Sawasdee – November 21, 2024

Range-bound, overall still good

Today’s highlights

• The Deputy Minister of Finance says the economic stimulus board has approved in principle a debt relief measure for citizens, which will restructure NPLs with banks by suspending interest and requiring only payment on principal for three years. The BoT supports this household debt relief measure and to help banks is considering reducing FIDF contributions to 0.23% for the 3 years.
• Thai Chamber of Commerce estimates that Trump's 60% tariffs on China will impact Thailand with 10-15% losses, causing economic damage of over Bt160bn. Exports will drop 1.52%, GDP will contract 0.87%, directly affecting electrical appliances, food and rubber industries. It recommends the government urgently stimulate the economy before Thai economic decline worsens.
• The real estate sector is preparing to benefit from the Trump effect, with condominiums awaiting transfer worth Bt30bn, it is monitoring Chinese and Taiwanese companies moving to EEC, aggressively buying land in Chonburi and Rayong, building factories outside industrial zones with a boom in warehouses, offices and residences.
• The Finance Ministry expects to distribute phase 2 of the Bt10,000 handout to 4mn people aged 60 and above, with eligible recipients to be announced in December. Phase 3 is expected to start in April 2025.
• EIA reports weekly crude oil stocks increased by 545,000 barrels, exceeding market expectations. Equinor has resumed production at the Johan Sverdrup oil field (the largest in Western Europe) after a power outage caused a halt last Monday.
• The Minister of Energy has ordered the ERC to temporarily suspend the second phase of renewable energy power purchase until investigations are completed following objections. This is seen as a short-term negative for sentiment for power plant stocks.
• 3Q24 Nvidia's results exceeding market expectations, with total revenue +94%YoY, driven by a 112% growth in Data Center business.

Strategy today

In the short term the SET will move sideways as external factors are limited after the market has accepted that Trump will be the next US president, as seen in funds flowing to US financial and small cap stocks, while still flowing out from EM and China markets due to concerns about US tariff policy. Domestically, the market will be adjusting earnings forecasts after 3Q24 overall earnings weakened YoY and QoQ. There are also key issues to follow: the economic stimulus board meeting on Nov 19 and the constitutional court deciding whether to accept Phue Thai party dissolution on Nov 22. Our strategy is "selective buy".

Trading today

In the short term the SET is expected to move sideways on few external factors and standing by for Trump's tariff policies; at home, the market is waiting for additional economic stimulus. We recommend "Selective Buy" with four main themes:
1) Event plays: stocks expected to benefit from additional stimulus: Bt10,000 handout phase 2, Easy e-Receipt, etc. Recommend Commerce - CPALL, CPAXT, CRC, HMPRO and TNP.
2) Stocks benefiting from a strong dollar and weak baht. Recommend those with revenue from exports - CPF and DELTA - and involved in tourism - AWC, AOT, MINT
3) Earnings plays: stocks whose 4Q24 profit is expected to grow YoY and QoQ, and on which we recommend outperform - GULF, OSP, CBG, AMATA, AU and TIDLOR.
4) 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 and HMPRO.

Daily top picks

AMATA: It is expected to turn in an outstanding performance, backed by both a new high for land sales at 2,500 rai, 27.3% growth in profit and backlog at an all-time high of Bt19.269bn, supporting profit for 6-8 quarters. Land sales are expected to continue strong in 2025 on manufacturing relocation and growth in the new economy.

CPAXT: One player in the Commerce sector that will benefit strongly from additional stimulus. 4Q24 profit is expected to be this year's peak, growing QoQ on seasonality and YoY from higher sales and margin. After the M&A, synergy will start to be seen in 4Q24 and come in more clearly by mid-2025.