AEONTS – 2QFY66: ผลประกอบการเป็นไปตามคาด May sink to a new low |
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Market today | The market overall remains negative, with technical indicators not yet showing a turn, pressured most heavily by concerns over the Fed’s high interest rate and worries over the war in Israel. This is likely to pull the SET down to below 1,430 and it may even dive to a new low with the next support at 1,422. Recovery is limited at resistances of 1,450 and 1,460. | Today’s highlights | • The war between Israel and Hamas has generated more tension in the Middle East and will affect world oil supply, raising prices.
• Russia’s government is allowing the export of diesel by sea after a ban for several weeks (effective Sep 21) that led diesel price in Europe to spike.
• US nonfarm payroll in Sep increased by 360k, the highest since Jan. Unemployment rate was 3.8%, higher than expected.
• UTCC forecasts an active vegetarian festival this year, with greater confidence leading to per capital spending of Bt4,587, a 16-year high, for a total of Bt45bn.
• The prime minister is going to focus on well-rounded water management and targets Thailand to be the last combustible car manufacturing hub.
• Thailand plans to propose to COP28 a greater focus on bringing the Thai economy to be more climate friendly, to be carbon neutral by 2050 and net zero GHG emissions by 2065 on the condition that Thailand will get support in terms of capital and technology from developed countries.
• Google, Amazon, Alibaba and Apple have accelerated their green roadmap, using innovation to adapt to structure, using renewable energy and making manufacturing environment-friendly.
• FETCO expects the 3-month forward investor confidence index to decline 20.6%MoM, back to stable, due to fund outflows and recession. Keep an eye on government stimulus. This year the lead businesses are tourism and recreation. | Strategy today | Last week the SET sank to a new low of 1,429.99, the lowest since Jan 4, 2021, on concerns over the Fed’s stance keeping interest rates higher for longer and slowing in global economies overall, including Thailand. However, in the short term the SET is expected to start to recover and start a rebound after falling to incorporate some of the risks. Our strategy is: opportunity to invest in themes with specific drivers. | Trading today | Weekly portfolio: This week the SET is expected to start to recover, rebounding after a sharp fall that incorporated some of the risks, which we see as an opportunity to invest in themes with specific drivers:
1) Undervalued stocks (price below true valuation) whose prices have fallen into the oversold zone, with strong fundamentals and inexpensive valuation (PER and PBV 2023F below 5-year average) – CPALL, TOP, CPN, BDMS and MINT.
2) Stocks with strong earnings growth (continuous earnings momentum) whose prices have beat the market since the beginning of the year – BCP, HANA, KCE, AMATA, BBL, KTB, BCH and KLINIQ.
3) Speculative stocks if Brent moves closer to US$80/bbl – PTTEP.
In the medium term we recommend being cautious on 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) and Food & Agriculture (CPF and GFPT). | Daily top picks | BDMS: The stock is a safe haven during market fluctuations. Price is down 6.9%YTD, less than the SET’s -13.8%YTD. It is also undervalued, trading below true valuation while fundamentals are strong and profit is poised to grow.
PTTEP: In the short term, sentiment will be positive by the prospective rise in oil price in response to the tension in the Middle East. 3Q23 profit is expected to be strong although it may fall QoQ. We see an entry price as not above Bt163.50/share. | Today’s reports | AEONTS – 2QFY23: In line with estimates |
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