How bullish can you get on Thai banking? Barrons say stop in Bangkok to buy banks

Since about July of 2012, broker such as Nomura have been advising a buy on Thai banks, which at that point, the sector was up some 30% to 40%. Nomura, back then still said, “Buy.” Since then it is more up. Now close to a year later, from those Nomura recommendation, the latest is Barrons. Barrons said today, quote: “If you’re shopping for Asian banking stocks that are cheap, have strong earnings growth, and sport reasonably good balance sheets, be sure to stop in Bangkok. Thai banks were at the center of the region’s financial crisis 15 years ago and still haven’t fully recovered. Their stocks’ 34% gain last year was an impressive rebound but still lagged Filipino banks’ 60% gain and Indonesian banks’ 42% rise.” Barrons quote a bank analyst Ismael Pili, regional bank analyst at Macquarie in Hong Kong: “Thai banks are my most preferred picks in Asia.” Barrons also quotes other. “The banks are currently going through their best earnings cycle in over 20 years,” says James Moss, an analyst for Nomura Securities in Bangkok. After 30% earnings growth last year, the sector sells at about 11 times this year’s earnings, and Moss projects at least 27% earnings growth in 2013. In comparison, Malaysian banks trade at 12.8 times this year’s earnings, Singapore banks at 13.2 times, and Filipino banks at 19 times. The Nomura analyst believes the Thai stocks can rise another 20% or more over the next 12 months. Barrons says what prompted the turnaround is that Thai companies are expanding at a pretty rapid pace for the first time since the crisis. “That means demand for loans is picking up. Loan growth will top about 13% this year and over 10% next year. “I think we are still in the early stages of a very strong investment cycle in the country,” says Moss (Source).

 

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