Sawasdee – October 21, 2024

To move between 1480-1500

Today’s highlights
• The Government Housing Bank reports the real estate developer confidence index for Bangkok and surrounding areas in 3Q24 dropped to 45.1, the seventh quarterly decline. The sector hopes for government economic stimulus measures and interest rate cuts to help improve the situation.
• The SET is tightening penalties on securities companies, effective November 1, as part of its effort to enhance regulatory oversight.
• The Condominium Association warns of a potential domino effect in real estate after 3Q24 sales declined, with condos seeing up to 60% negative growth. It has urged the BoT to relax LTV rules to attract wealthy buyers and investors.
• The Deputy Minister of Finance discussed potential tourism stimulus measures for flood-affected areas with the Ministry of Tourism, possibly offering double tax deductions for travel expenses.
• The Thai Retailers Association has proposed bringing back the "Shop Dee Mee Khuen" (shop and get a tax refund) campaign, suggesting a tax deduction of up to Bt50,000 to stimulate year-end spending.
• China's 3Q24 GDP growth slowed to 4.6%YoY, the lowest in 6 quarters and below the 5% target, despite better-than-expected September consumption and industrial production figures.
• Netflix stock rose 11.1% to an all-time high after reporting higher-than-expected subscriber growth. Apple stock increased 1.2% following strong iPhone sales in China.

Strategy today
In the short term the SET is expected to move sideways. The index rose to 1500 after the MPC cut interest rate, and the market is expected to have a steady push from US earnings releases, which are expected to be stronger than expected due to low expectations. However, upside is seen as limited as we enter 3Q24 earnings season, while the market is waiting for additional stimulus. Next week economic figures to be reported are US real estate and manufacturing PMI which are expected to slow down. Our strategy is "selective buy".

Trading today
Although the SET continues to climb, upside id beginning to be limited for the short term as we enter the 3Q24 earnings season and as the market waits for a new catalyst. We recommend "Selective Buy" with four main themes:
1) Earnings plays: stocks with strong fundamentals and strong 3Q24 profit - BEM, BCH, BDMS, GULF, TRUE, AU and TNP. Be cautious on sectors that are likely to come in below expectations - Energy, Petrochemicals, Packaging and Electronics.
2) For risk takers who want to speculate after the MPC cut interest rate, we recommend LHHOTEL, DIF, CPALL, AP, SIRI and SPALI, which is expected to benefit from a new loan measure of Bt3mn per person, TISCO and KKP who have large leasing portfolios, and GPSC and BAM, who benefit from lower financial costs.
3) Stocks with high dividend yield and expected to be targets of Vayupak and tax-deductible funds; recommend stocks with profit expected to grow in 2025 - KTB, BBL, ADVANC, HMPRO and BCP.
4) For investors who are concerned about tension in the Middle East and want oil stocks to hedge the risk, er recommend an upstream oil stock - PTTEP.

Daily top picks
AOT: 4QFY24 core profit is expected to be Bt4.0bn, growing 10%YoY from more international passengers, but declining 13%QoQ from lower concession revenue. Profit is expected to be stronger in 1QFY24, tourism's high season, plus upside from China's golden week.
GPSC: Benefits from lower European natural gas price and bond yield. 2024 core profit is expected to be Bt4.58bn, growing 33.8%, with growth continuing in 2025 at 16.3%, supported by contribution from overseas renewable energy projects with higher capacity in India and Taiwan.

Today’s reports
Land Transportation - September traffic down MoM on seasonality
BAY - 3Q24: Weak, as expected
KKP - 3Q24: Big beat on ECL and fee income
KTC - 3Q24: In line with estimates
OSP - Preview 3Q24: Core up YoY but down QoQ
TTB - 3Q24: In line with estimates