SCC – พรีวิว 3Q66: คาดกำไรลดลง QoQ Range-bound, wait for US CPI |
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Market today | The SET is expected to move between 1,440-1,462. Yesterday’s surge suggests a slowdown at a resistance of 1,462 due to selling to avoid risk ahead of a long weekend. Investors are also waiting for US CPI on Thursday US time. Supports are at 1,450 and 1,440, which is expected to stand. | Today’s highlights | • US PPI in Sep grew 2.2%YoY, higher than expected, to a 5-month high, while core PPI in Sep grew 2.7%YoY, also higher than expected.
• The Fed Minutes indicated that the majority of those on the committee thought the Fed should decide very carefully what the future direction should be for interest rate, while many of those on the committee signalled a lower possibility of raising rates.
• Saudi Arabia pledged to prevent the escalation of the situation in the Middle East, building stability in the oil market to reduce the effect on oil price.
• Exxon Mobil acquired Pioneer Natural Resources for US$59bn, making Exxon Mobil the largest oil operator in the US.
• BoT forecasts 2024 GDP growth of 4.4%, including the government stimulus packages, particularly the Bt10,000 digital wallet. If this changes, GDP may grow more than 4%.
• BOI targets to be a manufacturing hub for EV and combustible engine cars and plans to issue supportive measures, including an aggressive 4-year strategy to invest in five industries: EV, BCG, electronics and digital, promoting Thailand as a center for international businesses.
• The Thai Hotel Association in the South said 15% of Israeli tourists have cancelled reservations in Phuket but others have extended their stay in Thailand to avoid the war. | 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 intention to keep 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 and continuous earnings growth, whose prices have beat the market since the beginning of the year – BCP, 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), Food & Agriculture (CPF and GFPT) and Beverages (CBG has high sugar cost). | Daily top picks | KCE: This is the most interesting stock in the sector as it has a clearer recovery signal in 2H23, which is high season for its segment, which will continue through 2024 on higher demand from vehicle-related products while inventory levels are low. Valuation is still at discount against historical PE average.
GULF: 2H23 core profit is expected to grow YoY and HoH, supported by another IPP, GDP unit 2 (662.5MW), which will start up this month, and profit share from Jackson Generation, which is expected to grow HoH from the loss of Bt359mn in 1H23 due to low electricity price. | Today’s reports | SCC – Preview 3Q23F: Expect a fall QoQ |
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