Q1 earnings of SET firms expected to be near last year’s

Therdsak Thaveeteeratham, executive vice president for research at Asia Plus Securities, forecast that combined net profit of companies listed on the Stock Exchange of Thailand for the first quarter of 2017 would be close to the Bt226 billion recorded in the same quarter last year, led by the banking and energy sectors.
The banking sector is projected to book Bt54 billion in net profit for the quarter, while the energy sector is predicted to net Bt50 billion after recording no losses from crude-oil stocks in light of rises in oil prices, he said.
The SET Index is forecast to end the year at 1,620 points with a price-to-earnings (P/E) ratio of 16 times.
“The listed companies’ net earnings are anticipated to increase to Bt991 billion for the whole of this year, up from Bt903 billion in the previous year,” Therdsak said. 
The energy sector is expected to share 25 per cent of total combined net profit, returning to its normal level after only a 10-per-cent share last year, as a result of rises in crude-oil prices, he said.
The banking sector will also likely stage a return on expectation for 6-per-cent loan growth, led by lending to large enterprises that had faced difficulties with debentures and bills of exchange. 
Retail lending, particularly instalment and credit-card loans, should also record favourable growth, he said.
DBS Securities (Thailand) also expects commercial banks to see improvements in net profit for the first quarter after lower provisions and more borrowing by their customers, particularly businesses requiring working capital.
Borrowing for working capital is expected to be driven by exports, which began recovering in the fourth quarter of last year, the brokerage house said. Many small and medium-sized enterprises focus on exports. 
The value of Thai exports excluding gold grew by 8 per cent year on year in the November-February period.
Asia Plus Securities forecasts gross domestic product to expand by 3.5 per cent for the whole of this year, driven largely by public investment and state spending, particularly on infrastructure mega-projects. Last year’s economic growth was 3.2 per cent. 

Export barriers 
This year’s household consumption is expected to remain steady, while exports will likely improve. However, exporters do face risks from trade barriers, Therdsak said.
From the beginning of this year to the present, foreign investors have been net buyers of regional stocks worth about US$7.25 billion, centralising mainly in East Asian areas such as South Korea and Taiwan. 
All countries in the TIP group (Thailand, Indonesia and the Philippines) have confronted foreign net sales of their stocks, particularly since February. 
“Capital movement may find pressure from the United States, which faces an upward trend of interest rates. In this round, the Thai bourse becomes unattractive with its P/E ratio of as high as 16.5 times and this year’s low EPS [earnings per share] growth of 7.13 per cent, compared with other bourses across the world,” Therdsak said.
This is in line with 10-year data finding that foreign investors have mostly been net sellers of Thai stocks worth Bt12 billion on average in the second quarter for seven years, he said.