Limited recovery, expected to decline. |
| Market today |
The SET is expected to decline, pressured by concerns the Fed will raise interest rate after US retail sales came in higher than expected to the highest since Jan, with supports at 1,510 and 1,500. Recovery is limited at resistances at 1,530 and 1,540. The index must break through these before signals are again good. |
| Today’s highlights |
• The NCB states between 2020-1H23, banks have sold and transferred more than Bt287bn in debt and are likely to sell more, while institution NPLs in 2H23 are expected to be higher than in 1H23.• Fitch Ratings warns of another possible downgrade in US bank ratings to A+, including JP Morgan, the largest bank, and Bank of America.• US retail sales in Jul grew by 3.17%YoY, higher than expected, supported by sales on Amazon Prime day; the home builder confidence index in Aug fell for the first time in 7 months. Fed New York reports a lower manufacturing index in Aug than expected.• The Chinese government has approve Changan Automobile to apply for BOI for the first phase worth Bt8.8bn to set up a manufacturing base in Thailand to supply ASEAN, Australia, New Zealand, UK, South Africa and other markets.• China retail sales and industrial production in Jul rose just 2.5% and 3.7%, respectively, lower than expected, while unemployment rate in Jul increased from 5.2% to 5.3%.• PBoC cut its 1-year MLF interest rate by 15bps to 2.50%, opposite from market expectation, reflecting China’s worries over a recession especially in the real estate sector.• Russian Central Bank raised interest rate from 8.5% to 12% after the ruble depreciated to a 16-month low against the US dollar. |
| Strategy today |
The SET will move sideways in a bound of 1,500-1,550 although there is a sign that fund flows are slowing sells and returning to EM markets. Upside is seen as limited as the political situation is uncertain and the end of 2Q23 earnings season is approaching, switching investment to a focus on earnings plays. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is seen to have limited upside as politics is unclear and the end of 2Q23 earnings releases is approaching. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY and 3Q23 profit is expected to continue to grow YoY and QoQ – ADVANC, BBL, HMPRO and III. 2) Stocks paying an interim dividend on 1H23 profit with ~2% dividend yield – SPALI, RJH and TU. 3) Speculation in oil stocks after weak 2Q23 profit but heading toward improvement QoQ in 3Q23. Fundamentally – BCP and PTT; strategically – TOP and PTTEP.In the short term we recommend avoid investment in stocks that are 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: Profit momentum is strong. 3Q23 profit is expected to grow YoY from continuous growth in sales and margin in the CVS business and improving profit share from CPAXT on lower financial cost after refinancing in April.ERW: 2Q23 profit is Bt142mn, higher than INVX and market expectations, supported by strong RevPar, EBITDA margin and profit share, while 3Q23 profit is expected to grow strongly (+YoY and +QoQ), which will support a rise in stock price. |
Today’s reports |
Petrochemicals – Positive week for product spreadsASP – 2Q23: Beat on investment incomeBCH – 2Q23: Improved QoQ as expectedBLA – 2Q23: Slight miss on combined ratio and ECLBTG – 2Q23: In line with market estimatesBTSGIF – 1QFY24: Down QoQ, but growing YoYCPF – 2Q23: Beat estimates from extra gainsCRC – 2Q23: Below estimates on FX lossERW – 2Q23: Beat estimates on operationsPSH – 2Q23: Core down, net up on extra gainSAWAD – 2Q23: Slight miss on ECLTQM – 2Q23: Missed on toplines |
