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"For our Thai universe, we are now forecasting growth of 18 per cent for this year, minus 5 per cent for next year and 13 per cent for 2010. Previously we were forecasting 28 per cent, 1 per cent and 13 per cent, respectively," the broker said in a research paper titled "Equities reflect negative growth".

Phatra's forecast is more pessimistic than the Securities Analysts Association's consensus for listed companies' earning growth at 2.3 per cent next year, and Asia Plus Securities' estimate of minus 4.3 per cent.

Its estimate is based on assumptions that real US grossdomesticproduct growth will be minus 1.8 per cent for 2009, with European growth at 0.4 per cent and Thai economic expansion at 3.3 per cent.

Tracking back to data on listed firms' aggregate net profits from the Stock Exchange of Thailand, their net earnings rose 15.5 per cent in 2005 to Bt524.36 billion before plunging 11.57 per cent to Bt463.7 billion in 2006 and a further 15.75 per cent to Bt390.66 billion last year.

Listed companies in the first half of this year posted a combined net profit of Bt307.11 billion, up 44.25 per cent from the corresponding period last year.

Phatra said in its paper that it had raised the 2009 earnings estimates for only one sector - utilities - while cutting the forecasts for all others.

It slashed the transport sector's earningsgrowth estimate by the biggest amount -57 per cent - followed by contractors (down 35 per cent) and residential property (down 22 per cent). The brokerage cut the forecast for the commerce sector by 5 per cent, and financials and food and beverages by 8 per cent each.

"Based on our revised earnings estimates, the greatest aggregate growth for 2009 should be for healthcare (11 per cent), financials (10 per cent), food and beverages (4 per cent) and contractors (against a negative base in 2008). Several sectors are now expected to show doubledigit contraction in earnings in 2009. They include construction materials (minus 24 per cent), tourism (minus 12 per cent), residential property (minus 14 per cent), retail property (minus 12 per cent) and transport (minus 75 per cent)," Phatra said.

The brokerage has, however, maintained its forecast that realsector companies under its coverage will report a 5percent yearonyear increase in cash flow from operations in 2009.

"Adjusting for a 13percent reduction in capital expenditure, we are forecasting free cash flow to more than double in 2009. Sectors expected to show the greatest improvement in free cash flow in 2009 include commerce, construction materials, communication, energy and healthcare. This should enable companies to both continue to service their debts and maintain dividends at similar levels to the estimates for 2008. This would be equivalent to a dividend yield of about 8 per cent," it said.

Meanwhile, the brokerage has changed its recommendations for 20 stocks under its coverage.

It has upgraded recommendations from "neutral" to "buy" for Kasikornbank, Siam Commercial Bank, Siam Makro and Total Access Communication, and from "underperform" to "neutral" for BEC World, Bumrungrad Hospital, Glow Energy and Tisco Bank.

It has downgraded recommendations from "buy" to "underperform" for Erawan, ItalianThai Development, MCOT and Rojania Industrial Park; from "buy" to "neutral" for Amata Corp, LPN Development, PTT Exploration and Production, Quality Houses and Ticon Industrial Connection; and from "neutral" to "underperform" for Airports of Thailand and Thanachart Capital.