Earming review for firms in 'hit' sectors

With major industrial estates in Ayutthaya province having closed their facilities because of the crisis, Asia Plus Securities reiterated in updated research that it would review the earnings forecasts of listed firms with activities related to the flooding, especially in the auto and property sectors.
However, the brokerage said the factories of auto-makers that are in other provinces, such as Rayong, Samut Prakan and Chachoengsao, had not yet been affected by the severe flooding.
Nonetheless, there would be a risk of reduced production due to a shortage of supplies such as electronics components, some of the manufacturers of which are located in flooded areas.
“As a result, vehicle production in the final quarter will lose at least one month, or at least 30,000 units, resulting in overall output falling short of the previously targeted 1.8 million units,” said Asia Plus.
“The flooding crisis is expected to have as big of an effect [on Thai production] as the tsunami disaster in Japan in March.
“Honda, with a total capacity of 240,000 units a year, representing 12 per cent of domestic production of 2 million units, is directly affected by the floods. So this could impact on the country’s automotive industry,” the brokerage added.
Asia Plus said listed housing developers were also at risk of a downward revision of their earnings forecasts for the year, mainly because of the delay in home transfers given the gloomy mood of many buyers during the flooding crisis.
Meanwhile, Thanachart Securi-ties said in updated research that it had lowered its growth forecast for Thai gross domestic product for this year to 3.7 per cent from 4.2 per cent, because of weakened overseas demand in the current quarter and the effects of the severe flooding since the end of the previous quarter.
The brokerage said operators in the food and agriculture sectors would be the greatest concern, besides which they are supplies to other industries.
Thanachart also put a “negative outlook” rating on stocks in sectors such as banking, food and agriculture, leasing, media, retail, construction, property and electronic components, because of the flooding impact.
Meanwhile, stocks in some sectors were rated “slightly negative”, such as those in the energy sector, while infrastructure destroyed by the flood water would cause difficulties for the transportation and distribution of commodities like petroleum.
As a result, the brokerage said PTT Exploration and Production could experience lower sales, while Thai Oil, although 10 per cent of its sales are transported by truck, would also see a drop in sales in the current quarter.