Aug. 19--The outlook is rosy for electronics stocks, with a global market recovery set to raise electronics firms' profits in the current quarter after good performance in second quarter, said analysts.

Electronics manufacturers are now using about 80 percent of their capacity, as the third quarter is normally their peak season. The automotive industry's expected recovery could add to the momentum and push Thailand's electronic exports into annualised growth in the final quarter, said analysts.

Kim Eng Securities has raised its 2009 earning estimate for Cal-Comp Electronics (Thailand) Plc (CCET) by 20 percent to 1.8 billion baht after Electronics Manufacturing Services (EMS) reported much better-than-expected second-quarter results, thanks to solid recovery in the hard-disk drive (HDD) sector.

CCET, which produces computer components including printed circuit boards for hard-disk drives, LCD monitors and home-entertainment devices, posted second-quarter net profit of 460 million baht with normalised profit surging 275 percent from the previous quarter to 582 million baht.

Western Digital, the second-largest HDD maker and a major client of CCET, saw second-quarter sales revenue climb 4.5 percent to 27.6 billion baht and first-half revenue rise 4 percent to 51.9 billion.

Kitpon Pripisankit, vice-president of Trinity Securities' reseach department, recommended Delta Electronics (Thailand) Plc and Hana Microelectronics Plc as top picks, saying their performance had already bottomed out in the first half.

Hana's semiconductor business reached its bottom in the first quarter. The SET-listed electronic parts maker is now running at 80-90 percent of its integrated circuit (IC) capacity, producing 9-10 million ICs a day, up from 6 million in the first quarter, said Mr Kitpon.

The worst is also over for Delta, with orders placed in July indicating that demand is coming back. In addition, telecom bidding in India and other emerging markets is expected to come to life, driving Delta's revenue in the second half.

Phillip Securities and Kim Eng expect KCE Electronics Plc to return to profitability in the second half after its recent earnings beat forecasts. KCE had a net profit of 4.9 million baht, up from a net loss of 101 million in the same period of 2008, and a loss of 119 million in the first quarter. But revenue sank 36 percent year-on-year in the quarter.

Reviving printed circuit board sales helped lift KCE's revenue by 17 percent quarter-on-quarter, said Phillip Securities' analyst Naree Apisawaittakan.

"About 60 percent of KCE's sales come from the automotive sector, for which we expect to see recovery in the fourth quarter," she said. "The overall electronics sector will perform better in the second half than the first six months. The speed of the industry's recovery next year, however, depends largely on how the world's economy develops."

Share of Hana closed yesterday on the Stock Exchange of Thailand at 18.80 baht, up 10 satang, while Delta lost 10 satang to 16 baht. CCET finished at 3.02 baht, up 16 satang, and KCE edged up 3 satang to 1.75 baht.

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