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Thailand (Bualuang): Thai Market Strategy - SET earnings roundup for 2Q21

  • Our YE21 SET target of 1605

  • 2Q21 profit jumped 118% YoY and was 8.7% above the consensus

  • 2021 profit forecast upgrades have slowed (and paused for 2022)

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

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Bualuang Securities
17 August 2021

The YoY surge in the 2Q21 aggregate bottom-line was largely due to the low base set by 2Q20 (the hard lockdown tied to the first COVID-19 outbreak last year). The low base effect will be much less so in 3Q21. And the QoQ profit change for 3Q21 may shift into reverse, due to the severity of Thailand’s third COVID-19 outbreak. More progress in distributing COVID-19 vaccines and businesses reopening would revive confidence among investors in 4Q21 over the scope for upside to the SET. Nonetheless, the uptrend could be interrupted by another risk factor—less dovish messaging by the US Federal Reserve.

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

2Q21 profit jumped 118% YoY and was 8.7% above the consensus

The stocks that comprise the SET posted an aggregate 2Q21 net earnings surge of 118% YoY and 6% QoQ. Of 26 sectors, 23 reported higher YoY earnings, largely due to the low base set by 2Q20 (when Thailand entered a hard lockdown and international trade was disrupted). The only three sectors that posted lower YoY net profits were Insurance (higher claims), Packaging (higher costs), and ICT (a high base was set by 2Q20, due largely to non-operational items).