Page 20 - One Report Thai Final_ENG_2021

Tycoons Worldwide Group (Thailand) Plc.

The steel industry still has to be closely monitored vis-a-vis global steel price,
which has been steadily rising since the end of 2020, Due to the Ukraine-Russia
war in February 2022 which affected the export of steel products between the two
countries, resulting in a further increase in short-term steel prices. However, in
the long term, how the war develops and how the outcome of the war will affects
steel prices, which is a variable to be aware of.

3. Potential competitors

As the AEC, ASEAN Economic Community, has been setup by ASEAN on
January 1 , 2016, China, the U.S., Japan and other countries has launched new
st
ASEAN strategies, pledging that they will strengthen business relationship with
the AEC, and the investments in ASEAN has attracted more global attentions.
Therefore, the impact of China’s capacity-offshoring policy on Thailand and
ASEAN’s steel industry deserves watching.

2.2 Financial risks

1. Exchange rate and interest rate

TYCN’s raw materials are billet and wire rod. In 2019, 65% of them were from TY
in THB, while 35% were imported in USD. However, 28% of products were
exported mostly in USD and minorly in EUR. Therefore, the imports and exports
in USD can balance each other, resulting in a natural hedge. TYCN can also avoid
the foreign exchange risk by signing forward contracts to offset the net foreign
exchange position. TYCN group uses USD loans for working capital and long term
investment. Therefore, the interest rate should be carefully watched. TYCN can
choose interest rate exchange or repay USD loans by using THB loans to avoid
risks of foreign exchange rate and interest rate.

TYCN engages in derivatives trading based on actual need and according to
TYCN’s「Procedures of engagement in derivatives trading」. In addition to hedge
tools for foreign exchange rate and interest rate, TYCN also take actions such as:

(1) Set up foreign exchange rate monitor system to get real time information on
exchange rate.

(2) Get reports and hedge strategies about foreign exchange market from banks on
a daily basis.

(3) Check the net foreign exchange position on a daily basis and adjust it according
to the updated information.

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