สวัสดีตอนเช้า - 15 ส.ค. 2567 ปัจจัยการเมืองกดดัน

The SET is expected to fall, pressured by politics after the constitutional court handed down its decision that disqualified the Prime Minister and removed him along with the Cabinet, resulting in a political vacuum. The index has supports at 1280 and 1270; recovery is limited at resistance of 1300 and 1305

• The Constitutional Court ruled 5 to 4 to terminate Srettha Thavisin as Prime Minister and removed the entire cabinet. The vote for a new Prime Minister may be on August 16.
• The SET reports a decline in profit at most real estate companies in 1H24 due to decreased purchasing power, high household debt and slow economic recovery, keeping customers from deciding to purchase housing. The high interest rates are also detrimental to purchases.
• The EIA reported US weekly crude oil inventories increased by 1.4mn bbl against market expectations of a 2.2mn bbl decrease. This marks the first increase in crude oil stocks in 7 weeks.
• The Department of Labor reported CPI in July rose 2.9%YoY, the lowest since March 2021 and lower than market expectations. Core CPI in July increased by 3.2%YoY, the lowest since April 2021 and in line with market expectations.
• President Biden said a ceasefire agreement in the Gaza Strip would help avoid an Iranian attack on Israel following the assassination of Ismail Haniyeh, the political leader of Hamas.
• Eurozone 2Q24 GDP (second estimate) expanded by 0.3%QoQ, meeting market expectations. Japan preliminary 2Q24 GDP showed growth of 0.8%QoQ, higher than market expectations.
• WSJ reported that Huawei is preparing to launch its self-developed AI chip, the Ascend 910C. It is expected to be able to compete with Nvidia's H100 chip. Deliveries are anticipated to begin as early as October this year.

In the short term, the SET is seen to continue fluctuating on political confusion after the prime minister and his cabinet were removed from office by the Constitutional Court. Worries now focus on who will take the helm and what will happen to PM Srettha's economic policies. However, there is hope the Thai capital market will be aided in recovery by the start of fund inflows into EMs. Our strategy is "selective buy".

The Thai capital market is expected to fluctuate on political issues. However, there is hope for more fund inflows, now seen to be starting to flow back to EMs. We recommend "Selective Buy" with four main themes:
1) Earnings plays: strong profit momentum, with 3Q24 profit expected to grow YoY and QoQ and expected to grow YoY and HoH in 2H24, while valuations are attractive - DELTA, GULF, KCE, TU, BTG, BDMS, TRUE and BEM.
2) For risk-averse investors who want to generate cash flow from their portfolio, we suggest dividend stocks for a short-term investment - BCP and OSP, both expected to pay a 1H24 interim dividend with yield of 2%.
3) Stocks expected to benefit from the adjustment of ThaiESG conditions that will raise the maximum tax reduction to Bt300,000 and reduce the holding period to 5 years - ADVANC, AOT, CPALL, BDMS, BBL, KTB and GULF.
4) Brent price has recovered as there continues to be attacks on cargo ships in the Red Sea and on energy infrastructure in Russia, although the Middle East conflicts remain fairly contained. We expect the price to be at US$80-90/bbl. Oil stocks are good as a hedge against risk. For high-risk takers, we recommend an upstream oil stock - PTTEP

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Daily top picks

KTB: 3Q24 profit is expected to be stable YoY and 4Q24 profit is expected to grow YoY. 2024 profit is expected to grow 11% on lower credit cost, improving loan growth, higher NIM and growing fee revenue, while quality asset risk is lower than at other banks, and valuation is attractive with PER 2024F of 6.0x (-2SD).

KCE: 2Q24 core profit is reported at Bt531mn, growing 26.1%QoQ and 65.8%YoY on a higher margin. Profit is expected to continue growing, backed by high PCB demand and cost management that will keep margin widening in 4Q24. It is paying a 1H24 dividend of Bt0.6/share (XD on Aug 26), dividend yield of 1.5%.