Brokerages to cut share forecasts after poor Q2 results
Securities companies will cut their forecasts of SET-listed companies' profits and earnings per share (EPS) this year, following worse than expected second-quarter performances.
Wijit Arayapisit, a research department strategist at Maybank Kim Eng Securities (Thailand), said 90 per cent of companies listed on the Stock Exchange of Thailand (SET) had announced their second-quarter performances.
"Listed companies' [combined] net profit was at Bt118 billion, down about 46 per cent year on year from Bt200 billion – lower than the company's expectation of Bt150 billion," he said. "However, their quarter-on-quarter net profit increased by 34 per cent from Bt90 billion."
Listed companies in three sectors saw their profits increase both year on year and quarter on quarter, namely electronic parts, construction materials, and agricultural products, he said. However, companies in retail, medical and real estate saw their profits fall over 50 per cent.
"Large companies, such as energy and petroleum companies, performed as we expected as their second-quarter profits rebounded from first-quarter loss from oil storage," he said.
"Meanwhile, commercial banks' profit dropped more than we expected after they made allowances for doubtful debts."
He expected weak second-quarter profits would cause other analysts to review their EPS forecast this year, adding that his own company's EPS forecast was approximately Bt60 per share.
"Bloomberg Consensus recently cut the Thai stock market's EPS forecast this year and next year to Bt59.8 per share and Bt76 per share, respectively," he said.
"We may cut our EPS forecast once all of the listed companies have announced their second-quarter performances."
He expected listed companies' performances to gradually improve this year as the impact from energy companies' oil storage loss and Covid-19 were resolved, adding that the combined third-quarter performance would exceed Bt150 billion.
"We expect listed companies' performance this year to be at Bt650 billion, down 31 per cent year on year from Bt946 billion to the lowest level since the Asian financial crisis," he said. "The performance is expected to recover at the beginning of 2021 because it is currently at its lowest point."
Therdsak Thaveeteeratham, executive vice president for research at Asia Plus Securities, said it will cut its forecast for listed companies' EPS this year to below Bt60 per share from the current of Bt64.
He advised investors to closely follow the intensifying political situation in the country.
"From the economic view, the current situation is extremely risky because if any factor forces the government to hold off issuing economic stimulus measures, it will hit an economy already under recession, resulting in an impact on the SET Index," he said.
