Asia Plus puts SET at 1,620 points

Asia Plus Securities (ASP) forecast the SET index will reach 1,620 points by the yearend, propelled by improving investment in the second half as state investment boosts domestic demand.

The broker’s estimate is based on assumptions that the country’s economic growth will expand by 3.5%, driven by government investment and exports, and listed companies’ net profit will increase by 7% this year, said Poranee Thongyen, ASP’s executive vice-president.

Construction and banking are projected to be the biggest growth sectors this year, she said.

Listed companies’ earnings are expected to bounce back in the second half after falling in the second quarter because of long holiday periods, said Ms Poranee.

Construction, banking, steel and retail are interesting sectors as they are expected to benefit from government investment, she said.

ASP picks the banking sector to outperform in the second half, with third-quarter net profit peaking for the year.

Rising non-performing loans will continue to be seen in mortgages and smalland medium-sized enterprise loans, but commercial banks already set aside high impairment charges during the first half.

Krungthai Bank (KTB) will be the exception as it needs to put aside additional loanloss provisions for its loans to beleaguered Energy Earth Plc (EARTH), she said.

ASP’s top pick for the banking sector is Siam Commercial Bank.

Several mega-infrastructure projects are expected to go under auction in the third quarter. The broker’s top pick for construction is Unique Engineering and Construction Plc (UNIQ).

The steel sector’s net profit is expected to recover this quarter thanks to rising global prices after a glut from May to June. MCS Steel Plc (MCS) is ASP’s top pick in the sector.