BTG – 3Q66: ขาดทุนมากกว่าคาดเล็กน้อย
CHG – 3Q66: กำไรดีเกินคาดจาก EBITDA margin
ERW – 3Q66: ไตรมาสที่แข็งแกร่งตามคาด Continuing to move up |
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Market today | The SET is expected to continue to be supported by expectations the Fed will stop its upward interest rate cycle as both US PPI and CPI came in below expectations. The index has resistances of 1,422 and 1,432; in the short term it is expected to rest to reduce heat. Supports are at 1,410 and 1,400, which are expected to stand. | Today’s highlights | • The Ministry of Commerce says the IEA forecasts a global increase in EV sales of 35% to 14mn units this year. China leads with the highest sales globally, while Thailand has registered 66,919 BEVs in 9M23, up 300%YoY.
• FTI reports a decrease in the industrial confidence index in Oct 2023 for the fourth month to a 16-month low. This is attributed to the slow recovery of the domestic economy, as consumer purchasing power remains weak.
• The Prime Minister announced a strategic collaboration with Google and Microsoft, with both companies set to invest over Bt200bn in Thailand. Google will focus on cloud computing, while Microsoft plans to establish a data centre.
• Yesterday, President Biden met with China’s President Xi Jinping for the first time in a year to discuss reducing military and trade tensions, drug trafficking, and issues related to artificial intelligence.
• US PPI in Oct slipped 0.5%MoM, the largest decline since Apr 2021, moving contrary to market expectations of an increase. Retail sales in Oct decreased by 0.1%MoM, the first downturn since Mar.
• EIA reported an increase in U.S. crude oil inventory last week of 3.6mnbbl, exceeding expectations. US crude oil production in October reached a record high of 13.2mn bbl/day. China's oil refinery operations in October decreased from September, following reduced industrial fuel demand and narrowed profit margin.
• UK CPI in Oct showed a significant decrease compared to Sep to a 2-year low. | Strategy today | Although the Thai capital market is facing high volatility, in the short term the SET is expected to recover as economic figures and world earnings results are not as bad as feared, while domestically there is the possibility an LTF will be set up and extend SSF. However, SET upside is seen to be limited from profit-taking after the end of 3Q23 earnings announcements. Our strategy is selective buy. | Trading today | Weekly portfolio: Although the Thai stock market is still facing high volatility, in the short term the SET may recover, though upside is limited. We recommend “selective buy” in themes with specific drivers:
1) Big-cap stocks expected to recover in line with the market with low volatility; we pick undervalued stocks whose prices have entered oversold territory and valuations are not stretched (PER and PBV 2023F are below 5-year average.) – BDMS, BEM, BBL GULF and SCGP.
2) Earnings plays whose 3Q23 earnings will be announced this week, with 4Q23 expected to grow YoY to the year’s best quarter – ERW, AOT, CENTEL, ZEN and CRC.
The Ministry of Finance has approved the establishment of the TESG fund investing in stocks and bonds which focus on ESG to stimulate long-term investment in the stock market. The fund offers a tax deduction of up to Bt100,000 per year with an 8-year holding period, which begins this December. It is expected to attract at least Bt10bn in capital. Selected stocks within the SETESG index that are of interest have the following characteristics: 1) those with an ESG Rating of “AAA” or “AA”, and 2) those who have seen a sharp YTD price drop. We identify five stocks of interest as potential investment targets - TOP, CRC, SCGP, GULF, and ZEN. (In the past, the ministry approved SSF on a special basis or SSFX during COVID to invest in Thai securities by not less than 65%, giving a tax reduction by Bt200,000 per year with an 8-year holding period and starting from Jan 1 to Jun 30, 2020. This brought in Bt20bn in funds into the market, and the SET index rose by 200 points.)
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: Finance (MTC, SAWAD), Automotive (SAT, STANLY), Food & Agriculture (CPF GFPT and GFPT) and Beverages (CBG has high sugar cost).
| Daily top picks | SCGP: This company has been included in the SETESG index as an interesting stock expected to be an investment target given its “AAA” SET ESG rating. Stock price has fallen 34.2% YTD, already incorporating most negatives and core profit is expected to improve in 4Q23 in line with rising packaging paper price, limits downside.
OR: This stock is included in the SETESG index and with its “AA” SET ESG rating, is expected to be an investment target. Price is down 18.9%YTD on what we see as overdone concern on the government’s control over domestic oil price. 4Q23 core profit is expected to be supported by the entry into high travel season, bringing 2023 profit to Bt1.36bn (+31%). | Today’s reports | BTG – 3Q23: Slightly below estimates
CHG – 3Q23: Beat on EBITDA margin
ERW – 3Q23: Strong quarter as expected |
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