ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily240605_T Limited recovery. Risks a new low
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Market today | Although sentiment was aided by lower US job openings than expected to a 3-year low, raising hopes the Fed may cut interest rate, technical indicators are still negative and funds continue to exit, limiting the upper bound at resistance between 1345-1350, and putting the index at risk of falling below its previous low of 1330, with the next support at 1320. | Today’s highlights | • US job openings in April fell for the second month to their lowest in over 3 years, since February 2021. This is creating hopes the Fed will consider cutting interest rates this year.
• Yesterday, copper prices fell below US$10,000 per ton after global inventories increased rapidly. Additionally, demand was wobbled fewer new jobs in May than expected and concerns about a global economic recession.
• Yesterday, corn and soybean futures declined due to weak demand, and the market expects corn planting and crop conditions to improve.
• The Thai Chamber of Commerce maintained its forecast for Thailand's exports to grow by 1-2% in 2024, despite a rebound in exports in April of 6.8% that pushed 4M24 export growth to 1.4%. Behind this is important risk factors in 2H24, such as geopolitical issues, especially between China and the US, and rising freight rates.
• The Thai Cabinet approved an additional budget of Bt122bn for the FY2024 as a central budget for stimulating the economy. The draft is expected to enter parliament in July-August. It also approved tax measures to support tourism in secondary cities during the low season from May to November. The measures are expected to be urgently reviewed by the Council of State.
• ThaiBMA reported that in the first five months of 2024, corporate bond issuance fell 35% to Bt361bn compared to Bt500bn in 2023 due to high interest rates. Private companies are turning to lower-cost channels, such as short-term bills of exchange and bank loans. ThaiBMA is monitoring the Bt540bn worth of bonds maturing in 2H24. | Strategy today | In the short term, the SET is still fragile and range-bound. Domestically, the market lacks a catalyst and is being pressured by politics, keeping it underperforming the region. However, there will be some support from the expectations of better profit in 2Q24 and positive external factors, such as May manufacturing PMI in China and US, which is expected to recover after several rounds of stimulus, and the June 6 ECB meeting, which is expected to see the first interest rate cut. Our strategy is “Selective Buy”. | Trading today | The Thai capital market is still fragile as political risk remains in play. However, there is support lying in expectation of growth in 2Q24 profit and external factors to be reported next week will support. We recommend “Selective Buy” with four main themes:
1) Stocks whose 2Q24 profit is expected to grow YoY and QoQ, while valuations are attractive who are players in industries that have been able to outshine the market YTD – ICT: ADVANC; Tourism: MINT; and Food: TU, BTG and OSP.
2) Stocks expected to benefit from recovery in manufacturing, especially in China, whose profit has touched bottom but whose stock prices are yet to respond appropriately - KCE, SCGP and PTTGC.
3) For high-risk takers and those interested in small-cap, we select companies whose 2Q24 profit is expected to grow YoY and QoQ, whose valuation is attractive and who pay regular dividends – AMATA, AU, KLINIQ, TPAC and TNP.
4) Tension has eased about the situation in the Middle East, leading Brent down to the lower bound of US$80-90/bbl, which is seen as an opportunity to hedge. For high-risk takers, we recommend an upstream oil stock – PTTEP. | Daily top picks | KCE: In the immediate term, sentiment has been raised by the drop in copper price. 2024 core profit is expected to grow 44.7%. 2Q24 profit is forecast to grow both YoY and QoQ on high backlog orders for special-grade PBC (HDI), which carries a high margin, then in 2H24 high season will arrive. It will also enjoy a wider margin from its cost reductions.
CPALL: Price is seen as undervalued, recently trading at 2024F PER of 23x or -2S.D. of 10-year historical PER even though earnings are strong. 2024 core profit is forecast at Bt23bn, growing 28%YoY on higher sales, wider margin and lower interest expense. This does not included upside from the proposed digital wallet. | Today’s reports | Petrochemicals – Naphtha cost swung back up WoW
THANI – In a very cautious mode | | Click here to read and/or download file Daily240605_E |
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