Sawasdee – October 03 , 2024

To move between 1440-1460

Today’s highlights

• Tesla stock price dropped 3.49% after reporting a miss in 3Q24 vehicle deliveries at 462,890 units. Nike stock price fell 6.8% after abandoning its full fiscal year revenue forecast.
• OPEC+ decided to maintain its total production cut of 5.86 mbd, with 3.66 mbd from OPEC+ members (until the end of 2025) and 2.2 mbd from voluntary cuts by 8 countries (gradually returning from December 2024).
• US Department of Commerce imposed a general tariff rate of 9.13% on solar panels from China routed through ASEAN countries, including Cambodia, Vietnam, Malaysia, and Thailand. It is considering a 90-day retroactive collection.
• JSCCIB says the rapid appreciation of the baht over the past three months has hurt exports and competitiveness, especially for agricultural and food products. If the baht continues to strengthen, it could slice export revenues by Bt180-250bn.
• JSCCIB suggested the BoT reduce interest rates by 25bps this year and another 50bps next year to mitigate the effects of the strong baht. It also suggested reviewing the inflation target framework with the Ministry of Finance.
• The ERC announced bidding for Phase 2 of green energy purchases of a total 2,180 MW, on October 8. The 198 bids who met the criteria but were not selected in the previous round will be given priority consideration.
• The Ministry of Commerce reports a lively vegetarian festival, with increased consumer spending, partly due to the government's Bt10,000 handout to vulnerable groups. DoEB reported fuel consumption in 8M24 was 156.37mn l/d, up 1%YoY.

Strategy today

In the short term the SET is expected to move sideways up but may face profit-taking after sharp rises in stock prices as well as external factors. The market will be boosted by the start of the cyclic downward in interest rate (Finance and BoT will discuss this week), government stimulus and baht appreciation that is expected to continue aiding fund inflow. The SET is expected to surge if funds flow into banks, Property, Electronics and tourism-related stocks; stocks offering good returns are expected to continue to perform well. However, US and China PMIs are expected to slow down. Our strategy is “selective buy”.

Trading today

The SET is expected to move sideways up but may face profit-taking in stocks that have moved up sharply as well as on external factors. We recommend “Selective Buy” with four main themes:

• 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.
• Desire to speculate in stocks poised to benefit when the interest rate cycle starts down - Leasing (MTC TIDLOR), Property Development (AP SIRI), Commerce (CPALL), Utilities (GULF) and REITs (LHHOTEL and DIF).
• Desire 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-Sep to early Nov in years with La Nina.

The baht appreciation in 3Q24 will hurt companies that are primarily exporters, and we suggest avoiding these stocks in the near term: TU, GFPT CBG and KCE. Those who want to speculate on companies that benefit from baht appreciation may choose AAV, GULF, GPSC and BCP.

Daily top picks

CPAXT: One of biggest gainers from the government’s stimulus packages. 3Q24 profit is expected to grow YoY from higher sales and margin, with profit peaking in 4Q24 (up both YoY and QoQ). After the restructure, synergy will be seen beginning in 4Q24 and into mid-2025.

DELTA: 2H24 profit is expected to grow YoY and HoH from higher sales from more AI-related products. There is also upside from development and sale of AI-related power supply developed by DELTA Thailand, meaning it does not have to pay technical fees to DELTA Taiwan. Recommend to buy for trading at not higher than Bt110/share.