Thailand 3Q24 Financial Results: A Comprehensive Company Analysis
Date: November 22, 2024
Broker: UOB Kay Hian
Introduction
The financial landscape in Thailand has experienced significant shifts as companies grapple with the effects of seasonality and economic fluctuations. The latest report from UOB Kay Hian, dated November 22, 2024, provides a deep dive into the performance of Thai listed companies for the third quarter of 2024. This article meticulously examines the findings, offering a detailed analysis of each company covered.
Overall Market Performance
The earnings of Thai listed companies under UOB Kay Hian’s coverage fell by 28.9% quarter-on-quarter (qoq) and 35.2% year-on-year (yoy). This downturn is attributed mainly to seasonal effects impacting sectors such as petrochemicals, transportation, and energy. The report indicates a subsequent reduction in the earnings forecast for 2024 by 2.3% yoy, with a revised SET Index EPS to 99 from 96, and a SET Index target to 1,584 from 1,536, based on a 16.0x forward PE.
Banking Sector
The banking sector reported a modest uptick in earnings, with an actual net profit of Bt56,358 million, marking a 7.8% yoy increase and a 1.6% qoq rise. This was slightly above UOB Kay Hian’s estimate of Bt53,071 million, reflecting a 6.2% positive deviation. The sector’s credit cost improvements are expected to continue into the fourth quarter.
Construction Services
Construction services witnessed a notable 11.6% yoy increase in net profit, amounting to Bt860 million. However, this was a 13.5% decline from the forecasted Bt994 million by UOB Kay Hian, underscoring the volatility in project bidding and wage pressures.
Consumer Staples
Consumer staples emerged as a strong performer with a staggering 1,299.4% yoy growth in net profit, reaching Bt13,677 million, aligning with UOB Kay Hian’s estimate. This remarkable growth was driven by robust consumer demand.
Electronics
The electronics sector faced challenges with a 3.7% yoy decline in net profit to Bt6,698 million, falling short of the forecasted Bt6,853 million by 2.3%. The recovery of EV and consumer electronic products has been slower than anticipated.
Energy
Energy companies reported a significant decline in net profit by 80.4% yoy to Bt17,412 million, which was 19.3% below the expected Bt21,568 million. The sector was heavily impacted by volatile energy prices and inventory stock losses.
Financial Sector
Financial companies posted a modest net profit of Bt6,524 million, a 2.3% yoy increase. This was slightly higher than the estimate of Bt6,388 million, showcasing stable growth in financial services.
Healthcare
The healthcare sector reported a 7.0% yoy increase in net profit to Bt7,072 million, closely aligning with the forecast. The sector remains buoyed by consistent demand for healthcare services.
Hotel Industry
The hotel sector experienced a downturn with a 55.0% yoy decrease in net profit to Bt1,576 million, missing the forecast of Bt1,720 million by 8.4%. The decline is attributed to a sluggish recovery in tourism.
Industrial Estate
Industrial estates saw a 20.1% increase in net profit yoy, amounting to Bt1,224 million, although it fell short of the expected Bt1,942 million, marking a 37% miss. The sector continues to benefit from robust land demand.
Media
The media sector reported a 14.0% decrease in net profit yoy to Bt619 million but slightly exceeded the forecast of Bt610 million. Advertising media is expected to gradually improve alongside economic recovery.
Packaging
The packaging sector faced a substantial decline in net profit by 56.4% yoy to Bt578 million, missing the forecast by 37.6%. This was largely due to lower demand and inventory adjustments.
Petrochemical
The petrochemical sector reported a significant loss of Bt17,086 million, a 520.5% decrease yoy. This was 83.8% below expectations, highlighting ongoing challenges in the sector.
Property
The property sector’s net profit slightly declined by 4.7% yoy to Bt9,609 million, aligning closely with the forecast. The sector faces multiple headwinds with a slow recovery in residential areas.
Retail
The retail sector showed resilience with a 16.5% yoy increase in net profit to Bt8,460 million, slightly above the forecasted Bt8,349 million. This growth is driven by strong consumer spending.
Telecommunications
Telecommunications companies reported a 21.8% yoy increase in net profit to Bt7,978 million, surpassing the forecast by 11.5%. The sector benefits from a less competitive landscape and lower electricity costs.
Transportation
The transportation sector posted a 4.8% yoy increase in net profit to Bt4,883 million, although it was 19.6% below the forecast. The sector faces challenges with fluctuating demand and costs.
Utility
The utility sector reported a 4.1% yoy increase in net profit to Bt12,188 million, slightly exceeding the forecast. The outlook remains positive with stable gas costs.
Key Recommendations
UOB Kay Hian’s top picks include:
- AMATA: Buy with a target price of Bt35.00.
- CPALL: Buy with a target price of Bt85.00.
- ERW: Buy with a target price of Bt6.60.
- KBANK: Buy with a target price of Bt190.00.
- MTC: Buy with a target price of Bt64.00.
- SPRC: Buy with a target price of Bt9.50.
- TRUE: Buy with a target price of Bt14.50.
Conclusion
The third quarter of 2024 presented mixed results for Thailand’s market, with significant variances across different sectors. While some industries like consumer staples and telecommunications showed robust growth, others, notably energy and petrochemicals, struggled with substantial declines. The strategic recommendations from UOB Kay Hian offer insights into potential investment opportunities amidst shifting economic conditions.
