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Published on December 14, 2007

Phatra Securities has downgraded its EPS growth forecast for next year to 15.4 per cent, from 16 per cent before, due to lower expectations for communications companies. However, it has revised upward its forecast for 2009.

"We're forecasting 15.4-per-cent EPS growth for 2008 and 8.5 per cent for 2009 for our coverage area. This compares with 16 per cent and 8.3 per cent, respectively, two weeks ago. The change is due to reduced expectations for communications companies," Phatra said in a report released yesterday.

Previously, Phatra had forecast 56-per-cent growth for communications firms for next year. It has since reduced this to 39 per cent on expected lower phone use as operators increase effective tariffs.

Kim Eng Securities (Thailand) CEO Montree Sornpaisarn predicts earnings growth of listed companies will be about 20-25 per cent this year and next.

The high growth is assumed from the current price-to-earnings ratio of only 12-13 in the Thai market, which is lower than in other regional bourses.

In addition, the Thai economy and economic fundamentals have been strong.

Meanwhile, a poll conducted recently by the Securities Analysts' Association found that stock analysts had revised upwards their forecasts for the Stock Exchange of Thailand (SET) Index.

The targets range from 871-885 points for this year and 1,000-1,030 for next year.

The analysts' consensus estimates listed companies will see average earnings growth of 18.4 per cent next year and that gross domestic product (GDP) should grow 4.9 per cent.

Phatra Securities has raised its forecast for real GDP from 4.1 per cent to 4.5 per cent, due to stronger private consumption and a wider trade surplus. For next year, Phatra has revised growth slightly higher on an assumption of better investment growth.

Phatra believes the most immediate driver of share prices is growth expectations. On the basis that these were already historically depressed, events of the past year have not had a significant effect, it said.

"The key in 2008 will be whether a new government can rekindle hopes for future investment," the company said.

Kim Eng predicts the SET Index next year will reach 1,200 on an assumption of more stable politics.

Montree said in the first quarter, the post-election period would boost investment sentiment and that the SET Index will rise to 1,000.

Montree believes foreign investors still view the Thai market positively.

Siriporn Chanjindamanee

 The Nation