สวัสดีตอนเช้า - 25 ก.ค. 2567 ยังอ่อนแรง ขาดปัจจัยหนุนใหม่

The market has no new catalyst and sentiment was soured by the Wednesday fall in US markets and lack of resolution in local politics, meaning there is limited recovery seen for the SET. Resistances are at 1305 and 1310, and given the weak signal, the index may continue to decline with supports at 1294 and 1285.

• US new home sales in June slipped by 0.6%MoM to a 7-month low, below market expectations. Preliminary manufacturing and services PMI in July rose to a 27-month high.
• Alphabet stock price dropped 5%DoD, its lowest since May 31, 2024, after YouTube ad revenue fell short of expectations. Tesla stock fell 12.3%DoD, its biggest drop since September 2020, following a 5-year low in 2Q24 profit margin and lower-than-expected revenue.
• The Ministry of Finance announced the first group of citizens with smartphones can register for the digital wallet from August 1 to September 15 through a government app. Those without smartphones must wait. 18 products are excluded from the project. Stores can register from October 1.
• The Constitutional Court set August 14 as the date it will deliver a verdict on the Prime Minister's qualifications, having deemed the evidence sufficient.
• The Ministry of Finance said improved ThaiESG fund conditions is now at the Council of State and relevant agencies. This means there is no timeline when the cabinet will consider it.
• AREA reported a fall of 31.3% YoY in real estate sales in 1H24 due to slowing demand and lower purchasing power, leading homebuyers to delay decisions. Developers are now focusing on expensive SDH to cater to buyers who are not sensitive to the economic situation.
• The SET announced that in August it will collaborate with the SEC and AMLO to create an MOU for strict law enforcement against stock manipulation and financial statement fraud. This includes asset seizure before investigation and establishing a special task force using AI to examine financial statements, report information, and alert investors.

In the short term, upside is still limited, as the local political scene remains in turmoil. As well, the market is waiting for details about the digital wallet and 2Q24 earnings announcements, which are expected to show some growth. Externally, the market is expected to be supported by signals that interest rate will be stepped down, as the US PCE and PMI are expected to slow, plus strong 2Q24 earnings for US companies. However, fund flows returning to EMs may be limited by a weak Chinese economy and insignificant weakening of the US dollar, while the technology war is expected to escalate and may amplify risk on equities globally. Our strategy is “selective buy”.

The Thai capital market is seen to have limited upside, still waiting for domestic clarification and now anticipating 2Q24 earnings announcements, while the escalating technology war is expected to raise risk globally for equities. We recommend "Selective Buy" with four main themes:
1) Earnings plays: 2Q24 profit to grow YoY and QoQ and valuations are not expensive - MINT, BEM, OSP, TU, KCE, CPF and TRUE.
2) Stocks expected to benefit from short covering after the uptick rule started on July 1, also with strong fundamentals with SETESG Ratings between AAA and A - HANA, TOP, BEM, MINT, OSP, BBL and AOT.
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 attacks 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.

BDMS: 2Q24 core profit is expected to be Bt3.4bn, growing 11%YoY on higher revenue and EBITDA margin, but declining 17%QoQ on seasonal factors. 2024 core profit is expected to grow 13%Y to Bt16bn, with profit expected to be stronger in 2H24. Currently, the stock is trading at a 2024F PER of 26x, below
-2SD of historical average.
MINT: 2Q24 core profit is expected at Bt3.3-3.4bn, growing YoY and QoQ, backed by the entry into high season in Europe. Valuation is attractive, trading at a 2024F PER of 23x, which is around -1SD of historical average. Also, price has yet to factor in the expected 2024 core profit growth of 12%Y to Bt8bn. Recommend to buy for trading at not higher than Bt30/share.