Market Comment 10 Mar 2017

Please see disclaimer on last page 1

Robust SET earnings results in 4Q16 and 2016

► 4Q16 aggregate net earnings were Bt205bn, rising 20.2% YoY.

► 2016 net earnings were Bt909bn, surging 30.4% YoY, the highest

in five years.

► Both 4Q16 and 2016 net earnings were spot on our forecasts of

Bt212bn and Bt900bn, respectively.

► We have maintained our net earnings forecasts for 2017 at

Bt1,034bn, rising 13.7% YoY or EPS growth of 13.7% YoY.

► Strong earnings growth stemmed from Thailand’s broad-based

economic recovery and big turnaround in the resources & energy

sector.

► Major sectors with strong performances were resources & energy,

industrial products, services, foods & agro-business and

consumption.

► Major sectors with underwhelming performances were ICT,

financial and property & construction.

The Stock Exchange of Thailand reported companies listed on the SET had

a combined net profit of Bt205bn in 4Q16, surging 20.2% YoY but slightly

declining 1.5% QoQ (see Figure 1). In 4Q16, the Thai economy grew by 3.0%

YoY, resulting in a broad-based recovery in most economic sectors.

Meanwhile, the energy and petrochemical sectors markedly turned around

from heavy losses in 4Q15 to solid profits in 4Q16 as oil prices have been on

an upward trend since hitting the bottom at around US$27 in January 2016

and averaging over US$50 in 4Q16. In contrast, in 4Q15, overall earnings

were pulled down by poor results in the energy sector from the drastic drop in

oil prices, particularly at PTTEP and PTT, as well as banks’ large provisions

against the defunct SSI UK. For full-year 2016, Thai listed companies posted

net profits at Bt909bn, surging 30.4% YoY and the highest in five years (see

Table 2). Again, this was attributed to macro-economic conditions clearly

improving with GDP growth of 3.2% for the entire year 2016 from 2.8% growth

in 2015. Both 4Q16 and 2016 reported net earnings were spot on our

forecasts of Bt212bn and Bt900bn, respectively.

2013 2014 2015 2016 2017E

GDP Growth (%) 2.9 0.7 2.8 3.2 3.5

SET index - at year end 1,298.7 1,497.7 1,288.0 1,542.9 1,650.0

Implied EPS 88.7 76.4 73.1 93.0 105.7

EPS growth (%) 4.5 -13.9 -4.3 27.2 13.7

PER (x) - at year end 14.6 19.6 17.6 16.6 15.6

PER (x) - @ SET = 1,551.73 17.5 20.3 21.2 16.7 14.7

Implied DPS 42.1 44.0 47.0 49.3 52.9

Dividend yield (%) 2.7 2.8 3.0 3.2 3.4

Market capitalisation (Btbn) 11,496.8 13,856.3 12,282.8 15,079.3 16,125.6

Sources: SET actual, AWS estimates

Table 1: SET Index target for 2016-17

Thailand Research Department

Mr. Warut Siwasariyanon (No.017923)

Tel: 02 680 5041

Market Comment 10 Mar 2017

Please see disclaimer on last page 2

Strong performing sectors

The major sectors with strong YoY earnings performances in 2016 were industrial

products, services, foods & agro-business and consumption (see Table 2). Meanwhile,

the resources & energy sector had a very strong turnaround with 249% YoY earnings

growth. Within the main service sector, the medical and commerce sectors reported

robust earnings growth of 220% and 16%, respectively.

Within underperforming sectors there are high performers

The main financial sector’s earnings expanded only a moderate 4.2% YoY, primarily

due to cautious credit extension and provisioning policies by most banks, as reflected

by only 2.6% growth YoY in all bank loan portfolios in 2016 and high bad loan

provisioning. Within this main sector, the insurance sector posted robust earnings

growth of 28% YoY while the financial and securities sector registered a 14.5%

earnings contraction.

The main property & construction sector’s earnings grew a moderate 8.8% YoY in

2016. Within this main sector, the building material sector registered a very strong

15.9% earnings growth. Meanwhile, construction contractors posted moderate

earnings growth of 9.8% and property developers had poor growth of 1.7%.

245

169205

166

226205207

69

231 221

74

171

243 252209205

0

50

100

150

200

250

300

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

Btb

n

Source: SET and AWS estimates

Figure 1: SET quarterly profits

Market Comment 10 Mar 2017

Please see disclaimer on last page 3

Poor performing sectors

The main ICT sector’s earnings declined 18.1% YoY in 2016 due to earnings

contractions both in the telecom sector (-19.6% YoY) and electronics sector (-7.9%

YoY). The earnings contraction in the telecom sector stemmed from the high license

amortization expenses from skyrocketing 4G license prices, rising expenses from 4G

investment outlays, service price cuts on aggressive marketing campaigns to hastily

capture 4G market shares. Meanwhile, an earnings decline in the electronics sector

was attributed to a slowdown in exports of electronics products and components

resulting from weakened global demand.

Maintained net earnings estimates for 2017

The reported aggregate net profits of Thai companies listed on SET, both for 4Q16

and 2016 were spot on our forecasts. We have maintained our net earnings forecasts

for 2017 at Bt1,034bn, rising 13.7% YoY (see Figure 2 and Table 1).

Further 13.7% earnings growth in 2017 is expected to stem from the acceleration

of Thailand’s broad-based economic growth to a 3.5% estimate from actual

growth of 3.2% in 2016, thanks to the government’s planned infrastructure

investment of Bt1.1tn this year plus other annual public spending of Bt2.1tn and

strong growth of over 3% in household consumption.

We see the earnings growth momentum of the strong earnings performing

sectors in 2016 continuing into 2017, which includes: industrial products, services,

food & agro-business and consumption. Together, these major sectors’ earnings,

accounted for 24% of the total market earnings in 2016. Within this sectors, the

medical sector (2.9%) and commerce sector (5.4%) should continue to post solid

earnings. The petrochemical sector (5.2%) should enjoy the up-cycle of several

chemical products and demand recovery, hence widening spreads and improved

earnings. Please note that the numbers in the brackets on this page are earnings

for each sector as a percentage of total market earnings in 2016.

The resources & energy sector should post solid earnings growth this year after

a robust turnaround with 249% growth in 2016 as crude prices this year are

expected to average around US$55 per barrel, up from US$43 in 2016, according

to the World Bank’s estimate (Commodity Markets Outlook, January 2017). With

increasing crude prices YoY, the operations of oil & gas companies should return

to normalcy for a second year in a row and not have heavy impairment losses or

713 725 785 707 697909

1,034

1.6%8.3%

-9.9%-1.4%

30.4%

13.8%

-20.0%

0.0%

20.0%

40.0%

0

500

1,000

1,500

2011 2012 2013 2014 2015 2016 2017E

Btb

n

Figure 2: SET Annual Profits

Net profits growth rate

Sources: SET and AWS estimates

Market Comment 10 Mar 2017

Please see disclaimer on last page 4

inventory losses like in 2015. This major sector’s earnings accounted for 23.2%

of the total market earnings in 2016.

We believe the banking sector, which accounted for 22% of total market earnings

in 2016, should have double-digit loan growth this year after lackluster 2.6%

growth in 2016, driven by large infrastructure projects most of which will kick start

this year. Given the stable interest environment here and already large

provisioning, bank earnings should be strong this year.

The property & construction sector, which posted a poor earnings performance

last year and accounted for 17.4% of total market earnings, should have strong

earnings this year as they are direct beneficiaries of the government’s push for

infrastructure projects. These include the construction material sector which last

year reported strong earnings growth of 15.9%.

It seems only the ICT sector, which showed poor earnings last year could

continue to report weak earnings. The major mobile phone operators are likely to

continue to be loaded with huge amortization expenses from 4G licenses and

heavy investment costs. However, the electronics sector’s earnings should

improve given the global demand recovery for high tech goods and the baht

depreciation trend against the US dollar.

In sum, the listed companies on SET should broadly have better earnings this

year despite a decelerating growth estimate of 13.7%, which is down from a

robust 27.2% gain last year due to the large-base effect in 2016.

Please see disclaimer on last page 5

CG Report

Score Range Number of Logo Description

90 – 100

80 – 89

70 – 79

60 – 69

50 – 59

Below 50

No logo given

Excellent

Very Good

Good

Satisfactory

Pass

N/A

Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTC EASTW EGCO GRAMMYHANA HMPRO INTUCH IRPC IVL KBANK KCE KKP KTB LHBANK LPN MCOT MINTMONO NKI PHOL PPS PS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMARTSAMTEL SAT SC SCB SCC SE-ED SIM SNC SPALI THCOM TISCO TKT TMBTOP VGI WACOAL

AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIP BMCL BOL BROOKBWG CENTEL CFRESH CHO CIMBT CM CNT COL CPF CPI CSL DCC DELTADEMCO ECF EE ERW GBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICCICHI INET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBK MC MEGAMFEC NBC NCH NINE NSI NTV OCC OGC OISHI OTO PAP PDI PEPG PJW PM PPP PR PRANDA PREB PT PTG Q-CON QH RS S&JSABINA SAMCO SCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMT SNPSPI SSF SSI SSSC SST STA STEC SVI SWC SYMC SYNTEC TASCO TBSPTCAP TF TGCI THAI THANA THANI THIP THRE THREL TICON TIP TIPCO TKTKS TMI TMILL TMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUETSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWPC UAC UT UVVNT WAVE WINNER YUASA ZMICOVNT WAVE WINNER YUASA ZMICO

2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAH AMARIN AP APCOAQUA AS ASIA AUCT AYUD BA BEAUTY BEC BFIT BH BIG BJC BJCHIBKD BTNC CBG CGD CHG CHOW CI CITY CKP CNS CPALL CPL CSCCSP CSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIRE FOCUS FORTHFPI FSMART FSS FVC GCAP GENCO GL GLAND GLOW GOLD GYT HTC HTECHIEC IFEC IFS IHL IRCP ITD JSP JTS JUBILE KASET KBS KCAR KGIKKC KTIS KWC KYE L&E LALIN LHK LIT LIVE LST M MAJOR MAKROMATCH MATI MBKET M-CHAI MFC MILL MJD MK MODERN MOONG MPG MSC MTIMTLS NC NOK NUSA NWR NYT OCEAN PACE PATO PB PCA PCSGH PDGPF PICO PL PLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCIRCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCN SCP SEAOIL SIRISKR SMG SOLAR SORKON SPA SPC SPCG SPPT SPVI SRICHA SSC STANLY STPISUC SUSCO SUTHA SYNEX TAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TICTIW TLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMI UP UPFUPOIC UREKA UWC VIBHA VIH VPO WHA WIN XO

Source: Thai Institute of Directors (IOD)

Corporate Governance Report of Thai Listed Companies (CGR) 2016.

Please see disclaimer on last page 6

CG Report

Anti-Corruption Progress Indicator 2016

2S APCO BROOK CSS GFPT JMART LVT NCL PLANB SAUCE SR TICON TVD WIIKA APCS BRR DELTA GIFT JMT M NDR PLAT SC SRICHA TIP TVO WINABC APURE BSBM DNA GLOBAL JTS MAKRO NINE PRANDA SCCC STA TKT TVT XOABICO AQUA BTNC EA GPSC JUBILE MALEE NMG PREB SCN STANLY TLUXE TWPC ZMICOACAP AS CEN ECF GREEN JUTHA MBAX NNCL PRG SEAOIL SUPER TMC UAEC ASIA CGH EE GUNKUL K MC NPP PRINC SE-ED SUSCO TMI UBISAF ASIAN CHARAN EFORL HMPRO KASET MCOT NTV PSTC SENA SYMC TMILL UKEMAGE ASIMAR CHO EPCO HOTPOT KBS MEGA NUSA PYLON SGP SYNEX TMT UNIQAH ASK CHOTI ESTAR ICHI KC MFEC OCC QH SITHAI SYNTEC TPA UOBKHAI BCH CHOW EVER IEC KCAR MIDA OGC RML SKR TAE TPP UREKAAIE BEAUTY CI FC IFS KSL MILL PACE ROBINS SMIT TAKUNI TRT UWCAIRA BFIT CM FER ILINK KTECH MJD PAF ROCK SMK TASCO TRU VGIALUCON BH COL FNS INET KYE MK PCA ROH SORKON TBSP TRUE VIBHAAMARIN BIGC CPALL FPI INOX L&E ML PCSGH ROJNA SPACK TEAM TSE VNGAMATA BJCHI CPF FSMART INSURE LALIN MPG PDG RP SPALI TFG TSI VNTANAN BKD CPL FVC IRC LPN MTLS PDI RWI SPCG TFI TSTE WAVEAOT BLAND CSC GC J LRH NBC PIMO SAMCO SPPT THAI TTW WHAAP BROCK CSR GEL JAS LTX NCH PK SANKO SPRC TIC TU WICE

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AAV AU CBG CTW GJS KAMART M-CHAI PAP RCL SGF SUC TK TTA VIHACC AUCT CCET CWT GL KCM MCS PATO RICH SHANG SUTHA TKN TTI VPOADAM BA CCN DAII GLAND KDH MDX PERM RICHY SIAM SVH TKS TTL VTEAEONTS BAT-3K CCP DCON GOLD KIAT METCO PF RJH SIM SVOA TM TTTM WGAFC BCPG CGD DCORP GRAMMY KKC MODERN PICO RPC SIMAT SWC TMW TUCC WINNERAHC BDMS CHEWA DRACO GRAND KOOL MPIC PJW RS SIRI T TNDT TWP WORKAIT BEC CHG DSGT GSTEL KTIS NC PL S SLP TACC TNH TWZ WORLDAJ BEM CHUO DTCI GTB KWC NEP PLE S11 SMART TAPAC TNP TYCN WPAJD BGT CIG EARTH GYT KWG NETBAY PMTA SAFARI SMM TC TNPC UAC WRAKR BIG CITY EASON HARN LDC NEW POLAR SALEE SMT TCB TNR UEC YCIALLA BIZ CK EIC HFT LEE NEWS POMPUI SAM SOLAR TCC TOPP UMI YNPALT BJC CKP EKH HPT LH NFC POST SAMART SPA TCCC TPAC UMS YUASAAMA BLISS CMO EMC HTECH LIT NOBLE PPM SAMTEL SPG TCJ TPBI UPAMATAV BM CMR EPG HYDRO LOXLEY NOK PRAKIT SAPPE SPORT TCOAT TPCH UPAAMC BOL CNT ESSO IHL LPH NPK PRECHA SAWAD SPVI TFD TPIPL UPFAPX BPP COLOR F&D IRCP LST NWR PRIN SAWANG SQ TGPRO TPOLY UPOICAQ BR COM7 FANCY IT MACO NYT PRO SCI SSC TH TR UTARIP BRC COMAN FMT ITD MAJOR OHTL PSH SCP SST THANA TRC UTPARROW BSM CPH FN ITEL MANRIN OISHI PTL SEAFCO STAR THE TRITN UVASEFA BTC CPR FOCUS JCT MATCH ORI QTC SELIC STEC THIP TRUBB UVANASN BTW CRANE FORTH JSP MATI OTO RAM SF STHAI THL TSF VAROATP30 BUI CSP GENCO JWD MAX PAE RCI SFP STPI TIW TSR VISource : Thai Institute of Directors

Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)

under Thai Institute of Directors (as of October 28, 2016) are categorised into:

• Companies that have declared their intention to join CAC, and

• Companies certified by CAC.

Companies that have declared their intention to join CAC

Companies certified by CAC

N/A

The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat

Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and

Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the

form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1) , Annual Report (Form 56-2) , or other

relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a

third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as

of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information.

Nevertheless, AWS does not confirm, verify, or certify the accuracy and completeness of the assessment result.

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