Bangkok--Sep 22--Weber Shandwick (Thailand)
In a recent research report ABN Amro analyst Andrew Maule predicted a 12 month target for the SET index of 800 points. This is an upside potential of over 20% from current levels. The prediction was based on bottom up individual analysts stock target prices.
“Improved investment growth remains Thailand’s most compelling macro driver.” Mr. Maule Head of Research in Thailand added. “Likely political continuity and recovering investment should be key catalysts for the market over the next 12 months. At 800 points on the SET the index would be trading on a PE of close to 12 times.”
“Historically the Thai market has traded in a PE range of 10 -22 times. A twelve times multiple looks reasonable in light of the historical range.” He further added. “ We believe consensus earnings estimates are factoring in an unrealistically sharp slowdown, while earnings expectations for the rest of the region have been on an upward trend since late last year.”
Thailand’s bane of short lived governments, dominated by fractious coalitions, seems to be over. ABN Amro expects PM Thaksin’s government to return to power with a large majority in elections due by February 2005.
Improved investment growth remains Thailand’s most compelling macro driver, in ABN Amro’s view. Higher oil prices and rising interest rate could cause mild headwinds to growth, but the need for new investment remains strong. Capacity utilization has been on a steady uptrend since 2001, rising from a low of 50% then to 75% today, which means that manufacturing businesses have a strong incentive to expand.
Banks would benefit from accelerating loan growth, higher L/D ratios, improving pricing power and a shift of excess funds into higher-yielding loan assets.
Industry reform will be the long term key for share price performance of telecoms companies. The senates historic vote on 24 August to pick the seven members of a newly established, NTC, was four years behind schedule but nevertheless marks real progress. This will kick start the process of concession conversion, establishment of an interconnect regime and granting of new telecoms licences.
The key sectors preferred by ABN Amro on a bottom up derived basis are Banks and Telecommunications. This is due to the theme of improved investment and optimism on regulatory reform, respectively.
Press contacts:
Mr. Charles Skeeles
+ 852 2700 5251
or Weber Shandwick (Thailand) Limited
Khun Lakpilai Worasaphya 662 257 0300 # 312
About ABN AMRO
Netherlands-based ABN AMRO is a leading international bank with total assets of EUR 560.4 bn (as of 31 December 2003). It has over 3,000 branches in more than 60 countries and territories, and has a staff of over 110,000 full-time equivalents worldwide. ABN AMRO is listed on the Euronext, London and New York stock exchanges. End.
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