Sawasdee – November 27, 2024

Still pressured, expected to move up from supports

Today’s highlights

• Israel has reached a ceasefire agreement with Hezbollah, mediated by the US and France. The agreement will take effect immediately, with Israel planning to gradually withdraw its forces within 60 days.
• Trump says he will raise tariffs to 10% on all imports from China and 25% on imports from Canada and Mexico on his first day in office (after the Jan 20 inauguration). This is lower than previous threats of up to 60% tariffs on Chinese imports.
• The PM has told EPPO to revise criteria quickly for clean energy selection and purchase, particularly focusing on direct power purchase agreements (direct PPA) to improve competitiveness with neighboring countries.
• The BoT reported that bank lending contracted by 2% in 3Q24, the first negative growth in 14 years. Behind this is increased debt repayments by the government and businesses, with new lending slowing down. NPLs increased to 2.97% across all sectors.
• Thailand’s exports in October grew 14.6%, reaching US$27.2bn (the highest in 19 months). Imports increased by 15.9% to US$28bn, giving a trade deficit of US$794mn. The export target for the year has been adjusted to 4%.
• The country has welcomed 31.3mn tourists this year, generating approximately Bt1.47tn in revenue. The top 5 source countries are China, Malaysia, India, South Korea and Russia.
• The SEC has filed charges against 29 individuals with the Department of Special Investigation and Anti-Money Laundering Office regarding price manipulation and trading volume for DPAINT, which will damage investment sentiment and confidence in ESG.

Strategy today

In the short term the SET will be range-bound with no new catalyst. The market expects US PCE in Oct to be stable from Sep at 0.2%MoM and Chinese Manufacturing PMI to rise slightly or be stable from Oct at 50.1. Funds are expected to continue flowing out from EMs, including Thailand and China, due to the fluctuation of the dollar and uncertainty about Trump’s tariff policies. Domestically, listed companies are in the middle of providing earnings outlooks for 4Q24 and 2025. The market is also looking for additional stimulus from the government. Our strategy is “selective buy”.

Trading today

In the short term the SET is expected to be range-bound with no new catalyst. Funds are expected to flow out of EMs, while at home, companies are holding analyst meetings to provide earnings outlooks, and the market is waiting for more stimulus. We recommend “Selective Buy” with four main themes:

• Stocks expected to benefit from consumption and tourism stimulus and household debt relief measures. Recommend Commerce (CPALL, CPAXT, CRC, HMPRO and TNP), Tourism (AWC, AOT and MINT) and Banking (BBL).
• Earnings plays: Stocks whose 4Q24 profit is expected to grow YoY and QoQ, and which we tag Outperform – GULF, OSP, CBG, AMATA, AU, TIDLOR and BCP.
• 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
• For investors who are concerned about tension in the Middle East and want a stock to hedge the risk, we suggest PTTEP, an upstream oil company.

Daily top picks

CPAXT: 4Q24 profit is expected to be the year’s peak, growing YoY from higher sales and margin and QoQ seasonality. 2024 profit is expected to grow 24.6%, followed by 19% growth in 2025, beating peers’ growth of 15%. After the acquisition, synergy is expected to be seen in 4Q24 and become clearer in 2025-2027.

AOT: One of our top picks in tourism. Profit is expected to continue growing in tandem with more international passengers. FY2025 profit is expected to grow 18%, based on international passengers of 84mn (+15%). 1QFY25 profit is expected to grow YoY and QoQ as it is the high season for the tourism industry.