Mitigating Geopolitical Risks for Continued Operations
CP Axtra Public Company Limited (SET: CPAXT) has effectively addressed concerns regarding its Cambodian operations amidst rising tensions at the Thai-Cambodian border. The company confirmed that its business continues as usual in Cambodia, a testament to its proactive risk mitigation strategies. To minimize reliance on cross-border logistics, which have been subject to regional uncertainties and restrictions, CPAXT has significantly increased its domestic sourcing of goods, with over 60 percent of products sold in Cambodia now originating within the country. Furthermore, for all imported goods, the company has transitioned primarily to more stable sea freight routes, ensuring robust operational stability and uninterrupted supply chain continuity. While a proactive safety measure required the temporary closure of ten CPAXT branches in five Thai border provinces since July 24, the company is actively monitoring the situation and will adjust its response as needed. It is important to note that Cambodia’s contribution to CPAXT’s total revenue is minimal, at approximately 0.8 percent, indicating that these regional disruptions will have a limited financial impact on the group, reinforcing the company’s overall resilience in the face of external challenges.
Proactive Leadership Transition and Financial Resilience
Beyond navigating geopolitical issues, CPAXT has also demonstrated remarkable foresight in managing its internal leadership transition. The company recently informed the Stock Exchange of Thailand of the upcoming retirement of two key executives, effective August 1: Mrs. Saowaluck Thithapant, Director/Group Chief Wholesales Business Officer and Group CFO, and Ms. Thanyamas Worachart, Group Chief Shared Service Officer. This transition, while significant, is not expected to cause any disruption, as the company confirmed that a comprehensive succession plan for these vital leadership positions was prepared well in advance. A successor for Ms. Thanyamas, who is in charge of MAKRO’s financial operations, has already been selected, with the management affirming that the handover of responsibilities will be smooth and effective. In terms of performance, Same Store Sales Growth (SSSG) for July 1–20, 2024, showed a modest but positive improvement compared to the second quarter’s average, remaining slightly positive at less than 1 percent for both its B2B and B2C segments. This steady performance, coupled with the company’s proactive approach to management changes, underscores its fundamental financial resilience and operational stability.
Maintaining an Optimistic Outlook for Growth
Given CPAXT’s successful navigation of both regional operational challenges and its internal leadership transition, analysts maintain an optimistic outlook for the company’s future. Kasikorn Securities, for example, has reaffirmed its “Buy” rating on CPAXT, with a target price of THB 29.20 per share, a reflection of strong confidence in the company’s strategic management. The seamless management transition ensures that day-to-day operations and the overall business strategy will continue without interruption, preserving stakeholder confidence and providing a solid foundation for future growth. Furthermore, the minimal financial exposure to the Cambodian market means that the company’s overall performance will not be significantly impacted by the recent tensions. CPAXT’s ability to effectively mitigate risks by shifting to domestic sourcing and sea freight for imports, combined with its proactive approach to executive succession, showcases a level of corporate maturity and strategic foresight that positions it well for continued stability and growth as it moves forward.
