"Third-quarter earnings look to surprise the market [which expects their net profits to decline] because most listed companies have strong financial positions and operators have already prepared well for risk. And this would prompt the stock market to ad-vance by early fourth quarter," the brokerage said in a research paper.

The strong performers would be the communications, industrial estate, entertainment, petrochemical, coal mining, transportation, hospital and residential sectors.

The communications sector's earnings could rise after mobile-phone operators' earnings bottomed out in the second quarter.

"Mobile-phone-service providers' earnings will start to recover in the third quarter and increase sharply in the fourth quarter," the broker said.

"CNS has upgraded the sector from neutral to bullish. The broker has also raised its recommendation for Advanced Info Service from neutral to buy."

Third-quarter earnings for Aromatics (Thailand) Plc and PTT Chemical Plc are projected to grow both on quarter and on year, thanks to higher margins.

However, earnings of downstream petrochemical firms including Thai Plastic and Chemicals Plc and Vinythai Plc may slide on lower margins.

The residential sector's earnings in the second half are set to improve in the belief that political uncertainty will dissipate and hikes in interest rates will be limited.

For the energy sector, the broker views third-quarter earnings at PTT Plc and PTT Exploration and Production Plc remaining solid due to high oil prices and refinery margins.

The energy sector has so far this year posted the largest net profit. Its second-quarter net profit was Bt50.31 billion, up 60 per cent on year and 29 per cent on quarter.

The broker, however, stands "neutral" on the sector because of the high-base effect and likelihood that energy prices will not stay at lofty levels in the long run.

The sector's earnings growth this year is seen at 13 per cent, compared with 30 per cent in the previous year.

Listed companies' earnings are estimated to rise by 5.1 per cent from Bt398.30 billion last year to Bt418.77 billion.

According to Stock Exchange of Thailand data, 456 of the 470 listed companies last year reported combined earnings growth of 13 per cent.

The SET said in its latest note that fixed assets of listed companies in the second quarter rose a mere 4 per cent year-on-year to Bt84 billion.

The quarterly slowdown in new investment was due mainly to the postponement of investment by companies engaged in property and construction, consumer goods, services and technology.

The resources sector was the biggest investor, with 48 per cent of all fixed assets of listed firms.

The funding utilisation efficiency of listed companies - with the exception of financial institutions and the non-performing group - in the second quarter slipped marginally from the same quarter last year.

Return on equity sunk by 2.4 percentage points to 19.8 per cent, while return on capital employed fell 0.3 percentage point to 18.9 per cent.

However, listed companies overall carried a low financial risk profile, with a debt-to-equity ratio of 1.2 times and interest coverage ratio of 7.8 times.

Siriporn Chanjindamanee

The Nation