The baht strengthened 7.4 per cent against the US dollar from the start of the year to April 18, making it the second-strongest performer among Asian currencies, after the Indonesian rupiah.

A report from CLSA Asia-Pacific Markets assesses the effect of the baht's appreciation on Thai companies, dividing them into four groups: direct beneficiaries, indirect beneficiaries, neutrals and losers.

Companies that are direct beneficiaries of a strong baht have costs and financial liabilities in foreign currency, and revenues in baht.

Indirect beneficiaries are those exposed to domestic demand, as a stronger currency implies greater purchasing power.

Beneficiaries are therefore typically companies in domestically orientated sectors, such as contractors, telecom firms and property firms.

Sectors negatively impacted generally have US dollar revenues and baht costs.

These include the transport and mining sectors as well as oil and gas traders.

 "Around 15 per cent of construction costs are dollar-denominated steel costs while revenues are denominated in baht. The impact is magnified on the bottom line due to construction being a low-margin business," CLSA said.

Of the three main contractors, Ch Karnchang, Italian-Thai Development and Sino-Thai Engineering and Construction, the latter is the greatest beneficiary of a stronger currency as it is entirely focused on domestic construction.

A 10-per-cent reduction in steel costs would raise earnings by about 20 per cent, CLSA estimated.

The telecoms sector will also benefit as equipment costs are denominated in US dollars and a stronger baht lowers the cost.

"Many companies also have dollar debt and will report foreign exchange gains in the first quarter. A stronger currency also reduces the cost of imported goods and services, raising the purchasing power of subscribers," CLSA said.

True Corp is expected to gain the most due to its dollar-denominated debts and Advanced Info Service will see fewer benefits given that it has no dollar debt and low capital-intensity requirements, CLSA added.

The stronger baht will put downward pressure on interest rates, which will benefit property companies.

This in turn underpins increases in domestic demand and consumer confidence, a key element in large-ticket purchases.

To some degree a stronger baht will lower material costs, such as steel, where prices are quoted in dollars. Most company debt is in baht, however, so there will be few foreign exchange gains.

Commercial banks are considered mild, indirect beneficiaries due to reduced pressure on interest rates, coupled with higher domestic demand and consumer confidence.

However, this may be offset by the negative impact on the manufacturing sector, which consumes half of the Kingdom's bank loans.

As domestic purchasing power will rise, the consumer sector is an indirect beneficiary.

With costs, such as oil, linked to the dollar and therefore falling in relative terms, disposable incomes will rise. Companies that import goods and services will also benefit from lower costs.

Consumer companies with dollar debt will benefit and are due to report foreign exchange gains in the first quarter.

The media will also benefit indirectly. Although revenues and costs are baht denominated, a stronger currency will increase domestic purchasing power and likely to lead to higher advertising revenue, CLSA said.

Yet, a stronger currency is broadly neutral for power operators.

Companies will report foreign exchange gains on net foreign liabilities but capital expenditures denominated in dollars will also fall.

However, logistics companies will lose out with increased costs for manufacturers and exporters.

Costs such as wages are a key factor in determining where an international company will locate a factory and if costs rise significantly, companies will consider moving to countries like Vietnam, Indonesia and China.

A stronger baht will also lead to a margin squeeze for shipping companies, airlines and airports, whose revenues are largely dollar denominated while costs are in baht.

Meanwhile, oil and gas companies will be an operational loser as their revenues are predominantly dollar-linked from internationally traded and priced fuel. Capital expenditures are also linked to the dollar.

PTT Exploration and Production is the most dollar-based business in the sector.

The mining industry's sales and many costs are also dollar-denominated and stand to be hit by the rising value of the baht, CLSA said.