Sawasdee – November 11, 2024

The market is still concerned about how Trump’s policies will affect international trade as well as the strengthening of the dollar, which pulls funds out. Technically, signals are still weak, meaning the SET still has downside, with the next supports at 1460 and 1450. Recovery is limited at resistances between 1475-1480. Key to follow this week is US CPI.

Weak signal, limited recovery

Today’s highlights

Reuters reports the US Department of Commerce has ordered TSMC, Taiwan's major chip manufacturer, to stop supplying advanced AI-related chips to Chinese customers starting Nov 11, after finding TSMC chips in Huawei's AI processors. Huawei is on the US trade restriction list.
China's October inflation rose 0.3%YoY, meeting market expectations but slowing from September. PPI fell 2.9%YoY, more than expected and steeper than September's contraction, reflecting continued weak Chinese demand despite ongoing stimulus measures.
The COP29 conference will be held on Nov 11-22, aiming at a goal of limiting the global average temperature rise to 1.5°C. The US supports coastal issues, while China and India urge developed nations to provide financial aid to developing countries. Europe looks to increase funding for loss and damage.
Fitch Ratings maintained Thailand's credit rating at BBB+ Stable, citing a balance between a strong foreign financial sector and robust macroeconomic policies.
AOT plans to push Suvarnabhumi airport into the world's Top 20 within five years, targeting 200mn passengers, following Changi's commercial development model to establish Thailand as a green airport hub for the global aviation market.
TAT reports the Loy Krathong festival in 2024 is showing growth, and expects ~1.99mn domestic tourists (+9% YoY), generating revenue of ~Bt6.990bn (+12% YoY).
The ERC is opening the public hearing on Ft rate for Jan-Apr 2025, with maximum electricity price at Bt5.49/unit and minimum maintained at Bt4.18/ unit. Current electricity rates could be maintained if EGAT repayment is made gradually.

Strategy today

Although in the short term the SET is expected to move sideways-up due to limited overseas and domestic pressure, US inflation is expected to slow down, which suggests interest rates will continue to come down. The passage of the US election is expected to support continued improvement in the market. Expectations of the impact of policies from the new US government on macroeconomics will cause the market to be more volatile and may affect fund flow direction, especially policies related to China. Domestically, the market is expected to be driven by the final week of 3Q24 earnings reports. Our strategy is “selective buy”.

Trading today

In the short term the SET is expected to move sideways up due to weaker pressure, both overseas and domestic. The market is expected to be driven by the final week of 3Q24 earnings reports. We recommend “Selective Buy” with four main themes:

Earnings plays: stocks for speculation in the final week of 3Q24 earnings reports, on which we rate Outperform with strong fundamentals and 3Q24 profit – AWC, BDMS, TIDLOR, CPALL, BEM and AOT.
Stocks benefit from Trump’s win – AMATA and WHA (tax wall, manufacturing relocation), and CPF TU AOT and MINT (cutting revenue tax, increasing purchasing power, while benefitting from dollar appreciation).
Stocks with high dividend yield and expected to be targets of the Vayupak and tax-deductible funds (SSF, RMF and ThaiESG) and 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 top picks

CPALL: 3Q24 core profit is expected to grow 39%YoY, outperforming the Commerce sector, supported by higher sales and margin in the CVS business and CPAXT. 4Q24, which is high season, is expected to be the best quarter of the year, with government stimulus and lower interest rate raising upside to our estimate.

LHHOTEL: The fund benefits from better tourism and lower interest rate. 3Q24 core profit is expected to be Bt428mn, up 3.6% QoQ on seasonality but surging 87.8% YoY on booking revenue from two new assets, Grand Centerpoint Pattaya and Grand Centerpoint Space Pattaya, in which it invested in 4Q23.