Prosperity ahead if no strife over constitution

Market analysts are predicting a rosy second half of the year for listed companies - with the major proviso that there is no political upheaval arising from Constitutional amendments.

If there are no political problems, listed companies' net profits could peak in the fourth quarter, said UOB KayHian Securities' head of research Kosin Sripaiboon.

"However, the third quarter will be a difficult period for listed companies if they must suffer from political troubles," he said, adding that in these circumstances net profits would drop.

"The Charter amendment is causing a lot more tension, as it might lead to another clash," Kosin said.

However, if political conflicts are cleared before September, listed companies will prosper and the stock exchange will draw more foreign investment. The Stock Exchange of Thailand Index, which closed yesterday at a six-month high of 884.19 points, could rise to 1,000 points.

SCIB Securities assistant managing director Sukit Udomsirikul countered that political conflicts should have a lower bearing on the earnings outlook than oil prices, if the conflicts did not lead to major upheavals.

"The government should have learnt what persistence costs, and that compromises are better than pursuing changes that lead to serious impacts," he said. Sukit agreed that earnings should rise in the third and fourth quarters on higher domestic consumption following the economic stimulus package.

In the absence of political problems, Kosin favours banking, energy, food and agriculture and industrial-material stocks, followed by those

in property and communications.

Listed companies recorded a combined net profit of Bt152.38 billion and combined revenue of Bt1.78 trillion in the first quarter of this year, driven mainly by the baht's strength against the US dollar and higher prices for consumer goods.

UOB said listed companies were continuing to enjoy net profits in the second quarter. Although foreign-exchange gains are shrinking, brokerage houses are revising upwards their 2008 earnings forecasts for a number of companies.

Bualuang Securities vice president Pongrat Ratanatava-n ananda said that higher earnings in the first quarter came from sales volumes.

She said listed companies' net profits in the second quarter would be even better than in the first three months, especially those of commodities companies whose prices were climbing.

Pongrat said securities houses might have to revise upwards their full-year earnings forecasts for listed companies after they see second-quarter net profits.