Sector rides the bull

Analysts see second-quarter earnings of the securities sector soaring 30 per cent from the previous quarter on the back of the stock market recovery, prompting them to upgrade their industry recommendation from "underweight" to "neutral".

Sirinattha Techasiriwan, senior director of Syrus Securities Plc, said yesterday that daily trading volume has jumped from Bt11.8 billion in the first quarter to Bt15.1 billion in the second.

"Securities stocks are still attractive. Now volume has increased, while the market is still on the rise. We recommend 'trading' for the sector, but 'buy' for BLS (Bualuang Securities) which has good fundamentals," she said.

Securities firms with a large investment portfolio in the SET include KGI Securities (Thailand) and BLS. Their earnings are expected to rise sharply.

Syrus anticipates a target price of in the range of Bt2.4-Bt2.6 for KGI Securities with a buy on "speculation" recommendation.

BLS earlier had a market share of 3.5 per cent and target price of Bt19. But its market share rose to 4.5 per cent, so the target price was revised up to Bt24.

Seamico Securities Plc said it has upgraded securities stocks from "underweight" to "neutral" as it now forecasts a better outlook for the sector in the rest of the year.

Trading activity would pick up on supportive government policies, the stock market recovery, lower interest rates and a more stable economic situation.

Bualuang Securities is also bullish on the securities sector, saying improved investor confidence would re-energise trading.

The securities firm estimates average daily trading volume at Bt16.5 billion, although daily turnover over the first five months was only Bt12 billion.

Bualung Securities also upgraded the sector to "overweight"

from "underweight". It said local brokers with foreign partners are likely to recover the most. It recommends "speculation" for Phatra Securities, Kim Eng Securities (Thailand) and Asia Plus Securities, and "hold" for KGI Securities (Thailand) and Capital Nomura Securities.

Montree Sornpaisarn, CEO of Kim Eng Securities (Thailand), said his firm sees the SET index ending this year at 850-900 points and next year at 1,000.

He believes domestic interest rates would likely fall by 25 basis points with inflation kept at a reasonable level.

Foreign capital has been floo-ding into the Thai bourse because its price-to-earnings ratio is still low at 11-12 times versus 16-18 times for regional markets, he added.

Siriporn Chanjindamanee

The Nation