Sawasdee – November 5, 2024

Range-bound, waiting for the US election

Today’s highlights

• The BoT Chairman Selection Committee announced postponement of their meeting to Nov 11, saying it needed more time to thoroughly consider information and prevent allegations of political interference.
• FETCO reports the investor confidence index for the next 3 months remains in the "very bullish" zone for the second month at 160.66, supported by government economic stimulus, the MPC interest rate cut and tourism sector recovery.
• Today, all eyes are on the US election, where polls show a tight race between Republican Donald Trump and Democrat Kamala Harris.
• The Department of Energy Business reported that average fuel consumption in 9M24 was 155.37mn liters/day, up 1.2%YoY, driven by increased diesel and jet fuel consumption of 2.9%YoY and 17.3%YoY respectively, following economic and tourism recovery. Gasoline consumption contracted 0.6%YoY.
• The Minister of Finance expects GDP in 2024 to grow 2.7%, which it considers satisfactory in view of the flooding in several provinces and delays in the FY2024 budget. The government is currently considering economic stimulus measures, focusing on short-term initiatives.
• Several Chinese EV brands reported record-high deliveries in October, with BYD showing strong growth of 5.6% to ~500,000 units, along with Xpeng and Geely, benefiting from Chinese government industry subsidies.

Strategy today

In the short term the SET is expected to recover from 1450 on hopes China's inflation will be lower than expected, leading it to increase stimulus, plus a likely 25 bps cut by the Fed, which will support stock markets and the US election, which will help clear the uncertainty about the US economy. There may be high fluctuation if Trump wins the election. Domestically, 3Q24 earnings announcements are expected to drive the market. However, FX volatility and funds flowing out of Asia's markets will pressure the SET's upside at 1500. Our strategy is "selective buy".

Trading today

In the short term the SET is expected to recover from 1450 but is still pressured at 1500 due to FX fluctuations and fund outflow from Asia. We recommend "Selective Buy" with four main themes:
1) Earnings plays: stocks on which we rate Outperform with strong fundamentals and 3Q24 profit - CPAXT, TU, BCH, MTC, CBG, WHA, BDMS, CPALL, TIDLOR, BEM and AOT.
2) Global plays: stocks which benefit from a weakening baht in the short term, with YoY 3Q24 earnings growth and growth both HoH and YoY in 2H24 - TU, AOT.
3) Stocks with high dividend yield and expected to be targets of the Vayupak and tax-deductible funds (SSF, RMF and ThaiESG) and with following characteristics: dividend yield of at least 3.5%, high SETESG ratings and high CG and earnings expected to grow - BBL, ADVANC, HMPRO and BCP. Recommend to buy on dip as prices have already moved up.
4) For investors who are concerned about tension in the Middle East and want oil stocks to hedge the risk, we recommend an upstream oil stock - PTTEP.

Daily top picks

AWC: 3Q24 profit is expected to be most outstanding among peers. Core profit is expected to grow 92%YoY and 19%QoQ - while peers are expected to see a QoQ decline. 2024 core profit is expected to grow 57% and grow another 23% in 2025, supported by improving hotel operations. The strong earnings will drive stock price.

BCP: Stock price has fallen 9.8% last month, underperforming the SET's rise of 1.3%, likely factoring in the expected 3Q24 losses. GRM is showing signs of recovery in line with oil price direction after OPEC+ postponed raising oil production for another month. The stock has an advantage of being a high dividend stock.

Today’s reports

AWC (High conviction) - Preview 3Q24: Sector's outperformer
CENTEL - Preview 3Q24: Up YoY but down QoQ
PTT - Preview 3Q24F: Sharp fall QoQ and YoY