Left Brain Right B - the DBS Vickers Securities Equities Research
Left Brain Right B - the DBS Vickers Securities Equities Research
Left Brain Right B - the DBS Vickers Securities Equities Research
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Regional Equity Strategy 4Q 2009<br />
Country Assessment<br />
Valuations remain low. Despite <strong>the</strong> strong run-up in <strong>the</strong> past<br />
four months, <strong>the</strong> SET valuations remain low compared to its<br />
long-term historical averages. We believe P/BV multiple is a<br />
more appropriate valuation metric than PE or dividend yield<br />
currently, when market earnings are abnormally low (at <strong>the</strong><br />
bottom of <strong>the</strong> earnings and economic cycle).<br />
The current 12-month trailing P/BV is still below its long-term<br />
average, which is not demanding.<br />
SET: Current P/BV is still below historical average<br />
x<br />
4<br />
3<br />
2<br />
1<br />
0<br />
+1 sd<br />
-1 sd<br />
End 94<br />
End 95<br />
End 96<br />
End 97<br />
End 98<br />
End 99<br />
End 00<br />
End 01<br />
End 02<br />
End 03<br />
End 04<br />
End 05<br />
End 06<br />
End 07<br />
End 08<br />
Source: SET, <strong>DBS</strong> <strong>Vickers</strong><br />
Thai market is still cheap relative to regional peers.<br />
Compared to o<strong>the</strong>r markets in <strong>the</strong> region, <strong>the</strong> Thai market is<br />
still <strong>the</strong> cheapest in terms of PE and dividend yield. It is now<br />
trading at 2009 PE of 12.5x vs 16.3x for <strong>the</strong> region. It also<br />
offers generous 2009 dividend yield of 3.4% vs <strong>the</strong> regional<br />
average of 2.8%.<br />
Regional valuation comparison<br />
09 PE (x)<br />
20<br />
19<br />
18<br />
17<br />
16<br />
15<br />
14<br />
13<br />
12<br />
Expensive<br />
China H<br />
1.4 1.7 2.0 2.3 2.6 2.9 3.2 3.5 3.8<br />
09 Dividend yield (%)<br />
Source: <strong>DBS</strong> <strong>Vickers</strong><br />
Hong Kong<br />
Indonesia<br />
Malaysia<br />
Singapore<br />
Thailand<br />
Cheap<br />
Earnings Estimates by Sector<br />
EPS Growth %<br />
PE (x)<br />
2008A 2009F 2010F 2008A 2009F 2010F<br />
Banking 44.6 (4.2) 16.3 11.8 12.3 10.6<br />
Construction Materials (35.8) 9.6 16.5 15.0 13.7 11.7<br />
Chemicals & Plastics 43.9 69.8 11.8 11.1 6.5 5.9<br />
Commerce 51.9 9.0 12.2 20.7 16.9 15.1<br />
Communication (14.2) (26.7) 9.2 18.0 16.1 14.8<br />
Electronics Components (18.6) (30.1) 4.5 7.5 10.5 9.5<br />
Energy (50.5) 42.9 20.3 16.9 9.8 9.3<br />
Entertainment & Recreation (0.4) (18.2) 17.5 12.8 16.0 13.3<br />
Finance & <strong>Securities</strong> (29.7) 25.1 (12.0) 16.3 13.1 14.6<br />
Food and Beverage (10.0) 32.6 13.5 14.9 11.4 10.1<br />
Property Development (0.2) 24.9 7.4 16.4 13.1 12.3<br />
Transportation n.m. n.m. 32.2 mn 7.5 5.7<br />
O<strong>the</strong>rs 41.2 88.2 9.5 15.5 8.3 7.5<br />
<strong>DBS</strong>V Universe (30.0) 24.0 16.6 16.4 12.5 10.7<br />
Source: <strong>DBS</strong> <strong>Vickers</strong><br />
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