Listed firms see full return in January

The companies urge the government to accelerate development of a flood-prevention system and push ahead with the planned cut in the corporate income-tax rate.

Securities analysts expect the flood’s impact on listed companies’ earnings to be slight thanks to their tax benefits.

The Thai Listed Companies Association, Investor Relations Co and the Securities Analysts Association (SAA) polled 198 companies listed on the Stock Exchange of Thailand, with Bt6 trillion in combined assets, equivalent to 60 per cent of gross domestic product.

Their operations are expected to return to normal in January, SAA secretary-general Sombat Narawutthichai said yesterday.

Of the companies surveyed, 49 per cent had operations drowned by flood waters, 38 per cent were directly affected and 10 per cent reported no impact. About 90 per cent received a negative impact from the deluge.

Manufacturers saw their capacity utilisation drop by 50 per cent. About 24 per cent of service and sales operations were affected by the floods and 24 per cent of property, industrial estate and construction projects were swamped.

Of the listed companies, 12 per cent said they would not lose any revenue this quarter from the deluge, 55 per cent said they would lose less than one-fifth of total revenue, 17 per cent would lose 20-40 per cent and 16 per cent would lose more than 40 per cent.

Based on the survey, 16 per cent of listed companies expect no impact on their 2012 earnings, 61 per cent expect an impact of less than 10 per cent, 20 per cent expect an impact of 10-30 per cent and 3 per cent expect an impact of more than 30 per cent.

Companies with their operations suspended during the floods could see an average revenue drop of Bt559 million each, or 15 per cent of total revenue. On average, the estimated loss of product inventory is Bt121 million per company, or 8 per cent of total assets. 

Asked what they wanted from the government, the listed companies replied that protection against possible inundation in the future was the top priority.

“Although the Thai economy will likely grow next year, the big issue for investors is the plan for flood prevention. The government has to make the operating plan clear if it still wants foreign investors to continue their investment in Thailand. The plan should be firmed up in two or three months to boost confidence,” Sombat said.

Of the respondents, 73 per cent said they needed the corporate income-tax rate to drop to 23 per cent next year and 20 per cent in 2013, 57 per cent demanded insurance policies to cover flooding without a sharp rise in premiums and 55 per cent called for a delay in hiking the minimum daily wage to Bt300 and minimum pay for bachelor-degree holders to Bt15,000.

Kavee Chukitkasem, assistant managing director of Kasikorn Securities, said that even though listed companies were heavily affected, they recovered and resumed operations faster than expected. 

Many used their cash flow for restoration, indicating that their financial health was strong.

Tarisa Chaisuntornyotin, senior vice president of Kiatnakin Securities, said the flood’s effects could be seen in the current quarter and the first quarter of 2012, but these were expected to be short-term. 

In the third quarter of next year, the listed companies should post satisfactory earnings, possibly boosted by tax measures, she said.