Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

Regional Small/Mid Cap Strategy Q2 2008
Country Assessment
Key Valuation Comparison
Large Caps
Small Caps
2006A 2007A 2008F 2009F 2006A 2007A 2008F 2009F
EPS Growth (%) (1.3) (10.2) 14.1 3.5 (36.3) 55.9 2.0 12.5
PER (x) 13.2 13.8 12.0 11.5 15.3 10.0 10.0 8.9
EV/EBITDA (x) 8.3 7.7 7.2 6.6 8.5 7.8 6.3 5.6
ROAE (%) 15.4 13.2 14.0 13.3 11.0 15.2 14.1 14.7
Source: DBS Vickers
PERFORMANCE REVIEW
The SET index softened 4.4% QTD to close at 820.31
points on 25 Mar 2007, on renewed US sub-prime
concerns. The SET50 Index (large cap stock index) also
fell by 6.7% in the same period. Trading activities on
the SET edged down from 4Q07 with average daily
value of Bt19.1bn. Average daily turnover in large cap
stocks, represented by the SET50 Index, fell from Bt15bn
in 4Q07 to Bt14.6bn QTD. Focus during the quarter was
on the new government’s economic stimulus policy,
which should benefit Property and Banking sectors.
Nonetheless, the Energy sector continued to dominate
38% of total market trade value. Bank stocks came in
second at 21%. Property sector came in third at 9% of
total trade, followed by the Communications sector at
7.5%, and Transportation sector at 4.9%. These five
sectors’ (Energy, Banks, Transportation, Property, and
Communications) cumulative trade accounted for 80%
of total market trade value for the quarter.
SET and SET-50 Indices
50%
SET
40%
30%
20%
10%
0%
-10%
Source: Reuters
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
SET50
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Page 45