Market Comment 24 Nov 2016

Please see disclaimer on last page 1

Thailand Research Department

Mr. Warut Siwasariyanon (No.017923)

Tel: 02 680 5041

Official 3Q16 earnings results

► Official 3Q16 aggregate net earnings were Bt208.9bn, rising 251.7% YoY

but falling 14.8% QoQ, in line with our forecast of Bt210bn.

► 9M16 net earnings were Bt681.3bn, surging 34.9% YoY.

► We are maintaining our net earnings forecasts at Bt900bn for 2016, rising

30% YoY, and Bt1,034bn for 2017, growing 15% YoY.

► 3Q16 earnings declined QoQ as overall economic activities slowed from

2Q16.

► Major sectors with strong performances were consumption, industry

products, services, agro-business and property & construction. Resources

& energy had a strong turnaround.

► Major sectors with underwhelming performances were ICT and financial.

The Stock Exchange of Thailand reported companies listed on SET had a combined net profit of Bt208.9bn in 3Q16,

surging 251.7% YoY over a very weak net profit of Bt59.4bn in 3Q15. In 3Q15, overall earnings were pulled down by poor

results in the energy sector from the dramatic fall in oil prices, hefty extraordinary losses, particularly at PTTEP, PTT, SSI,

THAI, as well as banks’ large provisions against the now defunct SSI UK. The 9M16 earnings performance increased

significantly by 34.9% YoY to Bt681.3bn. This was attributed to macro-economic conditions clearly improving with GDP

growth of 3.3% YoY in 9M16 from 2.7% YoY growth in 9M15. In addition, oil prices have been on an upward trend since

hitting bottom at around US$27 in January 2016, indicating no or small inventory losses for the energy sector.

However, on a quarterly basis, net earnings dropped 14.8% to Bt208.9bn from a record quarterly high of Bt245.2bn in

2Q16. Economic activities in 3Q16 slowed slightly from 2Q16 as GDP growth decelerated from 3.5% YoY in 2Q16 to 3.2%

YoY in 3Q16. Most economic sectors, with the exceptions of agricultural, mining, hotel & restaurants, and transportation,

declined QoQ. This was also partly due to the seasonal impact of the rainy season on sectors such as construction and

property.

The major sectors with strong YoY earnings performances in 3Q16 and 9M16 were consumption, industry products,

services, agro-business and property & construction. Meanwhile, tesources & energy had a strong turnaround.

The main financial sector’s 3Q16 net profits improved YoY mainly due to the low base in 3Q15 from huge provisions

related to SSI UK liquidation. However, 3Q16 earnings contracted 5.4% QoQ and 9M16 earnings growth remained weak

at 1.5%, mainly due to cautious credit extension and provisioning policies by most banks, as reflected by YTD contractions

in all bank loan portfolios and continuously high bad loan provisioning.

Btmn 3Q15 3Q16 %∆YoY 9M15 9M16 %∆YoY

Financial 50,577 60,730 20.1 169,701 172,197 1.5

Resource & energy -67,305 52,995 178.7 39,421 162,434 312.1

Property & construction 30,013 33,681 12.2 100,310 113,069 12.7

ICT 21,940 15,539 -29.2 85,570 76,340 -10.8

Services 842 7,549 796.1 42,938 61,640 43.6

Industrial products 3,712 16,105 333.9 29,468 49,364 67.5

Agro-business 11,269 12,125 7.6 33,799 40,022 18.4

Consumption 1,521 2,552 67.8 3,751 6,325 68.6

Others* 6,861 7,721 - -

Total 59,429 208,998 251.7 504,957 681,389 34.9

Source: SETNote: *Derived from SET's quarterly reports.

Table 1: Thai companies listed on the SET's earnings

Please see disclaimer on last page

Market Comment 24 Nov 2016

2

The ICT sector’s earnings continued to decline in 3Q16 both QoQ and YoY and in 9M16 YoY due to the high

license amortization expense from skyrocketing 4G license prices, rising expenses from 4G investment

outlays, service price cuts on aggressive marketing campaigns to capture 4G market shares.

Maintained net earnings estimates for 2016 and 2017

As the reported aggregate net profits of Thai companies listed on SET both in 3Q16 and 9M16 are in line

with our forecasts at Bt210bn and Bt688bn, respectively, we have maintained our net earnings forecast for

2016 at around Bt900bn, growing 30% YoY and for 2017 at Bt1,034bn, growing 15% YoY (see Figures 1

and 2).

Btmn 2Q16 3Q16 %∆QoQ

Financial 64,226 60,730 -5.4

Resource & energy 58,102 52,995 -8.8

Property & construction 41,720 33,681 -19.3

ICT 25,585 15,539 -39.3

Services 20,515 7,549 -63.2

Industrial products 18,868 16,105 -14.6

Agro-business 13,600 12,125 -10.8

Consumption 2,630 2,552 -2.9

Others* - 7,721

Total 245,247 208,998 -14.8

Source: SETNote: *Derived from SET's quarterly reports.

Table 2: SET earnings (cont)

245

169205

166

226205207

69

231219

59

182

233245209212

0

50

100

150

200

250

300

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

E

4Q

16

E

Btb

n

Source: SET and AWS estimates

Figure 1: SET quarterly profits

713 725 785707 691

9001,034

1.6%8.3%

-9.9%-2.2%

30.1%

15.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015 2016E 2017E

Btb

n

Figure 2: SET Annual Profits

Net profits growth rate

Sources: SET and AWS estimates

Please see disclaimer on last page

3

Score Range Number of Logo Description

90 – 100

80 – 89

70 – 79

60 – 69

50 – 59

Below 50

No logo given

Excellent

Very Good

Good

Satisfactory

Pass

N/A

Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2015.

Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

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