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ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily240814_T
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More hopes of a rate cut; follow local politics
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| Market today |
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The SET is expected to climb, supported by greater hopes for an interest rate cut as US PPI was lower than expected. Today, watch for the verdict on the PM's qualification case. If it is found to not be against the constitution, it will be a positive to the index with resistances at 1310 and 1315, while supports are at 1290 and 1285.
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| Today’s highlights |
• At 3:00 PM today, the Constitutional Court will deliver a ruling on the Prime Minister's qualifications, which may affect his ability to hold office.
• The Ministry of Finance is preparing to sell Vayupak One mutual fund units to general investors, with a total value not exceeding Bt150bn. It is offering guaranteed minimum returns as an incentive. The sale is expected in September, listing on the SET in 3Q24.
• The US Labor Department reported Producer Price Index (PPI) in July rose 2.2%YoY, while core PPI increased 2.4%YoY, both lower expectations, indicating lower inflationary pressure.
• The IEA predicts an oil market surplus next year due to increased production in the US, Canada, Brazil and Guyana, despite OPEC's production cuts.
• The Minister of Tourism and Sports reports entry of 21.8mn tourists from January 1 to August 11, 2024, generating ~Bt1tn in revenue. The top five source countries are China, Malaysia, India, South Korea and Russia.
• MSCI announced changes to its indices for August. Four stocks, AWC, EA, GPSC and IVL, were removed from the MSCI Global Standard Index, with no additions. The MSCI Global Small Cap Index added four stocks and removed thirteen, effective at market close on August 30.
• ThaiBMA reported a slowdown in the corporate bond market, partly due to EA's request to postpone bond payments. Bonds rated below BBB- are becoming harder to sell, while investment-grade bonds can still be fully subscribed but take longer to sell.
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| Strategy today |
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In the short term, the SET will continue to fluctuate as players wait for clarification of politics, with the Constitutional Court to hand down its verdict on the PM's qualifications on Aug 14; this week is also the final week to report 2Q24 earnings. Abroad, there are US CPI and China manufacturing, which are expected to decline. The index already reflects these factors to some extent after an earlier correction. However, the SET is expected to recover once politics becomes clearer (expected to test at 1330 if the PM is deemed qualified and 1250 if he is not), and funds start to flow into EM markets. Our strategy is "selective buy".
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| Trading today |
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The Thai capital market is expected to fluctuate while waiting for clarification on politics. However, there is hope for more fund inflows, now seen to be starting to flow back to EMs. We recommend "Selective Buy" with four main themes:
1) Earnings plays: strong profit momentum, with 3Q24 profit expected to grow YoY and QoQ and expected to grow YoY and HoH in 2H24, while valuations are attractive - DELTA, GULF, KCE, TU, BTG, BDMS, TRUE and BEM.
2) For risk-averse investors who want to generate cash flow from their portfolio, we suggest dividend stocks for a short-term investment - BCP and OSP, both expected to pay a 1H24 interim dividend with yield of 2%.
3) Stocks expected to benefit from the adjustment of ThaiESG conditions that will raise the maximum tax reduction to Bt300,000 and reduce the holding period to 5 years - ADVANC, AOT, CPALL, BDMS, BBL, KTB and GULF.
4) Brent price has recovered as there continues to be attacks on cargo ships in the Red Sea and on energy infrastructure in Russia, although the Middle East conflicts remain fairly contained. We expect the price to be at US$80-90/bbl. Oil stocks are good as a hedge against risk. For high-risk takers, we recommend an upstream oil stock - PTTEP.
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| Daily top picks |
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KCE: 2Q24 core profit is reported Bt531mn, growing 26.1%QoQ and 65.8%YoY from a higher margin. Profit is expected to continue growing, backed by high PCB demand and cost management that will keep margin widening in 4Q24. It is paying a 1H24 dividend of Bt0.6/share (XD on Aug 26), dividend yield of 1.5%. Recommend to buy for trading at not higher than Bt39.50/share.
CPALL: 2Q24 core profit was reported Bt6.2bn, growing 34%YoY from improving profit at the CVS business and at CPAXT. 2H24 profit is expected to grow YoY, beating peers, backed by strong sales growth and higher CVS margin and greater contribution from CPAXT. The company is a proxy for the commerce sector in terms of benefits from the digital wallet.
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Today’s reports
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Petrochemicals - Spread weakened WoW on bearish market
AH - 2Q24: Misses estimates on sales, margin
AP - 2Q24: Net profit in line
BAM - 2Q24: In line with estimates
BDMS - 2Q24: In line with estimates
BGRIM - 2Q24: Profit down YoY & QoQ on FX loss
BJC - 2Q24: In line with market estimates
BTSGIF - 1QFY25: Hit by high maintenance cost
CPALL - 2Q24: Slightly above estimates on margin
DIF - 2Q24: In line with expectations
GFPT - 2Q24: Slightly above estimates on margin
KCE - 2Q24: Profit recovers YoY and QoQ
LHHOTEL - 2Q24: Strong performance
SPALI - 2Q24: Net profit up QoQ, slips YoY
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