Published November 6, 2008

Kim Eng Thailand Q3 profit dives 56%

But it expects to maintain full-year results at 2007 level

By GREG LOWE
IN BANGKOK
Email this article
Print article
Feedback

KIM Eng Securities (Thailand) said yesterday that despite reporting declining third-quarter profits in the face of the global financial crisis, the firm would maintain annual performance at last year's levels.

The company posted Q308 profits of 88.61 million baht (S$3.73 million), down 55.89 per cent, or 112.28 million baht, from a net profit of 200.88 million baht for the same period last year.

'The bottom line is we're expecting performance similar to last year. It will be quite a good year with around 500 million baht profit,' Montree Sornpaisarn, CEO Kim Eng Securities (Thailand), told The Business Times. 'Our performance in the first-half 2008 was very strong compared with last year, but the second-half of 2007 was a much stronger base.'

Brokerage fees for Q308 securities trading fell by 52.94 per cent YOY to 261.41 million baht, in response to the market slowdown. The company's market share also contracted to 7.32 per cent from 8.48 per cent as its average daily securities trading dropped from 3.77 billion baht to 1.80 billion baht.

Fees for derivatives trading increased by 49.71 per cent to 46.42 million baht, in response to the market increase in trading volume in the same period.

Company profits were hit by across-the-board market devaluation, rather than a downturn in any particular sector on the Stock Exchange of Thailand (SET), according to Mr Sornpaisarn.

He said the current market volatility made it too early to predict profits for 2009, or when there would be an economic turnaround in Thailand, as the local situation is heavily reliant on global conditions. The possibility of more shocks was never far away in a financial system where banks are leveraged up to 30 times their equity, and with complex debt instruments such as sub-prime mortgages, he added.

SET has recovered more than 20 per cent this week, from its low of 384 points at the end of last month. But while the recovery was in line with other regional markets, Mr Sornpaisarn said it may only be temporary and that investors should remain cautious.

The company's strategy is to attract local investors from outside of the market by alerting them to the investment opportunities available.

'We like those outside of the market to know that this crisis is a golden opportunity for them,' he said, adding that a bigger proportion of local investors can create more stability in the market by reducing the influence of foreign investor panic.

Thailand has one million accounts on SET, but only 200,000 to 300,000 are active, for a country of 65 million, according to Kim Eng Securities (Thailand). This is in stark contrast to Taiwan, where a 23 million population has 8 million investors.

Kim Eng also supports moves by SET to develop an 8.25 billion baht-matching fund to invest in the market.

'SET has talked about this fund since before the financial crisis. It has substantial money, which it needs to invest for returns, but now SET is also thinking about how to create more gearing and momentum in the market. The crisis provides more opportunity.'