Continuing to recover, target of 1,540-1,550. |
| Market today |
The SET is expected to continue moving up as there is a technical rebound indicator and progress in politics. Also, US inflation slowed, leading the market to expect the Fed to stand pat on interest rate. Next resistances are at 1,540 and 1,550, while supports are at 1,520 and 1,514. If it can stand and not fall, recovery may be around the corner. |
| Today’s highlights |
• US CPI in Jul was 3.2%, lower than the 3.3% expected; while core CPI was 4.7%, in line with estimates. The market expects the Fed to stop tightening monetary policy this year. Initial jobless claims grew to 248,000, above the 231,000 expected.• China CPI in Jul was -0.3%, the first decline since Feb 2021, while PPI was -4.4%, declining more than expected. Both signal that China is at risk of deflation.• China lifted the order limiting of travel overseas by tour groups to more than 70 countries, including countries in Asia, Europe, Africa and North America, effective from Aug 10.• FETCO reported a stable investor confidence index while investors expect a catalyst from the formation of a government and tourism recovery. The uncertainty surrounding a new government and stock gain tax are negative factors.• BoT reported average occupancy in Jul of 58%, up MoM, and expects average occupancy in Aug of 54% with summer holidays adding to foreign tourists entering Thailand. |
| Strategy today |
The SET remains range-bound, still waiting for some progress in the formation of a government and the 2Q23 earnings season amid lower inflation forecasts, with inflation expected to slow from last month. Outside Thailand, watch China and US economic data and 2Q23 operating results, expected to show slower recovery signals in 2H23. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is waiting for some progress in the local political scene and watching 2Q23 earnings reports, both at home and abroad. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to continue growing YoY and QoQ – ADVANC (defensive), BEM (defensive) and GULF (priced below pre-election period). 2) Speculative stocks whose 2Q23 profit is expected to beat market expectations – AOT (the first quarter of a return to collecting the minimum guarantee) and MINT (NHH profit at a record high). 3) A stock whose 2Q23 profit was good and is expected to continue good in 3Q23 – SCGP (high season for the packaging business).In the short term we recommend avoid investment in: 1) stocks whose 2Q23 profit is expected to be weak and may be subject to downgrades, specifically in Food (TU, CPF GFPT and BTG) and Securities (ASP and MST), and 2) stocks expected to be affected by El Nino, which will erode purchasing power in the agricultural sector: Commerce (GLOBAL), Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG, where sugar plays a leading role in cost), Hydropower (CKP) and Food & Agriculture (CPF and GFPT). |
| Daily Focus |
CPALL: 2Q23 profit was reported at Bt4.4bn (+48%YoY and +8%QoQ), higher than market and INVX expectations. Profit is expected to continue growing in 3Q23 YoY on higher sales and margin and improved contribution from CPAXT after it financed debt at the end of April.OSP: 2Q23 profit was in line with our estimates with margin improved to a 7-quarter high. We have a positive outlook on recovery in its market share and expect 2023 profit to grow 43.8%, with 7.8% growth in 2024. |
Today’s reports |
AWC – 2Q23: Weak results BEM – 2Q23: In line with expectationsCPALL (High conviction) – 2Q23: Beat estimates on CVS marginGFPT – 2Q23: Beat market estimates on FX gainGULF – 2Q23: Core profit up YoY OSP – 2Q23: In line; solid recovery this yearPTT – 2Q23: Beat estimates; driven by gas unit SAT – 2Q23: In line with market estimatesSCCC – 2Q23: Earnings drop signals sluggish outlook TIDLOR – 2Q23: In line |
