Sawasdee – November 13, 2024

Still pressured by surrounding elements

Today’s highlights

• The PM scheduled her first economic stimulus board meeting on Nov 19, planning to discuss both extension of existing measures and new, more detailed measures as New Year's gifts for the public.
• The cabinet approved two economic stimulus measures: a Bt15bn credit scheme to help low-income earners resolve informal debt, and a Bt55bn "Buy, Renovate, Repair, Build Home" credit scheme to stimulate the real estate sector.
• The THA said the October 2024 accommodation confidence survey showed an improved hotel business with a 58% occupancy rate, up from Sep 2024 and Sep 2023 due to tourism season. 4Q24 confidence index is expected to improve with cool weather and the New Year high season.
• OPEC has cut its global oil demand forecast for 2024 and 2025 to 1.82mn and 1.54mn bb/day, down from October's predictions of 1.93mn and 1.64mn bbl/day. This marks the fourth month it has lowered its demand forecast.
• China reports October new loan issuance slowed to only 500bn yuan, below market expectations, compared to 1.59tn yuan in September, pressured by low private sector funding demand and declining profitability.
• The Deputy Minister of Finance disagreed with foreign media reports attributing baht weakness (Asia's worst performer) to concerns over the BoT’s independence, arguing external factors like the US presidential election as the main drivers.
• The Japanese PM will prepare a budget of ~¥10tn to support semiconductor and AI industries over next 10 years, aiming to accelerate both public and private sector investment growth.

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, CPALL, BEM and AOT.
• Stocks that benefit from Trump’s win – AMATA and WHA (tax wall, manufacturing relocation), and CPF 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

CPF: 3Q24 core profit is expected to be Bt6.3bn, leading the food sector, supported by strong overseas and domestic livestock prices and low animal feed cost. It has the highest upside among peers from the upcoming downward interest rate cycle, and has low downside from a raise in minimum wage.

AU: 3Q24 profit reached a new high and beat consensus. 4Q24 profit is expected to grow YoY, giving 2024 profit growth of 65%; profit is expected to grow 18% in 2025 on booking revenue from new channels, such as sales through Thai Airways during Oct 1, 2024–May 31, 2025, and 7-Eleven stores, where it plans to stock its products for sale across the country by next year. Recommend to buy for trading at not higher than Bt11.20/share.