Securities house: Phatra Securities

The broker has cut its earnings estimates for Siam City Bank by 13.8 per cent for 2006 and 1.7 per cent for 2007, given a lower lending growth projection and slightly lower net interest margin (NIM).

   It has also lowered its 12-month price objective for the stock to Bt27 from Bt28.70. The broker believes that the recent price fall, after the Bank of Thailand announced a plan to sell the Financial Institutions Development Fund's stake in the bank, is essentially overdone.

   Risks are a sharp economic slowdown and a change in ownership structure as a result of the Bank of Thailand's divestment plan.

   The key price driver is an improvement in NIM. Against the general trend for the sector, the bank's NIM should materially improve during 2006-2007 from the re-pricing of Bt67 billion of AMC notes (30 per cent of its total loans) into higher-yield assets, starting from the second quarter of this year.

   Siam City Bank's fundamentals remain relatively strong. Amid rising rates and some uncertainty, it appears to be in a relatively better position than its peers - with a very low non-performing loan ratio, highly liquid balance sheet, and low gearing (real performing loans to total assets) of 48 per cent.

Stock: Krung Thai Bank (KTB)

Rating: Fully valued

Securities house: DBS Vickers Securities (Thailand)

KTB's first-quarter net profit is expected to grow 15.2 per cent year on year and 532.4 per cent quarter on quarter to Bt4.97 billion, on the back of Bt1 billion in dividend income from the Vayupak I Fund.

   The bank has set a loan growth target of 7.5 per cent for 2006, including loans for government mega-projects. However, the broker forecasts just 6-per-cent loan growth as it expects the infrastructure projects to be delayed.

   KTB aims to reduce its non-performing loans to 8 per cent this year from 10.3 per cent in 2005, but the broker believes its loan-loss reserve should remain relatively high at least for the next two years, in order to maintain cumulative provision coverage at 50 per cent.

Stock: Advanced Info Service Plc (ADVANC)

Recommendation: Buy

Securities house: Seamico Securities

A source at Advanced Info Service said the company had recorded only 50,000 net new customers in February and 40,000 so far in March, a significant drop from 103,700 net additions in January. AIS did not announce official figures on its net adds. The company has launched a new prepaid phone programme in a bid to attract new subscribers.

   In the broker's view, it is likely that AIS will lose further market share in terms of net new subscribers in the current quarter due to the ongoing political tension and the public boycott of services provided by Shin Corp, its parent. The broker however views this as a short-term phenomenon and believes net new additions will improve after political tensions calm.

   Despite the likely poor first quarter, the broker expects the company will achieve the forecast of 1.27 million new subscribers this year, or about 100,000 per month, on the back of its strength nationwide and its efficient network.

The broker has set a fair value of Bt121.60 for the stock.

oranan@nationgroup.com