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The Stock Exchange of Thailand (SET)’s SETNote Quarterly Corporate Update for Q2/2010 reported that as a whole, Thai listed companies posted net profits of THB126.22 billion (approx. USD4.07 billion), approximately the same amount as in Q2/2009 but lower than those of Q1/2010. The main reasons for the decline were sector-specific problems in Resources Group and political unrest that affected the Services Group. However, a continual rise in revenues for the past five consecutive quarters and a rise in the proportion of companies recording net profits and an increasing investment in assets showed that operating performances had expanded in line with the overview economic recovery.
In Q2/2010, overall, listed firms recorded a rise in total revenues, which was in accordance with Thailand’s overview economic expansion. However, their net profits (excluding property funds) approximately the same amount in Q2/2009, which was due to a plunge in Resources Group’s net profits, as a result of problems in crude oil stock management and the exchange rate. If we exclude the Resources Group, Thai listed firms overall enjoyed a 22.88% increase in net profits in Q22010 over Q2/2009.
In addition, operating performance showed widespread recovery in most sectors, with 395 listed companies recording net profits, accounted for 78.53% of total listed companies, up from 73.00% in Q2/2009.
Comparing operating performance of all companies in Q2/2010 with their Q1/2010 figures (excluding the Financials Group and property funds), shows a 25.66% drop in net profits, to THB95.00 billion (approx. USD3.05 billion) from THB102.77 billion (approx. USD3.30 billion). The decrease was mainly due to crude oil stock management problems in the Resources and political unrest that affected Services Group. However, there were signs of recovery in other business sectors, reflecting a continual growth in revenues.
Listed companies’ performance indicators (excluding the Financials Group and property funds) in Q2/2010 were close to those of Q2/2009; in Q2/2010, return on equity (ROE) was 3.26%, while return on assets (ROA) was 2.55%. In the meantime, the overall financial status was stable, showing the companies’ ability to cope with global economic volatility, especially when compared with the economic recession during 2008-2009. In Q2/2010, the debt to equity (D/E) ratio was at 1.14, while the interest coverage ratio was 6.34, vs. 1.17 and 7.99, respectively, one year ago.
Listed companies’ investments (exclude Financials Group and property funds) in Q2/2010 dropped by 7.27% y-o-y, to be THB88.82 billion (approx. USD2.85 billion), mainly because the large projects in the Property and Construction and Services Groups had ended. However, the value of investments made in Q2/2010 exceeded those of a quarter ago by 18.34%, due to the economic recovery. For the same reason, the proportion of firms investing in fixed assets rose to 92.02% of total listed companies, up from 90.51% in Q1/2010.
The Thai economic recovery and major rises of the SET Index in Q1/2010 and Q2/2010 were important factors encouraging companies to raise funds through equities. In Q2/2010, listed companies raised a total of THB38.44 billion (approx. USD1.23 billion), a 13-fold increase over Q2/2009 and a three-fold rise over Q1/2010. The funds raised were through two newly-listed companies and one property fund, totaling THB2.12 billion. Meanwhile, seasonal equity offerings in the SET and Market for Alternative Investment (mai) totaled THB36.32 billion (approx. USD1.17 billion).
