Sawasdee – November 20, 2024

To move between 1445-1470

Today’s highlights

• President Putin has signed a decree approving the use of nuclear weapons following Ukraine's use of US long-range ATACMS to strike deep into Russian territory.
• IMF warns that retaliatory import tariffs between the US and China will undermine Asia's economic opportunities, dragging down growth at export-dependent countries, eroding supply chain efficiency, and driving up US inflation.
• The Economic Stimulus Board approved a Bt10,000 cash handout for 4mn people aged 60 and above, to be received before Chinese New Year. Phase 3 of the distribution is expected in April 2025 after the smartphone app is completed early next year. The committee also approved a debt pause for NPLs of up to 1 year with total value of Bt1.2-1.3tn and 3-year interest suspension.
• The Ministry of Finance is ready to convert THAI’s debt to 100% equity, asking the cabinet to allow it to maintain a stake of over 40% this November. THAI is expected to again trade on the SET in May 2025.
• The Minister of Transport says the proposal to extend the flat Bt20 flat fare for Purple and Red Lines for another year beyond the November 30 deadline will be presented to cabinet next week.
• The AIMC says the Association of Investment Management Companies and 16 member firms are ready to offer 42 Thai Environmental, Social, and Governance (ThaiESG) mutual funds and are prepared to launch at least fiyr new ThaiESG funds, targeting new investment of no less than Bt25bn.
• Apple Inc. has offered to raise its investment proposal in Indonesia tenfold to US$100mn within two years in exchange for lifting the iPhone 16 sales license suspension, after previous investment fell short of commitment.

Strategy today

In the short term the SET will move sideways as external factors are limited after the market has accepted that Trump will be the next US president, as seen in funds flowing to US financial and small cap stocks, while still flowing out from EM and China markets due to concerns about US tariff policy. Domestically, the market will be adjusting earnings forecasts after 3Q24 overall earnings weakened YoY and QoQ. There are also key issues to follow: the economic stimulus board meeting on Nov 19 and the constitutional court deciding whether to accept Phue Thai party dissolution on Nov 22. Our strategy is “selective buy”.

Trading today

In the short term the SET is expected to move sideways on few external factors and standing by for Trump’s tariff policies; at home, the market is waiting for additional economic stimulus. We recommend “Selective Buy” with four main themes:

• Event plays: stocks expected to benefit from additional stimulus: Bt10,000 handout phase 2, Easy e-Receipt, etc. Recommend Commerce – CPALL, CPAXT, CRC, HMPRO and TNP.
• Stocks benefiting from a strong dollar and weak baht. Recommend those with revenue from exports – CPF and DELTA - and involved in tourism – AWC, AOT, MINT
• Earnings plays: stocks whose 4Q24 profit is expected to grow YoY and QoQ, and on which we recommend outperform – GULF, OSP, CBG, AMATA, AU and TIDLOR.
• 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 and HMPRO.

Daily top picks

DELTA: 4Q24 profit is expected to continue to grow YoY due to growing AI-related product sales driven by strong demand for generative AI and co-location service. 2024 core profit is expected to be Bt20.8bn, growing 17.8%, followed by 11% growth in 2025. Recommend to buy for trading at not higher than Bt170/share.

CPALL: 4Q24 is expected to be the year’s best quarter, growing both YoY and QoQ on high season, strong SSS growth and margin continuing to widen on more high-margin products; additional government stimulus and interest rate cut are seen as upside.