STOCKS NEWS THAILAND-Citi cuts Thai banking sector, sees moderate earnings growth

Wed Oct 31, 2012 12:20am EDT

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Citigroup downgraded its rating on Thai banking sector to 'neutral' from 'overweight', cautioning of a moderate earnings growth outlook and strong stock price performance year to date.

A mixed bag of third-quarter earnings results has sent the banking subindex 3.7 percent lower since mid-October. That compares with a 0.3 percent loss of the broader SET index .

Krung Thai Bank and TMB Bank provided strong beats, with weakness from corporate segments dragging Bangkok Bank, Siam Commercial Bank and Thanachart Capital, Citigroup said in a report dated Oct. 30.

"The Bank of Thailand surprised with a rate cut, followed by a 2013 estimated GDP downgrade to 4.6 percent versus 5 percent adding doubt on growth," the brokerage said.

"We anticipate the domestic and external sectors to continue to diverge. Government has room and will soon have urgency to accelerate infra spending. We expect bank earnings to moderate from 23-25 percent in 2010-12E to 17 percent in 2013E," it said.

Citi advised investors to stick with quality and beta.

"We still like Kasikornbank for its business strategy of selective credit growth and robust fee and insurance growth. Krung Thai Bank is our second pick, as overhangs on capital and new CEO have been lifted, with benefits if government infra spending materializes," it said.

1055 (0355 GMT) (Reporting by Viparat Jantraprap in Bangkok; Editing by Gopakumar Warrier; viparat.jantraprapaweth@thomsonreuters.com)

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10:20 STOCKS NEWS THAILAND-Dhipaya Insurance drops after rights issue plan

Shares in Dhipaya Insurance Pcl TIP.BK dropped 7.14 percent to 26 baht after the insurer said it planned a rights issue at a lower-than-market price of 12 baht and would use the proceeds to strengthen its capital base.

Dhipaya shares had risen 34 percent so far this year compared with a 26.1 percent gain of the benchmark SET index .SETI.

1015 (0315 GMT)

For the company statement, click (Reporting by Viparat Jantraprap in Bangkok; Editing by Anupama Dwivedi; viparat.jantraprapaweth@thomsonreuters.com)

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