Recommendation: Buy on weakness

Securities house: Kim Eng Securities (Thailand)

Aromatics (Thailand) reported a first-quarter net profit of Bt349 million, or an earnings per share of Bt0.36, a decrease of 87 per cent year on year and 12 per cent below the broker's expectation.

The significant earnings drop came from the 30-day shutdown for maintenance, a feed fractionation revamp project and the tied-in cyclohexane plant.

In addition, the product-to-feed-margin fell 41 per cent year on year to US$110 (Bt4,150) per tonne, from $186 in the same period last year.

Without an extra gain from foreign exchange of Bt98 million and a gain from forward contracts of Bt264 million, the company would have recorded an operational loss of Bt13 million, or Bt0.01 per share, compared with a huge operational profit of Bt2.64 billion in the first quarter last year.

The brokerage believes that ATC's second-quarter earnings should see an improvement from the first quarter as a result of the increase in condensate feedstock from 50,000 to 70,000 barrels per day and the new cyclohexane capacity of 150,000 tonnes per year, which came on line this quarter.

However, it believes ATC's share price, which has dropped almost 60 per cent from last year, has already absorbed the weaker earnings for this year.

Stock: Kim Eng Securities (Thailand) Plc (KEST)

Recommendation: Trading

Securities house: Seamico Securities

The company's first-quarter net profit rose 74 per cent quarter on quarter, as brokerage income increased by 70 per cent in line with a 63-per-cent increase in daily market turnover and a 0.5-per-cent rise in market share. Personnel expenses were lower than expected, which resulted in the personnel expense and brokerage income ratio falling from 52 per cent in the fourth quarter of 2005 to 44 per cent in the first quarter.

Kim Eng's market share in the quarter increased by 0.5 per cent quarter on quarter after declining gradually since the first quarter of 2005. The brokerage expects Kim Eng will achieve a 2006 market share of 9.08 per cent and has maintained its average daily turnover assumption of Bt20 billion for the year.

Stock: Dynasty Ceramic Plc (DCC)

Recommendation: Outperform

Securities house: KGI Securities (Thailand)

Dynasty Ceramic announced a disappointing first-quarter net profit of Bt174 million, down 34 per cent on the year but up 48 per cent on the quarter due to the seasonal effect.

The result was below the broker's expectation and market consensus. The main reason for the disappointing result was lower-than-expected sales, which had been expected to pick up year on year.

However, sales came in at Bt1.2 billion, down 3 per cent year on year though they did pick up 32 per cent quarter on quarter on the seasonal effect.

Meanwhile, gross margin continued to improve to 38.2 per cent in the quarter, compared with 36.9 per cent in the first quarter and 35.8 per cent in the fourth quarter, mainly from sales at retail prices.

Interest expenses increased slightly quarter on quarter to Bt15 million, even though the company has less interest-bearing debt. This is likely because of rising interest rates as Dynasty's debt is mainly in short-term loans, which are based on floating interest rates. The broker expects the company to announce an interim dividend payment of Bt0.30 per share for first-quarter performance.

oranan@nationgroup.com