Auto-parts stocks seen in fast lane

       Brighter prospects are expected for automotive stocks in the latter half, experts say, citing that the industry bottomed out in the second quarter and orders have started flowing in to revive the sector's performance in the current quarter.
       Yeap Swee Chuan, chairman of SETlisted Aapico Hitech Plc (AH), said the company's financial results improved in the quarter to June from those in the first quarter, keeping the first-half results in line with its projection.
       AH, which produces a variety of auto parts including chassis and door frames for leading automakers such as Toyota,Isuzu, and Nissan, is scheduled to report second-quarter results tomorrow.
       The company has reaffirmed its forecast that revenue would fall 20-25% this year from 2008 on estimates that overall car sales will decrease from 1.4 million units to 1.1 million, he said.
       "Vehicle sales are improving monthon-month, prompting us to believe that AH and the automotive parts industry in general would perform better in the second half," noted Mr Yeap.
       He added that AH in October would begin supplying parts to Ford Motor's new compact passenger vehicle B-car production in Rayong. Therefore, more revenue is expected in the final quarter.
       AH's two new factories in Rayong have been operated for the manufacturing of plastic fuel tanks, press parts and door sets for Ford's new model, of which a few thousand units are expected to roll out this year from the maximum capacity of 100,000 units a year.
       Analysts also viewed auto-parts suppliers would find bottom in the second half with higher capacity utilisation expected for the passenger car segment in the current quarter.
       "Better prospects should be seen in the second half. Vehicle production,which fell 40% year-on-year in the first half, should be slightly better with an expected 30% annualised drop in the latter half," said Reweenuch Piyakriengkai, an analyst at KGI Securities.
       Earnings of SET-listed Somboon Advance Technology Plc (SAT) should weaken further in the second half but better results are expected in the latter half with more orders for re-stocking and from Kubota, according to KGI.
       Analysts said SAT aimed to gain 220 million baht this year from Kubota, the agricultural vehicle maker. Of the amount,100 million would be realised in the fourth quarter. The company's net profit was worse than expected, falling by 86% year-on-year to 25 million baht in the first quarter with sales sliding 33% to 936 million baht.
       SAT capacity utilisation rate slipped from 50% in the first quarter to 48% in the past quarter, typically the weak season for car sales with long holidays.
       KGI also predicts that a sharp V-shaped recovery is unlikely for the auto sector.
       Kiatnakin Securities has lifted its recommended price of AH from 2.64 baht to 4.28 baht on the expected rebound of the automotive industry in the second half. The bankruptcy of General Motors would increase the sales of Japanese automakers, the major buyers of listed automotive parts companies. Therefore,local parts stocks would benefit.
       Sales of AH closed on Tuesday on the Stock Exchange of Thailand at 5.70 baht,up 45 satang, while SAT rose 15 satang to 7.70 baht.