Sawasdee – October 28 , 2024

Today’s highlights

• Today the Prime Minister will attend a meeting with JSCCIB to discuss ways to promote Thailand's economy across all sectors, aligning with global and regional situations.
• The Public Debt Management Office reports Thailand's public debt level is not concerning compared to other countries with similar credit ratings (BBB+). Current public debt is at 64.02% of GDP (Bt11.7tn), still below the 70% threshold
• The Minister of Finance says setting up a semiconductor board would benefit the country's economy as he considers this crucial for Thailand's future, wanting to make Thailand a regional leader.
• The State Railway of Thailand selected the "Cho Thavee-AS" consortium for Phase 2 of the double-track railway project (Khon Kaen-Nong Khai section), budgeted at Bt28.6bn. The contract signing is planned for November, with service expected to begin in 2027.
• The Ministry of Tourism and Sports will launch "Thailand Winter Festival" on October 29 to promote travel. TAT aims to attract 10.7mn foreign tourists in 4Q24 and expects to reach its 2024 target of 36.7mn. It expects arrivals to grow to the 2025 target of 40mn.
• China’s Deputy Finance Minister announced an upcoming large-scale domestic consumption stimulus measure, expected to be announced during the congress meeting (November 4-8).
• Israel's response to Iran over the weekend did not affect oil production facilities or nuclear sites, while Iran reported limited impact. The markets view this as potentially opening doors for future negotiations, putting downward pressure on oil prices.

Strategy today

In the short term the SET is expected to move sideways up, driven by 3Q24 earnings of US and Thai companies, expected to show growth, plus hopes for additional stimulus from China. However, the SET has limited upside with resistance of 1500 due to the strong US dollar that is pulling funds out of emerging markets, while the market is adjusting to the possibility the central bank may cut interest rate less than expected. In the short term be cautious on stocks that benefit from the lower interest and have already risen to reflect an expected sequential cut in rates (DELTA, GULF, ADVANC and INTUCH) as the market is rebalancing. Our strategy is “selective buy”.

Trading today

Although the SET has pushing momentum, short-term upside is limited as companies begin releasing 3Q24 earnings and as the market waits for a new catalyst. We recommend “Selective Buy” with four main themes:

• Global plays: stocks whose 3Q24 earnings are expected to continue to grow YoY, and 2H24 expected to grow HoH and YoY, with short-term benefit from the weakening of the baht since Oct – KCE, TU, MINT and AOT.
• Earnings plays: stocks with strong fundamentals and strong 3Q24 profit – BEM, BCH, BDMS, AU and TNP. Be cautious on sectors that are likely to come in below expectations – Energy, Petrochemicals and Packaging.
• Stocks with high dividend yield and expected to be targets of the Vayupak and tax-deductible funds with following characteristics: dividend yield of at least 3.5%, high SETESG ratings and high CG and earnings expected to grow - BBL, ADVANC, HMPRO and BCP. Recommend to buy on dip as prices have already moved up.
• For investors who are concerned about tension in the Middle East and want oil stocks to hedge the risk, we recommend an upstream oil stock – PTTEP.

Daily Toppicks

TRUE: Our top pick in its sector. 3Q24 core profit beat estimates at Bt2.9bn, up 37.8%QoQ and recovering from a Bt1.6bn loss in 3Q23, on lower expenses than anticipated. 4Q24 core profit is expected to grow YoY on a continued effort to reduce expenses and less price competition. We recommend to buy for trading at not higher than Bt12.50/share.

AOT: 4QFY24 core profit is expected at Bt4.0bn, growing 10%YoY (more international passengers) but decline 13%QoQ (lower concession revenue). Profit is expected to continue to grow both YoY and QoQ in 1QFY25, the tourism high season, with upside from China’s Golden Week.