Thailand (Bualuang): Thai Market Strategy - 1Q21 earnings wrap & 2Q21 outlook

  • 1Q20 net profit surged 113%; core profit rose 8% YoY
  • 2Q21 net profit to jump 81% YoY; core profit to leap 95% YoY
  • 2021 earnings forecast upgrades have paused

The YoY surge in the 1Q21 aggregate SET bottom-line was partly due to the low base set by 1Q20. The low base effect will continue into 2Q21 and 3Q21, making for strong growth of 81% YoY and 37% YoY, respectively. The QoQ comparison for 2Q21, however, may not impress, due to Thailand’s third COVID-19 outbreak. Progress in distributing COVID-19 vaccines and eventual control of the virus by 3Q21 should generate confidence among investors during 2H21 over the scope for upside to the SET.

Our YE21 market target of 1605 is pegged to a 10% discount to our YE22 target of 1784 (PER of 18.2x on EPS of 98).

1Q20 net profit surged 113%; core profit rose 8% YoY

The aggregate 1Q21 net earnings of the firms under BLS coverage jumped by 113% YoY and 41% QoQ. Core profit rose by 8% YoY and 31% QoQ. Of 20 sectors under active BLS coverage, 13 sectors reported YoY bottom-line growth—most notably Construction Materials (higher sales, mean EBIT margin fattened 400bps YoY), Energy (higher oil prices), Chemical (fatter product spreads), Electronics (31% YoY sales growth, fatter YoY margins), Insurance (higher revenue for TQM and higher returns on investments for BLA), and Residential Property (transference and margin expansion). Aggregate net profit was 19% above our estimate, while core earnings were 8% above our expectation.

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