Listed firms perform better than expected in Q3

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Thai listed companies performed better than expected in the third quarter with net profits of 209 billion baht, up 19% quarter-on-quarter, of which 167 billion baht stemmed from the real sector and 42 billion baht from the banking sector.

Prakit Siriwattanaket, managing director of Merchant Partners Asset Management, said net profits were down 25% year-on-year but were still surprising as several companies have performed better than expected and were able to generate profits of more than 200 billion baht.

The third-quarter results reflect the strength of Thai listed companies, signifying there will be an uptrend in the fourth quarter after the pandemic situation began to ease from the lifting of the lockdown measures and the country’s reopening earlier this month.

Net profits of listed companies are expected to rise to 210 billion baht in the fourth quarter.

If this target is reached, Thai listed firms will record a total of 960 billion baht in net profits this year with an earnings per share (EPS) of 83.87 baht, up 75% from the previous year, which is very close to the pre-pandemic level.

Mr Prakit said with the current pace of economic recovery, Thai listed firms’ net profits will reach 1.09 trillion baht in 2022 while the EPS will grow to 95.98 baht per share, up 14.45% from the year before.

Listed firm’s total profits still need some time to recover. However, investors may have less room to make profits as the SET Index as of Nov 9 has already reached 1,631 points and exceeded the pre-pandemic level of 1514.44 points as of Jan 31, 2020, suggesting that the SET Index has already outpaced listed firms’ actual net profits and been adjusted up in response to future profits.

However, even though the returns of the SET Index have risen 12.58% year-to-date, the returns of the SET50 Index have only increased 7.7%, suggesting that the market was raised by non-SET50 stocks, especially small and medium-sized companies with returns of 48.68%.

The sSET Index stood at its highest in three years, even though small firms’ profits have yet to see a remarkable recovery.

All small and mid-cap stocks accounted for only 36% of the market capitalisation but their gains are more than 20-50% and can raise the SET Index up nearly 13%, while large-cap stocks in the SET50 Index are still slow to recover.

However, as large companies’ profits in the SET50 account for up to 72% of the entire market, their poor performance results in a slow recovery of the market’s profits as a whole.

“If we were to conclude that the SET Index rose because of the churning of small-medium stocks, it would not be wrong. Therefore, the stocks in the SET50 Index group still lag, compared to the profits that the firms have generated,” Mr Prakit said.