The 21-year-old closed his round with a long birdie putt for a two-round total of 13-under 131 to stay ahead of Australian Scott Hend (65), American David Lipsky (68) and Felipe Aguilar (67) of Chile at the $1.5 million European and Asian Tour event.
"The weather is really hot today. The two birdies in my last three holes were nice to end off my round. That cools me up a bit," Panuphol told reporters at the Laguna National course.
"I really wanted to make that long putt to take the outright lead (on the last). I am happy I did it.
"It's nice to be putting myself in a good position heading into the last two rounds. I rather stay up there than to be chasing the lead actually. I just want to grab my chance and not let it go. I am very happy with myself at the moment."
It was the first cut Panuphol, given the nickname coconut by his father who is also his caddie, has made in four events this season on the Asian Tour.
Playing the course the wrong way around, he opened with a birdie on the 10th as he began clawing back his position at the top of the leaderboard which early starters Hend and Aguilar had taken.
Birdies at the Thai's sixth and 10th holes left him level at the top on 12-under alongside playing partner Lipsky before he dropped his first shot of the week at the par-five second.
But late birdies on 16 and 18 put him back in front, although Hend and Aguilar were happy to have put themselves back in position to challenge on the weekend, when all will hope for cooler temperatures than the 34 Celsius on Friday with high humidity.
"The weather's so hot. It's hard to keep your composure in such hot playing conditions," Hend said after his eight-birdie round.
"I am used to this kind of weather but it still comes to a point where your body just cannot take it and it makes you lose concentration."