Thursday, September 24, 2020

Listed companies EPS slashed to lowest in a decade

Jul 28. 2020
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By The Nation

Several securities companies have cut listed companies' earnings per share (EPS) and second-quarter profit forecasts this year due to the Covid-19 impact on the economy.

Tisco Securities' senior strategist Apichat Poobunjirdkul said the company has cut listed companies' EPS to Bt61.1 per share from Bt67 per share in May, the lowest in 10 years, adding that listed companies' EPS was Bt53.4 per share during the hamburger crisis.

"We expect listed companies' second-quarter performance to drop the most as their net profit would drop over 40 per cent year on year due to the Covid-19 pandemic that has caused the global economic slowdown," he said.

He said the second-quarter profit of 43 listed companies in the SET50 Index is expected to be Bt93.3 billion, down 39 per cent year on year as lockdown measures had caused an impact on various industries, especially the tourism industry businesses, such as airports, airlines, hotels, public transportation and department stores.

"Listed companies' second-quarter performance announcement would cause market volatility in the short term because the profit forecast in the first half of this year accounted for 37 per cent of the profit forecast this year," he said. "However, listed companies' profit would increase during the second half of this year in response to the easing of the lockdown and economic stimulus measures."

He added that listed companies' third-quarter profit would grow over 30 per cent quarter on quarter.

Sunthorn Thongthip, a senior director at Kasikorn Securities, said there is a chance that listed companies' EPS this year will drop from the current forecast of Bt64 to Bt65 per share due to the decline in number of tourists, adding that listed companies' EPS next year is expected to be at Bt85 per share.

"The number of tourists this year would be lower than expected because the second Covid-19 wave has caused many countries to delay reopening," he said.

Nuttachart Mekmasin, assistant managing director at Trinity Securities' research department, said listed companies' second-quarter performance would not cause much impact on investment because the market had already responded to this factor.

"Investors should focus on listed companies' third-quarter performance rather than on the second-quarter because the index rose over 20 per cent from the lowest point so far," he said. "However, the index would face severe correction if listed companies' third-quarter performance is lower than expected."

Chaiyaporn Nompitakcharoen, deputy managing director of Bualuang Securities' non-institutional broking group, said listed companies' second-quarter profit will drop by 40 per cent year on year to the lowest point in response to countries' lockdown due to the Covid-19 pandemic, adding that listed companies' performance is expected to recover during the third and fourth quarters of this year and will return to normal at the end of 2021.

"Stocks whose profit will rise gradually are food export, packaging, and consumer finance stocks, while stocks whose performance will recover by the second half of this year are restaurant, petrochemical, fuel and oil refinery stocks," he said. "Stocks whose performance will recover slowly are electric appliances, automotive parts, service, and commercial bank stocks which may recover by the end of this year or the beginning of the next year."

However, he added that listed companies' profit forecast this year would be cut further from the current expected drop of 25 per cent year on year as commercial banks' second-quarter performance was lower than expected.

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