Sawasdee – November 22, 2024

Expected to recover from support of 1422-1433

Today’s highlights

• The PM has unveiled her national development policies, saying Thailand is entering a prime period for investment. She announced five economic stimulus measures for both the short and long term, focusing on real estate, infrastructure investment, agricultural sector enhancement, tourism promotion and private investment support to address economic restructuring.
• The Credit Bureau reported 3Q24 household debt in its system at Bt13.6tn, up 0.5%. NPLs increased to Bt1.2tn, representing 8.8% of total credit. Home, auto and personal loans are stabilizing, while the SME sector is concerning, up 20% YoY and 5.2% QoQ.
• The Minister of Tourism has asked TAT to discuss the "We Travel Together" project with the Ministry of Finance before presenting it to the economic stimulus board. Registration and validity is expected during off-peak tourist season in 2025 (March-June).
• Yesterday Russia launched an intercontinental ballistic missile (ICBM) attack on Ukraine, the first use of high-powered long-range weapons. The Russian Foreign Ministry spokesperson said it is ready to consider "realistic" peace proposals while prioritizing national interests.
• The Japanese PM will unveil a ¥21.9tn economic stimulus package covering wage increases, cash handouts to low-income households, semiconductor and AI investment support and energy subsidies.
• Today watch the Constitutional Court's decision as to whether to accept or reject the "Thaksin Pheu Thai" case regarding an alleged attempt to overthrow the government. If accepted, it is viewed as negative to short-term investment sentiment, as the court deliberation would take several months.

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 is key issues to follow: the constitutional court deciding whether to accept Phue Thai party for alleged attempt to overthrow the constitutional monarchy case 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

AOT: One of our top pick stocks in tourism. 4QFY24 core profit was Bt4.4bn, up 20%YoY, bringing FY2024 core profit growth to 111%. We forecast FY2025 profit growth of 18%, based on international passengers of 84 million (+15%YoY), rising both YoY and QoQ in 1QFY25 due to Thailand’s high tourism season. Recommend to buy for trading at not higher than Bt62/share.

PTTEP: Strong oil price in the short term will be a catalyst to stock price; it is also a hedging asset to the Middle East conflict. Profit and balance sheet are also strong. 2024 core profit is expected to be Bt80bn, growing 2%YoY. Recommend to buy for trading at not higher than Bt129.50/share.