Left Brain Right B - the DBS Vickers Securities Equities Research

Regional Equity Strategy 4Q 2009
Country Assessment
Quarterly aggregate net profit and y-o-y growth*
Btbn %
120
80
100
40
80
60
0
40
-40
20
-80
0
-20
-120
-40
-160
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Banks Energy Telecom
Property Building mat. Others
Growth (RHS)
Note: * Only stocks under our coverage, excludes new listing
Source: SET and DBS Vickers
Sectors with positive y-o-y growth in 2Q09
Contractors (+122%): Sector earnings turned positive
from a huge loss (from ITD) a year ago.
Petrochem (+53%): Sales recovery, widening margins and
stock gains.
Commerce (+25%): Aggressive branch expansion in 2H08
and rising SSS.
Property (+11%): Higher sales and margins following the
continued drop in interest rates and the government’s
incentive measures.
Sectors with y-o-y earnings contraction in 2Q09
Transport (-100%): Lower freight rates and weak tourism
numbers.
Industrial estate (-53%): Weak FDI resulting in a sharp drop
in land sales.
Media (-29%): A sharp drop in ad income at MAJOR and
BEC’s c.Bt110m extra expenses for donation and events for
its 39th anniversary.
Construction Material (-28%): 2Q08 was when commodity
product prices peaked.
Energy (-32%): 2Q08 was when commodity product prices
peaked.
Electronics (-29%): Product prices declined throughout
2008 and only recently picked up in 2Q09.
Aggregate 2Q09 SET net profit
YE Dec
(Btm)
2Q08 1Q09 2Q09 Chg
y-o-y
Chg
q-o-q
Banking 20,988 21,190 20,340 -3.1% -4.0%
Finance 340 82 328 -3.5% 302%
Petrochem. 429 681 658 53% -3.4%
Con. Mat. 9,316 5,206 6,669 -28% 28%
Property 4,572 4,201 5,076 11% 21%
Contractors -230 392 51 122% -87%
Ind. estate 788 209 367 -53% 76%
Energy 65,952 24,151 44,731 -32% 85%
Commerce 1,663 2,216 2,078 25% -6.2%
Media 1,444 888 1,026 -29% 16%
Transport -1,301 10,289 -2,606 -100% -125%
Telecom 7,335 5,754 7,068 -3.6% 23%
Electronics 1,789 815 1,265 -29% 55%
Others 2,742 2,416 5,173 89% 114%
Total 115,828 78,490 92,224 -20% 17%
Source: Companies and DBS Vickers
POLITICS
Recent demonstrations were peaceful. After postponing
demonstrations twice (to 30 Aug and 5 Sep), the pro-Thaksin
red-shirt protesters gathered at the Royal Plaza on 19 Sep,
which is also the 3 rd year anniversary of the Coup (19 Sep
2006). The demonstration was peaceful and ended around
midnight. However, the leaders warned of another
demonstration in October.
Pro-Thaksin protests losing momentum. We reiterate our
view that political tension has eased and the probability of
future protests turning violent is low for three reasons.
First, the pro-Thaksin rally is losing momentum after the
riots in April. Ex-PM Thaksin has lost credibility due to that.
The fact that the planned rallies had to be rescheduled twice
also supports our view that they are losing momentum.
Second, there is no compelling reason for a demonstration
for the time being. And the longer the gap between
demonstrations, the more difficult it will be to gather
support for the next rally.
Third, PM Abhisit Vejjajiva has bought more time by
proposing that a constitution drafting assembly be set up to
handle changes in the constitution. He claims they should
come up with a single charter amendment draft, which they
could agree upon and be tabled in parliament for a vote.
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