Investors in Thai equities should consider consigning earnings-based and book value-based valuations to the dustbin, Jardine Fleming Thanakom Securities says.
In a recent research report it said if you needed to pick stocks in Asia's most volatile market, then look to valuations based on cash flow or adjusted reported earnings.
This is due to a multitude of approaches by listed firms to account for foreign-exchange losses racked up on the back of the baht's devaluation.
'Listed companies appear set to account for forex losses in widely divergent ways, possibly rendering comparative earnings-based valuations impossible and market earnings forecasts meaningless,' it said.
Thai firms preferred to absorb the losses that year, putting the bad news behind them rapidly, it said.
Others have said they would try to amortise the losses over a number of years, but did not specify the period, the report said.
