Asia Plus Securities set to cut 2013-14 earnings estimates for several groups
Asia Plus Securities (ASP) will lower its 2013 and 2014 earnings estimates for some Thai listed companies affected by decreased purchasing power and high competition.
Profit projections will be cut back for producers of export food products, providers of information and communications technology, and retailers.
The brokerage house expects Charoen Pokphand Foods (CPF) and Thai Union Frozen Products (TUF) to continue to be affected by problems related to their shrimp and tuna operations, while the mobile-phone business is facing fierce competition. However, CP All continues to do better than others in the retail group.
An ASP analyst said it would lower its forecasts for CPF’s and TUF’s net profit for the third quarter, and its estimates for full-year 2013 and 2014. CPF’s shrimp supply continues to suffer from early mortality syndrome, cutting this year’s production by 50 per cent, while TUF has experienced slower purchase orders for tuna.
Although CPF’s third-quarter net profit improved from the previous quarter, it has not returned to a normal situation, the analyst said.
GFPT is expected to post slower performance in the current quarter due to slower chicken exports and a drop in the chicken price.
Khon Kaen Sugar Industry is expected to report low earnings in the fourth quarter of its fiscal year ending October 2013, given excess global sugar production.
The ICT group is expected to see a cut in ASP’s 2013 full-year projection after gloomy performance for the mobile-phone business in the third quarter.
ASP cut the estimate for Total Access Communication’s 2013 and 2014 earnings by 10 per cent. Growth in DTAC’s earnings per share is forecast at 5 per cent for 2013.
Given expectations of higher expenses, Advance Info Service and its major shareholder, InTouch, are also expected to see a cut in ASP’s earnings estimates.
After the end of the government’s economic stimulus, retail groups will be affected by weakening purchasing power, the ASP analyst expects. Hypermarket operators such as Big C Supercenter will likely suffer the most impact. Its third-quarter sales were the lowest in four quarters. With high competition, its fourth-quarter performance, which comes during high season, is expected to be poorer than the same period of previous years.
However, Siam Makro is expected to register satisfactory performance in the third and fourth quarters of this year amid seasonal factors. CP All may see a light impact as consumers reduce the size and frequency of their purchases. However, CP All’s acquisition of Makro with borrowed funds will likely result in higher interest expenses, a short-term pressure on earnings performance.
ASP plans to raise its 2013 earnings targets for Airports of Thailand and BTS Group Holdings. Also expected to do well are groups that depend mainly on the global economy such as petroleum and export companies, particularly in electronics.
