Thai Stocks Seen Opening Higher, Earnings in Focus
This week, the market will likely open higher as investors look to Thai earnings reports for guidance. Reports are expected to show improved earnings growth in the year’s second half. In addition, the reports will provide insight into the economic health of the Thai market and the performance of key sectors.
Additionally, analysts will watch for external factors such as oil prices and global economic indicators that could affect Thai stocks. Let’s look at what investors should watch for this week.
Thai stocks seen opening higher
Thai stocks are expected to open higher on Monday, with international and domestic developments encouraging investors. This follows a stronger close for the key SET Index over the weekend.
The upbeat sentiment comes despite uncertainties surrounding the US-China trade war, as investors focus on fresh reports from Thailand. On Monday, seven Thai companies — Airports of Thailand PCL, Thanachart Capital PCL, BTS Group Holdings PCL, PTT Exploration and Production PCL, PTT Global Chemical PCL (PTTGC), Siam Cement PCL and Saha Pathana Intern AP Ltd. — are scheduled to report their earnings for the second quarter.
Analysts anticipate higher-than-expected growth in several sectors due to improved economic activity amid recovery momentum and increases in government spending on stimulus packages. Airports of Thailand is forecasted to post around 4% year-on-year growth in 2Q EBITDA while Thanachart Capital is rising 1% during the same period.
Observers expect BTS Group Holdings’ revenues to increase 8%, resulting from ridership increases at Bangkok’s mass transit system following easing movement restrictions. However, gains could be tempered by operating costs for international travel and business operations being partially suspended due to Covid-19 related shutdowns. For PTT Exploration & Production, analysts predict a 4% year-on-year growth owing to higher oil prices in May and June and growing petchem demand amid travel restrictions nationally and internationally.
The rest of the week should bring more optimism with companies like Kasikornbank (KBANK) Ltd., Thai Oil PCL (TOP) , TPI Polene PLC due to report their results later this week alongside property developer Magnolia Quality Development Corp LTD. Analysts anticipate 1Q2020 EBITDA for KBANK will climb 47% from last year while TOP would likely report flat EBITDA figures YoY albeit recurring net profit was seen rising 10%. TPI POLENE’s earnings is forecasted with 3Q2020 profits hitting 545 million Baht up from 527 million Baht prior year given lower electricity cost not offsets rising Covid 19 induced costs related uncertainty faced by producers across board this quarter. However, property firm Magnolia Quality Development Corp LTD is projected to drag key indices lower given reports estimated losses amounting 774 million baht likely to fall 0f 22 % YoY amidst project delays prompted by Covid 19 economic impact.
Earnings in focus
This week’s earnings reports out of Thailand give investors a unique opportunity to gain a more detailed insight into the economy and its companies. Investors should closely watch the earnings releases for signs of a prolonged deceleration in demand and sluggish margin performance. In addition, as investors begin to assess the possible impacts of the pandemic, there could be further potential implications for companies’ returns in future quarters.
Earnings-wise, major Thai tech stocks are expected to remain relatively robust despite global market volatility brought on by COVID-19. Key companies such as Thai Aviation Industries Public Company Limited (TAV) have already released their earnings for this quarter. They are expected to show healthy results driven by improving domestic demand figures. Other companies will also likely demonstrate similar improvements due to international trading activities spurred by similar trends throughout much of Asia.
Meanwhile, consumer-focused enterprises such as CP All Public Company Limited may report better overall numbers despite reasonable pressure felt in certain areas due to falling consumer spending as demands adjust to changing economic circumstances brought on by coronavirus restrictions. CP All is expected to benefit from resilient convenience store sales. At the same time, delayed infrastructure projects could impact revenue from its other services like supply chain logistics activities or construction services ventures.
These emerging trends provide invaluable insight into how Thailand’s economy is affected by current events, which can inform investment decisions during these uncertain times. Therefore, investors should pay close attention as each company releases financial information this week to make informed decisions based on facts from company reports instead of speculation or guesswork.
Key Sectors
As investors turn their attention to Thai earnings reports this week, a few key sectors are expected to be in focus. Investors will keep an eye on the performance of the banking, energy, IT, and automotive sectors as they look to gauge the underlying health of the Thai economy.
Look closely at these sectors and see what we can expect from their earnings reports.
Banking & Financials
The banking and financial sector is a bellwether of the Thai economy, with earnings and stock performance offering reliable indicators of how Thailand is fairing. In addition, banks account for a large portion of total market capitalization, meaning their health has broad economic implications.
Bank sector earnings reports may focus on loan growth and quality, spreads on deposits and loans, fee income performance from asset management and capital markets businesses, and trading gains or losses in treasury products operating results. In addition, analysts will look for trends such as unusually high levels of loan provisions to be aware of any potential issues.
For life insurance companies that are publicly traded, investors are looking for premiums earned versus ones booked as well as claims paid out against the liability side of both traditional and investment-linked policies. In addition, reserve setting usually takes place at the balance sheet date, so assessing whether the assumptions remain valid indicates future performance.
Earnings release dates will vary between banks according to their reporting timetables but most are expected to start reporting numbers at the end of this week or early next.
Technology
In the technology sector, companies such as Advanced Info Service Public Company Limited (ADVANC), D.D.CRYPTO Co., Ltd. (DDCP), and COMBIT Co., Ltd. (COMBIT) will likely report positive IT service and software development growth. Additionally, digital products such as gaming platforms and e-commerce are expected to enjoy strong subscriber growth from new games and the highly popular online shopping platform Lazada Thailand.
Companies including GBCOM Co., Ltd. (GBCOM) and APlus Entertainment Plus Corporation Public Company Limited (PLUS) should have reported above-average numbers in light of their successful launches of new gaming titles, which should bode well for their fourth quarter earnings releases due this week.
Further attention should be given to electronics manufacturers such as Thai Summit Corp PCL (TSC) and Techno Plus Group PLC (ITP). Both companies have seen considerable gains year-on-year due to increases in export demand across a variety of consumer goods like home appliances, audio units and smartphone components which should contribute towards overall profit growth for the fourth quarter of 2020 for these two firms in particular.
Energy & Utilities
The energy and utilities sector remains a key contributor to Thailand’s economy. This sector comprises electricity, petrochemicals, oil and gas, renewable and natural resource production and other related industries. Companies in this sector mainly produce energy through conventional or alternative methods and manufacture and distribute household utilities.
This week’s earnings reports will provide an insight into how well the sector has performed over the past quarter.
Analysts expect positive results for this sector as demand for Thai-made energy sources is strong domestically and internationally. The recently lowered fuel tax should also positively affect earnings potential as companies will have more money to invest in new projects. Additionally, technological advancements such as solar photovoltaic panels are enabling companies to obtain cheaper sources of electricity for their operations which should further increase profits across the board.
Overall, investors should watch out for rising margins and improved efficiency from the Energy & Utilities sectors during this week’s report season.
Company Earnings
With the recent surge in Thai stocks opening higher, investors are tuning in to the expected earnings reports this week. Earnings will be closely scrutinised as they will help measure the performance of the companies, compared to the previous quarter.
Investors and analysts will closely monitor the reports to determine a company’s financial well-being. So let’s look at what investors should anticipate from the earnings reports.
Banks & Financials
Banks & Financials is a key sector to watch as earnings season kicks off in Thailand. This is because banks and financial firms are the largest contributors to the Thai economy. Therefore, investors will closely monitor reports from big-name financial services such as Bangkok Bank, Kasikornbank, Siam Commercial Bank, Krung Thai Bank and Thanachart Bank. These financial services are expected to release data on their quarterly earnings this week.
Analysts will be looking for indicators that could signal potential opportunities or risks ahead for the sector as a whole. For example, earnings reports can provide insight into how these companies perform relative to their peers and how well they can navigate domestic and global macroeconomic conditions. In particular, analysts will focus on company profits and revenues, citing key performance metrics such as return on equity (ROE), debt levels and liquidity ratios to assess their current health and future outlooks.
Technology
Technology companies are a key sector for the Thai economy and may provide valuable indications of its underlying health. Investors should be particularly interested in results from major technology firms such as Xiaomi, Samsung Electronics (Thailand) Public Company Ltd., and Siam City Cement. These companies can illustrate important trends in consumer demand, innovation cycles and government activity which shape the Thai economy.
Xiaomi, in particular, is a significant player in Thailand’s mobile tech market; investors should look for insights into their consumer trends. On the other hand, Samsung Electronics (Thailand) Public Company Ltd. provides an insight into smartphone sales inside and outside Thailand and other consumer electronics products such as televisions and home appliances.
In addition to these technology-focused companies, investors should also consider monitoring the results of Siam City Cement. This company produces cement essential for construction in Thailand which can indirectly indicate investment patterns by developers and ongoing government activity related to infrastructure projects.
Energy & Utilities
The Thai energy & utilities sector is expected to report moderate earnings growth at 1.7% year-on-year during the week, lagging the overall market forecast of 4.6%, according to a poll by Refinitiv. This comes largely from softer power generation due to lower demand amid COVID-19 lockdowns, which will likely bear down on revenues and thus drag profits in the sector.
The sector’s two segments — electricity and oil & gas — are likely to come in with different performance levels, with electricity proving more resilient such that Refinitiv forecasts its earnings growth at 3% and Oil & Gas sagging 0.5%. Companies expected to release results in this segment include PTT Pcl (PTT), Electricity Generating Public Co Ltd (EGCO) and B Grimm Power Corporation Public Co Ltd (BGRIM).
Investors should look out for cost cutting efforts that have allowed these companies to shore up their bottom lines, with cost inflation in the form of higher taxes or investments being mitigated throughout 2020 due to authorities’ relaxations on compliance requirements or extensions of deadlines. Such flexibility could help limit losses during Q2 FY2021 and steered some companies towards improved operating income or returns despite lower demand amid the pandemic.
Analyst Forecasts
Analysts expect Thai stocks to open higher this week with earnings reports in focus. Analysts are predicting strong earnings performance from several companies, including those in the banking, technology, and communications sectors.
Investors will watch these reports closely to determine if their predictions are correct. Let’s take a look at what analysts are expecting this week.
Banks & Financials
The Thai banking and financial sector has seen significant growth in recent years, and the upcoming earnings reports provide a valuable opportunity to assess progress within the sector. In particular, analysts will look for evidence of economic stability in the region and indications of ongoing growth.
Analysts will also be keeping an eye on loan growth, profits, and cost of revenue data from each firm in this sector. Loan growth will provide insights into economic investments while profits are important investor sentiment indicators. Likewise, cost of revenue will be closely watched as it reveals input costs to operations. During earnings reports, networks such as credit checks, customer service facilities, training programs, and marketing initiatives should also be considered.
In addition to these factors, analysts will also consider non-performing loan ratios – a measure of how effective lenders manage new accounts–and their exposure to foreign exchange risk. These higher-level aspects assessments should provide a good picture of overall performance expectations and trends across firms in the Thai banking sector this week.
Technology
Given the rise in people working from home, it’s no surprise that technology companies saw significant gains this year. As such, analysts’ forecasts for the Thai technology sector are expected to be strong. As a result, analysts expect Tech-related earnings reports from major companies such as Kasikorn Bank, Advanced Info Service Public Co. Ltd (ADVANC), and Charoen Pokphand Foods PCL (CPF).
Key elements to watch out for in these earnings reports include sales of consumer electronic devices and software products. Indeed, most analysts anticipate that demand for consumer electronics will remain relatively stable even as the world slides into recession due to its reliability and affordability. In addition, analysts focus on gross margin improvement initiatives that reportedly can drive bottom-line performance. Moreover, analysts are watching closely over the outlook commentary provided by management which should offer additional insights into the company’s future operations and efficiency in capital expenditure decisions going forward.
Another area of focus will be non- IT related costs such as SG&A expenses and wage inflation, which can hurt profitability if not closely monitored. Finally, investors should consider how emerging technologies like cloud computing and 5G networks may play a role in Asia’s economic recovery post-covid-19 shockwaves.
Energy & Utilities
This week’s earnings report from Thai companies will provide investors with insight into the performance of the energy and utilities sector. Although the energy and utilities sectors tend to be relatively stable, the global economic situation – and its possible impacts on commodity prices – could lead to fluctuating results.
In particular, investors should pay close attention to outlooks regarding fossil fuel production and renewable energy sources. With the global economy transitioning from fossil fuels, companies with a significant presence in alternative energy sources are likely to fare better than their peers dependent on traditional fuel sources. Furthermore, any commentary about upcoming legislative initiatives for renewable energy in Thailand could also impact future sales prospects for these companies.
The reporting from Thailand’s state-owned utility providers and foreign firms in this market will be particularly valuable for analysts this week. This information can give investors a comprehensive view of which strategies are being implemented in terms of pricing, technological investments, regional energy management policies and other trends affecting profitability in the sector. In addition, analysts should also look for notes related to corporate governance reforms aimed at improving customer service along with reports about new capital investments made over the past year across different divisions.
Market Sentiment
After several days of stagnant trading, Thai stocks are expected to open higher this week, amidst heightened anticipation of the upcoming financial earnings reports.
Market sentiment has become a crucial indicator in determining how the stocks perform. So let’s take a closer look at the factors influencing the market sentiment and how investors can use this information to inform their decisions.
Analysts’ sentiment
Analysts’ sentiment on the Thai markets remains cautiously optimistic heading into the week. This sentiment is mainly due to the recent recovery in some of the major Southeast Asian economies and Thailand’s known ability to handle political and economic disruptions.
The consensus is that Thai earnings will remain under pressure, with the country’s GDP expected to decline by up to 7.5% in 2020 alone. However, according to brokerages, earnings reports should provide relief for equities investors, as expectations for firms affected by delayed economic activity have been reduced considerably in recent weeks.
Furthermore, brokerages believe some companies may continue to register better-than-expected earnings reports despite pressure from various macroeconomic headwinds. Looking at specifics such as order backlogs, capacity utilisation levels and tariffs announced for imports/exports should give investors a clearer picture of market trends and how they may impact investment decisions over the coming week.
Investors’ sentiment
Analysing investor sentiment is an important part of developing an effective trading strategy. Investors’ sentiment can help traders accurately estimate and anticipate stock price movements. For instance, if investors feel confident about a company’s prospects, this might boost its stock price; conversely, if investors feel there may be trouble ahead for a particular company, this could negatively impact the value of its shareholdings.
For traders in Thailand, looking into current market sentiment can also help when assessing how to position themselves regarding forthcoming earnings reports from major Thai companies this week. These earnings reports can shape market sentiment for weeks or even months to come and investors must have the necessary information to make informed decisions on reacting.
Therefore, investors and traders must consider factors such as recent news events in their analysis of investor sentiment before and during the release of these earnings reports. In addition, analyst surveys, media reports, previous trading patterns, political developments and economic data can influence investor perception around a particular stock or sector. Therefore, they should be heavily considered when deciding whether to invest in Thai stocks following releases of these earnings reports.
Impact of global markets
While Thai listed companies are largely focused on the domestic market, global conditions can significantly impact their performance. As such, investors should closely monitor external developments as they evaluate the results. A major factor to consider is the performance of international markets, which serve as a barometer for sentiment surrounding Thailand’s economic performance and direction.
Signs of economic strain in global markets can influence the outlook for Thai equities given demand and pricing pressures that weigh upon the sector’s earnings and margin growth. Furthermore, trade tension between key economies — including the United States, Europe and China — could contribute to limited risk appetite across world markets, leading to extreme volatility in asset prices and reduced confidence in stock-picking decisions.
Conversely, signs of stability in international markets could send a positive signal to Thai stocks by prompting fund managers to deploy capital into comparable investments while providing support through more moderate volatility levels. The macroeconomy has also been subject to much anticipation with ongoing discussions around U.S.-China relations and their potential impacts on key export destinations for Thailand for durable goods such as electronics components. After all, deteriorating global growth momentum would likely worsen already-subdued corporate profit outlooks in Southeast Asia’s second-largest economy — suggesting investors should remain watchful through earnings reporting season from Bangkok-listed firms this week.