← 返回

2026.09.22 | TB | Materials | Thailand Paint & TOA

原标题：Thailand Paint & Coatings Market & TOA Paint – Former Senior Executive at TOA Paint (Thailand) Public Co Ltd

#materials

Third Bridge · 2026-09-22

Client-led • 25 Aug 2026

Companies: TOA TH, AKZA NL, 4612 JP

Expert Former Senior Executive at TOA Paint (Thailand) Public Co Ltd

Agenda

Introduction

Client [00:02:42]: We're looking at opportunities in Southeast Asia and have come across TOA Paint. Could you share your experience with the company and your view of TOA Paint's current situation? Are you still connected to the company and the industry?

Expert [00:03:59]: I am no longer an employee of the company. I retired three years ago in end of 2022. However, I'm still connected to the industry as I'm having many friends in this industry and I'm in regular communication. I'm regularly tracking how the industry is going and I'm fully up to speed about what's happening.

Questions

[00:04:37] From your point of view, what happened in the incident between TOA and Stark Corporation? How did TOA involve Stark in the beginning? How did the incident appear? How has it developed thereafter? What are the consequences to TOA from the Stark incident?

Expert [00:04:50]: I'm quite familiar with the case, as I know some executives in Stark itself, and I've also followed this case quite closely. I have quite a lot of information about Stark as well.

Stark was formed by the TOA founder's elder son. He formed the company together with a friend of his, Chanin Yensudchai. The elder son, Mr Vonnarat Tangkaravakoon and Chanin Yensudchai decided to establish this business together. What they did is they acquired a company, which was in the stock market already, so they acquired this company. Afterwards, this company acquired a company called Phelps Dodge, which is in the cable industry. In terms of the relationship with TOA, the relationship is the founder's son. TOA itself doesn't own any shares in Stark, but this is the elder son's business. The elder son and all the founders' children are also shareholders and board of director members of TOA itself.

Client [00:06:57]: The elder son, as you said, is Vonnarat?

Expert [00:06:59]: Yes, Khun [sic] Vonnarat, the elder son, together with his business partner, Chanin Yensudchai, decided to do this business.

Client [00:07:13]: (Audio distorts) business transaction of this partnership with the founder of TOA?

Expert [00:07:34]: TOA, as a company itself, has no relationship with Stark. TOA does not own shares in Stark. The two businesses are not related to each other. They are completely different industries. The only relationship is that the elder son was the major shareholder of Stark, and he is also a shareholder in TOA and sits on the board of directors of TOA.

[00:08:11] What was the incident involving Stark back then? Was there a financial issue? Was the elder son prosecuted?

Expert [00:08:24]: The issue with Stark was a false declaration of financials to the stock market and shareholders. This was both numbers on the P&L and numbers in the balance sheet. Basically, the sales value, the cost of goods sold, the gross margin, the OPEX, or some people call SG&A, these were all false numbers on the P&L side, which resulted in false net profit or profitability levels. On the balance sheet, the inventory and accounts receivable and accounts payable were false. I think, from what I have read from the papers and so forth, the idea was to generate a very high-performance-looking company by perception from the financial results in order to maximise the share prices. Over time, Khun Vonnarat, the major shareholder, has diluted his shares in the company.

Client [00:10:04]: The wrongdoing and everything was related to Stark, but I think it also affected TOA's share price very negatively.

Expert [00:10:16]: Yes. Obviously, because Vonnarat carries the surname of Tangkaravakoon and was the elder son, so both the stock market and public sentiment were very negative during that period with TOA. The case of Stark is actually the biggest fraud case in the Thai stock market until now, with very high publicity, which is very negative. From TOA's side, obviously, impacted. I think lots of people raised questions about TOA financial reports because Stark was a completely fraudulent financial report. It raised lots of questions. They got lots of questions. They tried to ring-fence TOA by Vonnarat immediately resigned as the board of directors of TOA Paint. I think the company bought his shares out. Also, the father, Mr Prachak, and his wife, who is the mother of Vonnarat, both have resigned from the board of directors of TOA in order to try to ring-fence TOA and minimise the negative impact.

[00:11:43] Can you share what TOA has been doing to ring-fence itself from the case? From your perspective, which actions were strong enough to gain investor confidence? Is it that TOA cannot be completely separate from Stark?

Expert [00:12:16]: I think they have taken all the possible actions. I don't think there could be any further actions to try to ring-fence the TOA business, so I think they've done as much as possible. However, I think it's difficult to completely whitewash the family. I think it's going to be difficult to completely whitewash. However, over time, people may feel less negative as time passes, but when the name is mentioned, people will probably immediately say, "Oh, this family was the Stark case."

[00:13:20] I'm not so familiar with the Thai market or the Tangkaravakoon family. Can you give a brief overview of the family? Besides TOA, what other businesses do they have? How have they gained popularity in Thailand?

Expert [00:13:41]: Tangkaravakoon, the father, Prachak, started this TOA Paint business about 60 years ago and then became the market leader in paint. In the paint category, they have about 50% market share and the number two player has about 14% share. TOA has very high brand awareness. It's a very popular paint product. You can see TOA signs all over Thailand. It's very well known. It's a very popular product with painters and has a positive image in the eyes of consumers, so very, very popular. Mr Prachak has diversified his portfolio by one angle is moving backwards, integrating. He's done some joint ventures to produce chemicals, which are used in the paint industry. He has also diversified himself in the paint industry. He has several different paint brands. He has acquired some companies. He has some joint ventures with Japanese companies. It's quite a diversified group in the paint industry, paint companies under different legal names under his.

Client [00:15:14]: This family, in addition to the TOA brand, do they also own other brands?

Expert [00:15:21]: Yes, there are other brands. They have a joint venture with Chugoku, a Japanese leading protective marine coatings company. The company is called TOA-Chugoku. They have several different brand names, but doing just different segments in the paint industry. They're quite diversified in the paint industry in Thailand, very well-known. TOA itself is having very high brand recognition, brand awareness, winning top brand awards for 10 consecutive years and so forth. At the moment, as a listed company, they are receiving awards from the stock exchange for being a very high-performing company. The CEO has won several top CEO awards. The company has also been moving very strongly into environmental friendly products, receiving lots of certificates and working closely with leading property developers. Then they also diversified themselves into automotive. They are dealers of several automotive brands like Mercedes-Benz and Suzuki. They have now also started to be active in several Chinese EV brands as well. Quite a diversified group, very strong in raw materials for paint and then also some smaller diversification into automotive.

Client [00:16:58]: The family also has some automotive dealerships across the country and only in Thailand, not in other countries, right?

Expert [00:17:06]: Yes, only in Thailand. The automotive dealership or retailership is only in Thailand. When Stark was doing very well, Mr Prachak was actually among the top 10 richest people in Thailand. He was number eight, I forget what year, but he was in a very high position with the high share prices of Stark. However, he's no longer in the top 10. He's probably now maybe in the top 30. His standing has dropped. In business circles, he may not have such a positive image anymore.

Client [00:17:49]: The family has been very focused on paint, and gradually expanded and diversified into other businesses, right?

Expert [00:17:59]: Yes.

[00:18:01] How do you estimate each industry's value contribution to the family's net worth? For example, how much does TOA Paint contribute to the family's total assets? Is it more than 50%? What's your estimate?

Expert [00:18:18]: For paint, TOA Paint itself, I think it could easily be around 50%. I haven't done a real calculation, but TOA Paint is the crown jewel. It's the company founded by the father. It's the core business which got them to become wealthy. TOA Paint is not just active in Thailand. They have manufacturing in Indonesia, Vietnam, Malaysia, Cambodia, Myanmar, and Laos. They're active in several Southeast Asian countries, except in these countries, they are not that successful. Anyhow, the Thai TOA company is performing well. It could easily be at least around 50% of their assets.

Client [00:19:13]: Only for TOA Paint?

Expert [00:19:17]: Yes, only TOA Paint. I'm just speaking because we have to be careful, as they have several subsidiaries. When I say TOA Paint, it means specifically this particular subsidiary, which is a listed company. In terms of assets, I could imagine that this would be about 50% of the family assets.

[00:19:39] How is the reputation of the family in Thailand? Does it have a good reputation for governance and related issues? Was the Stark case a surprise for the market? Was it not that hard for the market to digest?

Expert [00:20:05]: I think overall, they have a very strong reputation, especially in the paint industry, which is the core business. I think the reputation is very strong and good, except it's been tarnished recently with the Stark case.

Client [00:20:21]: Is it a big surprise in the whole market?

Expert [00:20:31]: I don't frankly think that the Stark situation has impacted the business in the sense of the commercial side of the business, impacted popularity. People are less impacted in decision-making [in terms of] whether to buy TOA or not. I think this area hasn't been impacted. I think it's more impacted in the financial sector, the bankers, or in case in the future, the family decides to list other companies. I think in that area, it's probably more impactful.

Client [00:21:09]: Does the company also have a plan to list other subsidiaries?

Expert [00:21:15]: There were plans to list some additional subsidiaries because TOA, several years back, bought shares of a local gypsum board manufacturing company. Firstly, the stock market in Thailand is not really favourable at the moment. Share prices of most companies are down significantly. There still may be negative sentiment in the stock market for the family.

[00:22:11] Back to the ring-fencing TOA has been doing, I think the company asked the founder and his wife to resign from the board, and it has another independent member sitting as the acting chairman. Can you share why that independent member is not a permanent chairman but an acting chairman? What are your views on TOA not being able to find a permanent chairman since then?

Expert [00:22:52]: No, I think this is the strategy of the founder. I think he does not want to give the chairman a permanent chairman role. I think this is a strategy from him. Basically, this is a family business, which is still very much controlled by the company. Traditionally, what happens on the board of directors is that very often in family companies, the founder is the chairman of the board of directors, which means he has full control of the company. In this case, his second son is the CEO and also sits on the board of directors, so basically, the family controls. They have several independent members of the board of directors. These board of director members are basically well connected to the father, so friends. Arguably, or you could question how independent the independent directors are? When you come back to the question of the chairman of the board of directors, this person has been on the board of directors for quite a long time. He was one of the independent directors, and then he was in this crisis situation, he was asked to take over as an acting chairman. That's what I see.

[00:24:51] In Thailand, are family businesses like TOA Paint very open to external investors? Do they welcome investor insight to improve or enhance governance towards more international standards, for example by adding more truly independent board members?

Expert [00:25:27]: It depends on each family style. Each family style has probably a different approach in doing that. It also depends on, I think, how international the companies are. There are certain Thai family companies which are operating very internationally, meaning having a very, very diversified geographic portfolio internationally. I think, for these companies, they would be interested in having the perception of the public or the shareholders to see that the board of directors is a very international board of directors, is very robust, very high in governance. I think these businesses will probably be more interested in having that kind of situation of the board of directors. Now, in the case of TOA, the founder is very much in control of the business. I don't think he thinks that somebody from the outside really needs to come and help.

[00:26:46] Can you share some names of the families that have been more open to the international standard?

Expert [00:26:58]: The family member, who is very professional, is the third son. The third son, I think it's Nattavuth. He's a director of TOA. Khun Nattavuth is the third son. This third son is very professional. He's probably the most professional out of all the sons of the founder. Khun Nattavuth, he is a shareholder of TOA. However, the founder has basically given businesses to his children. The father is still alive, but he has given businesses to his different children. Khun Jatuphat is the CEO of TOA Paint. I think this business has been given to Khun Jatuphat as like this is your business. However, the family members have shares in it. This is Khun Jatuphat's business. The elder son did not want to be in the paint business, so wanted to do his own, so he did Stark. Khun Nattavuth himself, basically, he runs the TOA, it's called TOA Venture Capital [sic]. TOA Venture Capital is an investment vehicle of the Tangkaravakoon family, but basically, this is given to Khun Nattavuth to manage, and this is your business. This TOA Venture Capital is the shareholder of TOA-Chugoku Paints. That's a joint venture and the joint venture is in Thailand. There's a joint venture in Thailand. There's a joint venture in Myanmar. Then they have a paint company, which is doing automotive refinish paint and abrasives. I think that's called Performance Coatings.

Under this group is all the automotive retail. Under this, they also own a franchise of a retail format from Japan. It's called something like Donki. There are some retail outlets, selling Japanese-style products, so that's also under that umbrella. I've recently seen that he intends to get active into e-sports or something like that. Under Khun Nattavuth is this, but he sits on the board of directors of TOA Paint as well. I think the thing is that when the father has given businesses out to the different family members, TOA Paint is Khun Jatuphat's business. I think Khun Nattavuth will probably not say a lot because he is the older brother. He probably does not say a lot and maybe just makes some comments and so forth. Anyhow, on the business, which I mentioned under the venture capital, there are several businesses under that, but none of them is listed.

Client [00:30:38]: Is it still under the family group or under TOA?

Expert [00:30:46]: It's under the family group. The family have a holding company. I think it's called TOA Holdings. There's a TOA Holdings. Then TOA Holdings is a vehicle. The Chinese used to manage their family businesses through a non-financial vehicle, but this family is smart. They established this financial vehicle called TOA Holdings. TOA Holdings is the one which owns the majority shares in the various TOA companies. To be clear is that TOA Paint is not part of TOA Venture Capital.

Client [00:31:21]: (Audio distorts) has a different line of business and the founder just gives each office to one…

Expert [00:31:35]: Yes, that's how they do it. TOA Paint is the major shareholder of a company called Gypman Tech. Gypman Tech is the company which does gypsum board. TOA is the major shareholder of that because TOA does not just paint, but it's diversified into other building materials.

Client [00:31:59]: That one has an IPO plan, because the current situation is not so favourable with Gypman Tech.

Expert [00:32:07]: Yes.

[00:32:19] Let's get back to the Stark case. I think the case has not been finalised yet. Vonnarat hasn't been released. Do you have any view on the development timeline going forward? Will it be closed in the next 12 months? If not, is it likely to take much longer?

Expert [00:32:45]: There are four persons who are imprisoned now. Vonnarat is imprisoned. Chanin Yensudchai is imprisoned. The CFO, I think his name is Sathar, is imprisoned, and then the HR director is imprisoned. There is a warrant for arrest for the CEO. His name is Prakorn Makjumroen. There is a warrant of arrest, but he's not been arrested yet. I think, in terms of timeline, it will take quite some time. This case will run 1-2 years, and we'll have to see what happens over time.

Client [00:33:25]: Is it still under trial now? Why?

Expert [00:33:28]: Yes, it's in court, but I have understood that the issue is that it has impacted a large number of shareholders. I'm not sure about the number, but it's a very large number. I've understood that they have taken a class action. It's taken up a class action against the owners of the business and the people involved in the business in order to try to recuperate the lost investment. I think the whole situation is quite strong, meaning from the class action approach and so forth, I think this is quite strong. I think it will take time in order to have a closure in the court case.

[00:34:34] It's been nearly four years since the incident. How has stock market sentiment towards the company changed? Is sentiment improving? Are investors still sceptical about its governance?

Expert [00:34:59]: I think it's still an ongoing concern, in terms of business. However, the issue, as you probably are aware, the stock market situation in Thailand is not very good. There are lots of examples of this in the Thai stock market. I think overall, the sentiment in the Thai stock market is not positive overall. Then in terms of the Stark case or the companies related to Stark, it's another impact to be more negative. It's an ongoing concern. As far as I know, it's still in operations and the management team is doing as best as possible to perform.

[00:36:02] Currently, is the second son more like a decision-maker at TOA?

Expert [00:36:13]: Just to be clear, in TOA itself, the second son is the CEO. He's basically responsible for running the company. In the case of TOA itself, as the founder was the one who established the business, he's still very highly involved. In companies which he did not establish himself or he acquired or whatever later on, his involvement level is not that much.

Client [00:36:58]: In the listed company itself, it will be the second son. He may also be influenced by the founder.

Expert [00:37:07]: Yes. To make it very clear, the founder is very much involved in TOA Paint, is one. There's another company which is also a listed company. I think it's called Sherwood. That listed company, he is also very much involved. He's basically very much involved in these two companies. For example, under Khun Nattavuth, TOA Venture, these companies, he's not very much involved. It's Khun Nattavuth who manages the business and the father is not very much involved in that area. He's extremely involved in his own baby. TOA Paint is his baby.

[00:37:58] What is the Sherwood company doing?

Expert [00:38:01]: Sherwood is producing pesticides under the Shell brand. Actually, this company acquired Shell pesticides. It also does some FMCG-related products. In terms of revenue value and so forth, it's quite a small company compared to TOA Paint.

Client [00:38:29]: Is this a diversification from TOA or is this also a separate division of the family?

Expert [00:38:37]: It's separate. The father, I think, acquired it. I probably can imagine it under investment done by TOA Holdings. It's not done by TOA Paint.

[00:39:02] I see another person on TOA's shareholder list, Busatree Wanglee. Is she a director and currently the VP or CEO? Is she part of the management team?

Expert [00:39:47]: TOA Paint, there is an executive committee where the CEO is sitting on the executive committee. There is a CFO. There is a COO. These are, I think, two, I would classify SVP level. These are professionals. Then in that team he has also the sales leadership team, so there are three sales leaders in that structure. The company is more run by the CEO himself. Everything is coming from the CEO himself.

[00:40:42] How do you see current market development for the paint industry in Thailand? Is it highly correlated to the real estate market? Is that why it hasn't performed strongly over the past year? Have you seen a recovery in Thailand's real estate market yet, or is it still a long way off?

Expert [00:41:24]: The Thai market is, in terms of the paint market, the biggest driver for paint usage is repainting, not new build or new use. Repainting is the big driver. The challenge for Thailand is that the economy is not growing very fast. It's low-single-digit. Then, on the other side, consumer purchasing power is not very high. The economy is not doing that great. The majority of people have lots of debt and, therefore, not very high savings. Therefore, in terms of choice of usage of money, when you're in that situation, painting probably is not fundamental. In Thai society, we're not a society where we tend to invite friends to our homes. We mainly meet our friends in restaurants or something outside. That means that keeping your home in very good shape with paint and paint looking very good and all that is not so significant.

From the new consumption, this is in decline because we have excess stock of residential property. There's a lot of stock of residential property, which is unsold, due to the negative situation in Thailand. Also, we had a period where there were lots of Chinese investors buying properties here in Thailand. They have stopped buying because the Chinese economy is not very good. On that side of the business, new usage is quite low. I would say the paint industry is probably growing in line with GDP as a percentage. This is low-single-digit, meaning 1-2% per year. I think that's how the paint industry is developing in Thailand, not very high development.

Client [00:43:40]: Within that low growth of low-single-digit, how much is from repainting and how much is from new consumption?

Expert [00:43:59]: I think repainting probably drives about 85% of the consumption and the balance then is new painting. In the new painting, the key driver at the moment is more on the retail market, meaning we're still building lots of shopping malls and these projects.

Client [00:44:26]: Is the situation still the same as during the past two years, and we won't see any improvement in the short-term?

Expert [00:44:48]: No, I don't see improvement in the short term. When you look at the market share picture, as I mentioned earlier, TOA has 50% market share roughly. The number two brand has 14%. Then the number three has probably 13%. The followers are very closely having similar market shares. I don't see the market share picture changing at all dramatically, meaning TOA will continue to have this 50% market share because they are very powerful, very strong, high brand awareness. They've got the biggest distribution network. They've got a full range of products and each of their product ranges, in terms of the value tiers, is very competitive. I don't see the market share picture changing at all. I don't see a chance of TOA eroding quickly. If you look at the TOA financials, TOA is in very good shape. They're actually growing. In H1 of this year, they've grown faster than GDP. Their gross profitability is very high. Their net profitability is also a very high percentage. A very good P&L model. In terms of growth rates and profitability, it's fantastic. This situation, I don't see changing.

[00:46:25] Do you see TOA having any plans to pursue M&A, given it has about 50% of the market and the remainder is quite fragmented? Does it have any plans to expand its market share?

Expert [00:46:41]: I think it's difficult to grow market share further because there are lots of other brands. I think it's going to be tough to grow market share. I think their strategy is mainly a defensive position, meaning defending or maintaining their market leadership position. What TOA has done in the recent past, in the four or five years, is that it's diversified its business. It's gone into construction chemicals, and it's growing its construction chemical business. It bought 51% shares of a gypsum board company, so maximising the situation there. It's gone into ceramic tiles as well. It's doing diversification of portfolio into industries which are closely related to the same client base, meaning the retailers, the project customers and so forth. The most recent move is that they've become the exclusive importer of a Chinese sanitary ware company, which is called Jomoo.

I think TOA is trying to diversify their portfolio in Thailand to adjacent business. However, in overseas, every single country is a very… They're not in the top three. Very low single-digit market share. I think, on one view, they could significantly improve their international business and move towards eventually becoming number three in each market. That could also give them significant growth as well.

[00:48:41] Is TOA Paint considering M&A in Thailand by acquiring shares from smaller players?

Expert [00:48:49]: No. They've done that in the past. Many years ago, they've acquired a brand called Captain Paint. That was acquired. I don't think they will be going after any more [aquisitions] in the paint area because in paint, it's now they have too many brands in their hands. Having too many brands is too complex. However, I could imagine one day that they will maybe do acquisitions in the building materials space for products which are similar or working in the same space as paint. I don't mean cement or iron or these heavy industries, but industries which are maybe lighter-weight construction materials. I could imagine that maybe in the future, they may do some acquisitions there, because they are sitting on a lot of cash.

[00:50:04] On the international market, what's stopping TOA Paint from growing much stronger? I see low utilisation at its international facilities.

Expert [00:50:18]: I think the biggest issue is the choice of leadership in the countries. I think, to be really successful internationally, they should hire locals. If you're in Indonesia, hire Indonesian. If you're in Vietnam, hire Vietnamese people. In Vietnam, they've been active for 25 years already. It's actually quite a long time. I think the issue is that they do not have the right leaders in the countries and their strategy towards doing well internationally or in each country, they're still trying to figure it out. By the way, they're very successful in Laos. In Laos, they have 50% shares. They're the number one brand in Laos. Laos is, as you know, a very small country. Contribution by value is very low.

Client [00:51:42]: I think Vietnam is the second-biggest market after Thailand or Indonesia?

Expert [00:51:47]: The biggest market in Southeast Asia is Indonesia, followed by Thailand.

Client [00:52:01]: I think in Indonesia, there is very strong competition from local players.

Expert [00:52:07]: Yes. There are very strong local players like Avian. Very strong local players are there. Some of the international brands have done pretty well as well, but strong local competition, correct. Indonesia is the largest market in Southeast Asia for paint, and then it's followed by Thailand. The reason, I think, for Thailand is that the volume per capita of paint is probably in a higher range. Therefore, Thailand comes out as a higher-potential market. Then following Thailand, it would be the Philippines because if you look at population-wise, for sure, Indonesia, close to 300 million, then it would be probably the Philippines population-wise and then Vietnam and then Thailand, in this order. In the paint industry, it's a different order. In the paint industry, number one in Southeast Asia is Indonesia. Indonesia is around a THB 40bn market. Thai market is around THB 24bn. The Philippines is THB 20bn. Actually, Malaysia comes out as number four with around THB 18bn and then Vietnam of THB 15bn. It's quite interesting to see that Vietnam, although the population is number three in Southeast Asia, the paint market is still small, and this is because, I think, the consumption per capita and urbanisation are still quite low.

Client [00:54:24]: I think the spending, or at least the unit price, is not that high.

Expert [00:54:30]: It's not there yet. Vietnam, obviously, is a very high potential market.

Client [00:54:38]: Also very competitive?

Expert [00:54:41]: Sure. I think the paint industry is a very competitive industry by nature.

[00:54:56] What differentiates one brand from another? Who are the biggest players in South Asia?

Expert [00:55:07]: It's very difficult to differentiate brand by brand because I think everybody has developed themselves very well, so it's very, very difficult to differentiate. There are minor things which people play with. In Thailand, TOA is playing very heavily on an environmentally friendly approach. They've got lots of certifications, probably the most certifications for environmentally friendly. This is called the EPG products. I think they're probably the maximum in this area. This is it. Apart from that, there are minor differences which people play on. TOA, in the high-end paint, talk about their products, for exterior use, having the maximum light reflectance products, so less heat coming in. They talk about them having 96% and competition having 94%. The percentage difference is not huge. In terms of the paint industry, very difficult to differentiate from each other. More on playing with regarding network, trade marketing, services, and this kind of area. This is where it's probably the most powerful approach. Obviously, doing lots of connections with the painters. Painters are comfortable and happy to use your products.

Client [00:56:43]: More on the distribution network rather than very significant difference in value proposition.

Expert [00:56:50]: Yes.

[00:56:59] Who are the biggest players in Southeast Asia?

Expert [00:57:05]: Biggest players in Southeast Asia, in the local markets, there's huge dominance by just some local leaders. Thailand is TOA. Indonesia is Avian. Then in the Philippines, it used to be called Pacific Paint. Let me see. What is the current name? Very highly influenced by local players. This is huge. Now, in the Philippines is Boysen. In Vietnam, Dulux seems to be, Dulux or AkzoNobel seem to be the market leader. However, a local company called 4 Oranges is a very close number two. If we look at Cambodia, it's a local player called Urai U-90. In Myanmar, it's a local player called UPG. If you look at it, Southeast Asia, the local players have a very dominant position. Now, if going international, meaning international companies, I would say AkzoNobel has only done well in Vietnam. Apart from that, they haven't done very well. Then it's between Nippon Paint and Jotun.

Client [00:58:52]: Between Nippon and Jotun.

Expert [00:58:55]: Nippon and Jotun. You probably are aware that Nippon Paint is Asia-Pacific's number one paint brand, but this is Asia-Pacific. In Southeast Asia, we could probably say that over in Southeast Asia, Nippon Paint is probably the strongest international brand, followed by Jotun.

Client [00:59:29]: In each separate market then, the retail is mostly local.

Expert [00:59:35]: Yes, it's mostly local. As an example, Indonesia, market leaders Avian Paint, number two is Nippon, and number three is AkzoNobel. Philippines, the market leader is Boysen, followed by Davies, another local brand. Together, these two brands have 75% of the market. Then Jotun is number three. As you see, the local players are very dominant.

Client [01:00:03]: Is it because of the network or based on some favourable…

Expert [01:00:11]: No, I think it's the entrepreneurial spirit of the founders. They have moved aggressively quickly, focused on gaining market share. Obviously, from the retail side is maximising the retail reach as much as possible. I think these are the key factors. The western multinationals in history tend to have been more conservative or focused more on delivering short-term profitability, whereas these local players have focused on gaining share, conquering the market first and then moving to generating profitability afterwards.

[01:01:06] How do you see current Middle East tensions and high oil prices affecting industry profitability overall?

Expert [01:01:18]: Titanium dioxide, one of the key raw materials for paint has increased in cost. Then all the petrochemical solvent-related has increased their cost. The paint manufacturers have been able to pass on the cost to the consumers. There have been price rises and so forth. I am connected with have reported much better profitability. The reason is that, due to the news about oil prices and the oil prices of the market increasing, they've all taken the opportunity to increase prices, whereas they're sitting on old inventory. They've made better margins. They have had higher sales as well because of the price increase, so higher sales value, better gross margins. I think the challenge in Q2 has been a lot about supplies and managing the cost situation. Overall, in H1, the situation has been okay for them, I would say, quite good for the financial performance of the paint companies.

We'll have to see what happens in H2 and how the Middle East, because the thing is that the most important raw material, which impacts the paint industry, is titanium dioxide. What happens to this is crucial. By the way, in Southeast Asia, the majority of titanium dioxide is sourced from China now. China is not impacted by the Middle East war from various sides, even in terms of the freight, ocean liners, there's freedom of movement to Southeast Asia. I think the titanium dioxide players in China have taken advantage of the sentiment that prices are up. There's an issue with supply disruption from the titanium dioxide production in the Middle East. They're probably taking advantage of this sentiment and trying to increase prices and so forth. We'll have to see how the Chinese players play it out in H2. By the way, the solvent-based products, it's not the highest portion of sales. The sales are more in the emulsion and acrylic type of products, so water-based products. The solvent-base is maybe about 20% of the portfolio, so not a really high portion, so not in that sense, that impactful.

[01:04:09] In general, is supply a bigger issue than profitability for paint companies?

Expert [01:04:18]: Exactly. It's about supplies. Supply is only, I think, really relevant if sourcing is done in the Middle East, but as I said, the biggest raw material is actually not produced… They are not using Middle East-sourced material. I don't think, overall, it's too much of an issue. However, I can imagine that all the paint manufacturers, which, the Middle Eastern or these African or Indian paint manufacturers used to rely very much on Middle East sourcing, they maybe switch to China. I can imagine that there could be some issues with supplies coming from China, people fighting for volume.

Client [01:05:17]: It sounds like the consumer is not surprised. They are still okay with the paint company raising prices due to higher input costs.

Expert [01:05:37]: They're okay. The inflation costs are not a very high percentage, so in the single-digit numbers, pushing the market. This has happened already, I think, in H1. We'll have to see how they play the game in H2 on how they manage pricing.

Client [01:05:58]: The growth question will come from overall demand, not in volume, not in price?

Expert [01:06:04]: Yes, exactly.

[01:06:05] Is there anything else you want to share about TOA and the industry? What should I look for over the next 1-2 years for the paint industry as a whole? For context, we are currently looking for an opportunity to invest in listed companies and TOA is one of the targets because of its low valuation and everything. They have good financials and strong numbers, so I want to ask.

Expert [01:07:04]: I'll give you my frank opinion. I can understand TOA being a target, and I can understand that there are multinationals who would be interested in acquiring TOA because you get immediate high market share and a very effective-performing company. However, I think TOA probably will not sell. Then if you look at Thailand, there's another company which is privately held. This is called Beger. They are the number two player. This company is now

[01:09:16] Can you tell me more about Beger?

Expert [01:09:23]: Beger. It's a Thai company. It's a 60-year-old company as well. It's owned by one family now. They're the number two player. As you're doing financial services, maybe I don't know whether you're a PE firm or M&A firm, but I think there are companies in Thailand in which the second generation are not interested in the business. Potentially, the founders want to sell us off because there are a couple of companies which I'm aware that have been acquired by PE firms because the founders' children, the second generation, were not interested. For instance, a company called Microfiber doing glass wool insulation. This was acquired by a Thai PE firm five years back because the owner was no longer interested. I think there are companies like this in Thailand. I think that the second generation does not want to do the business anymore. I think there are.

Client [01:11:23]: Do you have any listed names in mind for us?

Expert [01:11:28]: No, I haven't done any research into this area. I think the first angle, obviously, is you want to target companies which have meaningful revenue. Too small doesn't make sense. It's not interesting. Meaningful revenue. Family business, meaningful revenue, a very good position in the Thai market, and then the owners are old, and the second generation is not interested. I haven't done research on that, but I think there must be people like this around.

Client [01:12:04]: I guess with all the family businesses around.

Expert [01:12:08]: Exactly.