Companies listed on Stock Exchange : sales up 22 %… but profits down 25 %

SET President Patreeya Benjapolchai revealed that 532 out of 546 companies enlisted on the SET and the Market for Alternative Investment or MAI have submitted their 2008 financial budget reports. They made 313,068 million baht in profits, a drop of 25 per cent or 109,086 million baht compared to total profits the previous year.

Without including the performance of companies in non-compliance and non-performing groups in 2008 in the calculation, the total profit last year was 309,973 million baht, a drop of 27 percent from the previous year.

The top three most profitable businesses were finance, natural resources, and real estate & construction. Patreeya added that the overall drop in profits is the result of the loss in energy operations in the fourth quarter, negative trends in the domestic economy and foreign economies, and the weakening value of the Thai baht. The depreciation of the baht has led to larger burdens for the companies who have foreign debts. Their losses due to the weakening baht are estimated at 15,456 million baht.

Despite the lowered performance of SET and MAI companies, they managed to make 7.3 trillion baht in sales, an increase of 22 per cent compared to the previous year’s sales figure, and 272 companies have announced a relatively high dividend rate at 6.65 for their 2008 dividend payments. (TOC)

Something is wrong. 😉

Where are the suckers who were talking to me about Price Earning Ratio ? “Thais stocks are cheap, buy, buy, buy !”. Where are they ?

Anyway. 2008 is the past. Like a century ago. I know what you are thinking, but you’re wrong : 2008 was NOT DIRECTLY IMPACTED by the current global crisis, at least for the first 3 quarters.

What happened in 2008 ? Two events :
-explosion of costs (and prices) with high inflation, due to the oil and commodities prices crisis (from january to july)… mechanically it increased the turn over, but trimmed the profits.
Peak Exports (july 2008), demand was strong.

Enough to explain the twisted figures for the whole year : sales up, profits down.

It’s ironic to note that the profits were leaded… by “finance, natural resources, and real estate & construction” companies, the very 3 sectors that are suffering in 2009 ! So it’s easy to forecast how 2009 is going to be…

Anyway, the real game starts this year. 2008 is not interesting, I don’t even know why I’m talking about it. 😉

Because in 2009, we are going to have the double whammy : sales down, and profits… extremely down.

14 Responses to “Companies listed on Stock Exchange : sales up 22 %… but profits down 25 %”

  1. 1 krsnakhandelwal 8 March 2009 at 8:14 am

    This speaks volumes about strength of economy.

  2. 2 ThaiCrisis 8 March 2009 at 8:31 am

    Yes of course, but again : 2008 is not directly linked to what we are living now…

    It was an “appetizer”, a mere “avant-garde”.

    Soon, people will see 2008 as.. the good (gold) old days.

  3. 3 Prokster 8 March 2009 at 9:08 am

    The SET has plenty more to fall, and you are right, it will be Q1 & Q2 earnings (or lack thereof) that will be telling, and likely to be very poor indeed.
    I can say with some certainty the SET has already lost 50% of Thai retail investors since the 2003 rally, and those that are left are under water to the tune of >70%
    The foreign money nwill not rush back in, or evemn take much notice of distressed assets this time round becasue there will be choice pickings everywhere.
    A new low for SET is surely in order for early Q2 …. 350 is my guess.
    If things really get nasty with the coloured shirted people again….no rush either…next year will do… we should see the SET somewhere between 280-320.
    Hold cash. Wait untill Q1-Q2 next year before buying property, and as for stocks, longer term cash can siton the sidelines for quite some time yet. Consider Indonesian government bonds in the meantime, or even some of the better corporate bonds in Thailand.

  4. 4 Bedwyr 8 March 2009 at 9:22 am

    A quick bit of algebra shows that profitability has declined by 39%

    Now that is a problem in any country.


  5. 5 ray 8 March 2009 at 12:07 pm

    pokster is quite right. now the yellow shirts are very dissatisfied with democrat led govt because of the pending investigation for events of 7th oct. just wait and watch by end of 2009early 2010 thai ppl will be begging for thaksin to be back in power. wel atleat he was in control and we knew where the buck stops.
    thai economy has a very long way to fall. and most people are in denial. serious denial..

  6. 6 ThaiCrisis 8 March 2009 at 12:29 pm

    We could see indeed the whole story as a Frankenstein scenario.

    The PAD was designed, created and used by the couple military/conservators, to bring down Thaksin. “Mission accomplished”… 😉

    But now, we could see the creature… getting out of control… That would be funny !

  7. 7 History buff 9 March 2009 at 3:21 am

    “A new low for SET is surely in order for early Q2 …. 350 is my guess.”

    On 4 September 1998, the SET index reached its low for the crisis period of 204.59 points before closing that day at 207.31. It was last at those levels in February 1987.

  8. 8 Prokster 9 March 2009 at 5:15 am

    A new low for this bear market. Not an all time low. I doubt it will go as low as 200 or so, although a worst case scenario of widespread anarchy type chaos might just see the SET fall to 240-260.

  9. 9 George P Tuckeer 9 March 2009 at 5:16 am

    While I’m no longer in the thick of things, the feeling right now in Thailand (and more so some months ago) is that we will not be hit that hard. A few months ago it was “we’ll barely feel it”

    I was in Hongkong in 1998. The Asian financial crisis that began in in Thailand in July 1997 had not reached HK and the feeling there at the time was similar to what we see in Thailand today: it didn’t begin here, we should be reasonably safe. After all, we’ve been prudent, our banks are well capitalized, our government is in surplus, we have massive foreign exchange reserves. In the event, none of that helped and Wham! investors and the average Joe were knocked off their feet and remained dazed for the following five years.

    Sadly this might be Thailand’s fate in the coming months.

    The unelected head of HK’s government, Tung Chi Wah was forced to resign in 2003 largely because of his inept handling of the crisis. Politics in Thailand is different so that may not be the fate of the Thai government, or it may be and may happen a lot sooner than it did in HK.

    The best strategy for individuals and families would be to hold on to whatever cash you have, cut expenses where possible, hunker down and work hard and keep expectations low. Things *will* get better, but it could be a long slog and forewarned is forearmed.

  10. 10 Prokster 9 March 2009 at 5:39 am

    I fear Thailand’s reserve position and indeed outstanding debt is far more worrying than you think George. True, the crisis did not start here, but with exports, tourism and indeed FDI all taking a very big hit, it stands to reason the contraction in Thai GDP and employment wil be quite severe. Couple this with local powder-kegs a plenty, and it all adds up to a very long slog.

  11. 11 George P Tuckeer 9 March 2009 at 7:31 am

    The consensus between Prokster and I is that it will be a slog. The difference between us is whether it will be a long slog or a very long slog.

    Officially, the reserve position seems reasonably OK, certainly far better then 1997. However, I seem to recall reading somewhere that during Takshin’s time and since, there’s been a fair bit of creative accounting. If you or Thaicrisis know more, I’d be interested in some elaboration, thanks.

  12. 12 ThaiCrisis 9 March 2009 at 8:14 am

    Indeed, the reserves are considerably higher (although… 1 USD in 1997 had more value than 1 USD today 😉 ).

    But :
    -see Russia : reserves were also super high last august… but in a few month, by defending the ruble, they lost 36 %.

    -there is still the “systemic” risk on USD… People are laughing because actually the dollar is going up since a few months…. But it’s purely technical… But on the mid long term, the USD will remain under pressure. Therefore to keep a mountain of cash and securities in USD could be a risky bet.

    As for the creative accounting, I don’t think it’s worse than… in the US, the UK or France… They are all doing it.

    In any case, and even if they are cheating a little bit : the unfunded liabilities of Thailand are much lower than in the US, Europe etc.

    On the long term, it’s the main problem for the western countries : who is going to pay for retirement pensions ? For medical assistance for the millions of old people (babyboomers) ? No one freaking knows.

    It’s a horrifying black hole.

  13. 13 Prokster 10 March 2009 at 5:22 am

    The trouble is Thailand will not come out of this a better place to do business. As such the long term implications are bleak, because the government(s) have no interest in LT planning.
    I beleive the country will be an ‘also ran’ for the forseable.

  14. 14 George P Tuckeer 11 March 2009 at 12:15 am

    @ Prokster
    Economic crisis, with all the accompanying pain, also offer opportunities — for re-tooling, balance sheet improvements, some creative destruction, etc — and the majority of companies and individuals come out the wiser and healthier. You are right that the current process at work that we see in Thailand do not bode well in this regard. This is a worldwide crisis of unprecedented proportions and some economies, the ones taking it on the chin, will emerge stronger. Thailand is unlikely to be one of them.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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