Asia Plus Securities (ASPS) has upgraded its profit forecast for listed companies in 2022 to 1.13 trillion baht as it is expecting Thailand's economic growth rate will continue to expand in the second half.
However, the brokerage firm cautioned that several factors could derail investment, including inflation, an interest rate hike and escalating China-US conflict. A US state governor visited Taiwan on Aug 22, a move that upset China, raising geopolitical tensions in the region.
Executive vice-president Therdsak Thaveeteeratham said ASPS increased Thai listed firms' net profit projection for 2022 to 1.13 trillion baht from 1.04 trillion.
The projected earnings per share forecast was also revised up from 88.9 baht to 94.3.
The revision was made after listed companies' net profit hit a record high of 348 billion baht in the second quarter of this year, representing an increase of 26% year-on-year. The quarterly earnings were higher than market expectations, including the Bloomberg Consensus forecast of 6%, said Mr Therdsak.
"The Thai stock market looks more attractive in the second half with opportunities given to investors to trade stocks in a narrower market earnings yield gap," he said.
At the same time, factors that pressured the Thai stock market during May-July have eased, said Mr Therdsak, such as high inflation and the first policy rate hike in four years. The impact of the Russia-Ukraine war has already played out, reflected in the current low prices of Thai stocks, he said.
"All negative geopolitical situations are already reflected in share prices," said Mr Therdsak.
Tension between China and the US and Taiwan has steadily increased, although it has not caused any violence to date, he said.
Compared with developed countries, the Thai economy has recovered well and the trend is expected to continue during the remainder of this year as tourists return, said Mr Therdsak.
More of the government's economic stimulus measures, such as the fifth phase of the "Khon La Khrueng" co-payment scheme, are likely to boost consumption, he said.
Meanwhile, the economies of developed countries have begun to slow down, causing more funds to flow into Thai stocks and other emerging markets, said Mr Therdsak.
The Stock Exchange of Thailand index is forecast at 1,730 points by the end of the year, according to the brokerage.
For investment strategies, ASPS's top picks are stocks with high potential for net profit, including those helped by rising interest rates such as Bangkok Life Assurance (BLA) and Krungthai Bank (KTB). Hospitality stocks such as Central Plaza Hotel (CENTEL) are also recommended as tourism revives as their valuations remain interesting.
