operators, including hospital chains, benefited from sustained medical tourism demand and an aging domestic population. Technology and telecommunications firms continued their pivot toward digital infrastructure, with Cloud computing, e-commerce, and fintech subsidiaries driving top-line growth.

Conversely, the energy sector—traditionally the SET's heavyweight—saw revenue crumble as crude prices spent much of the year below $80 per barrel. Petrochemical producers faced a double squeeze: lower feedstock prices reduced revenue, while overcapacity in China flooded regional markets with cheap imports. The banking sector struggled with compressed margins and sluggish loan growth, as consumers prioritized debt repayment over new borrowing.

Looking Ahead to 2026

Thailand corporate leaders are bracing for another year of modest growth. More than 80% of surveyed CEOs expect revenue to expand between 0% and 10%—a forecast that assumes no major external shocks. The primary growth drivers cited are government infrastructure spending, which is set to accelerate as delayed 2025 projects come online, and continued investment in automation and digitalization to offset rising labor costs.

However, executives remain wary of significant downside risks. Household debt continues to act as a structural brake on consumption. Geopolitical tensions—from U.S. tariff policies to Middle East instability—threaten to disrupt supply chains and spike energy costs. If crude oil prices exceed $120 per barrel for six consecutive months, the Thailand Treasury Department estimates the economy could slip into a technical recession.

Analysts covering the Thailand Stock Exchange have set a year-end 2026 target for the SET Index around 1,400 points, implying roughly 10% upside from current levels. That forecast hinges on interest rates remaining at 1.0%, a gradual tourism recovery to 35.5 million arrivals, and stable commodity prices. Any breakdown in those assumptions could see the index trade sideways or lower.

Sectors to Watch

For residents seeking portfolio opportunities in 2026, analysts recommend allocating a larger-than-benchmark portion of portfolios to retail, food and beverage, banking, tourism, healthcare, and technology. Within tech, subsectors tied to AI, cybersecurity, fintech, and electric vehicle charging infrastructure are seen as particularly resilient. The Thailand Board of Investment has granted tax incentives to foreign data center operators, which should bolster the digital ecosystem.

Conversely, energy and petrochemicals remain vulnerable to commodity price swings and Chinese oversupply. Real estate developers face headwinds from elevated household debt and tighter mortgage underwriting standards. The mai market will likely see further consolidation as weaker firms either merge or delist.

The Dividend Question

The Thailand Securities and Exchange Commission has flagged concerns over unsustainable payout ratios. While the record ฿651 billion in 2025 dividends pleased shareholders, roughly one-third of that total came from one-time gains rather than recurring earnings. If M&A activity slows and core profits continue to decline, companies will face pressure to cut distributions or tap equity to fund payouts—both negative scenarios for income-focused residents.

Investors should scrutinize payout ratios and free cash flow coverage when evaluating dividend sustainability. Firms in the energy and utilities sector, which contributed the largest share of 2025 dividends, are particularly exposed if oil prices remain depressed. Conversely, technology and telecom companies with strong recurring revenue streams may offer more reliable income prospects.

Final Takeaway

The Thailand Stock Exchange's 2025 performance tells two stories. On the surface, a 20% net profit surge and record dividends suggest corporate health. Beneath, a 7% sales decline and 10% core profit drop reveal an economy struggling with weak demand, commodity headwinds, and structural imbalances. For residents and expats, the lesson is clear: headline profit growth driven by one-time deals is not a substitute for operational strength. As 2026 unfolds, watch for signs that companies can reverse the sales decline and restore pricing power—absent that, even generous dividends may prove fleeting.