Upside is limited on less push from buying in big caps as many enter overbought position, while funds are going into speculation in mid to small caps, which affect the market less. The market also lacks a new catalyst. Resistances are between 1470-1475, while supports are at 1450 and 1440. A fall below support would be a bad sign. |
• Exports in August reached US$26.182bn (+7.0% YoY), while imports were US$25.917bn (+8.9% YoY), resulting in a trade surplus of US$264.9mn. The growth was driven by agricultural and food exports, on higher spending in major trade partner countries.
• EPPO decided to keep LPG price unchanged, at a retail price of ~Bt423/15 kg tank from October 1 to December 31, 2024, to avoid impacting the cost of living.
• The BoT acknowledged the baht's volatility, which has strengthened by more than 3.8% YTD compared to other regional currencies to a 30-month high of Bt32.563/USD. The BoT is ready to intervene if abnormal fluctuations occur.
• Eastern and Western Libyan governments signed an agreement to appoint a new central bank governor, a first step in resolving disputes over control of the central bank and oil revenues.
• The EIA reported a larger-than-expected decrease in US crude oil stocks of 4.5mn bbl, while gasoline stocks fell by 1.5mn bbl and distillate stocks decreased by 2.2mn bbl.
• The ADB revised Thailand's economic growth forecast for 2024 down to 2.3% from 2.6%, and for 2025 down to 2.7% from 3.0%. Tourism and private consumption are expected to be the main support to growth.
• The Thai National Shippers' Council (TNSC) expects the strengthening baht to impact export orders in late 2024 and 1Q25, particularly for agricultural exports. |
In the short term the SET is expected to move sideways up and has limited upside, supported by the cut in interest rate and expectation of economic stimulus by the government. Short-term baht appreciation is also expected to support greater investment in the Thai capital market compared to the region as fund flows in September show foreign flows turning from net sell to a buy of more than Bt30bn. However, Asian economies, especially China, are still weak. Our strategy is "selective buy". |
The SET is expected to move sideways up but has limited upside in the short term, with funds expected to flow into defensive stocks and those with specific drivers. We recommend "Selective Buy" with four main themes:
1) Investors who want to speculate in stocks with signs of a turnaround and an attractive valuation, with PER and PBV below -1SD - AOT, CRC, AWC, BCH and BEM.
2) Investors who want to speculate in stocks benefiting from flood repairs - HMPRO, GLOBAL, CPALL, BJC, DCC and TASCO, with data showing an average return of 5% for those speculating from mid-September to early November in years with La Nina in 2010-2023 (except 2020 which was derailed by COVID-19).
3) Investors who want to speculate in stocks expected to benefit when the interest rate cycle starts down - Leasing (MTC TIDLOR), Property Development (AP), Commerce (CPALL), Utilities (GULF) and REITs (LHHOTEL and DIF).
4) Stocks expected to benefit from the Vayupak Fund. We highlight stocks in SET100 that have: 1) good dividend yield of at least 3.5%, 2) SET ESG Ratings between A and AAA and 5-star CG and 3) a strong financial position, with profit expected to grow in 2025 - KTB, BBL, BCP, ADVANC and HMPRO. |
CPALL: 2H24 profit is expected to grow YoY, leading the Commerce sector. 3Q24 profit is expected to grow YoY and QoQ, supported by higher sales and margin at CVS and CPAXT. 4Q24 - high season - is expected to be the best quarter in 2024 and valuation is attractive, trading at 2024F PER of 25x (-2SD).
DELTA: 2H24 profit is expected to grow HoH and YoY on rising sales of AI-related products and upside from development and sale of power supply related to AI developed by DELTA Thailand, avoiding the technical fees paid to DELTA Taiwan. Recommend buy for trading at not higher than Bt111.00/share. |
