Limited recovery, there still is downside. |
| Market today |
SET recovery is seen as limited with resistances at 1,540 and 1,550. Uncertainty in politics still pressures with negative technical indicators bringing downside to the index. Supports are at 1,520 and 1,510. The market as a whole is seen to be resting. |
| Today’s highlights |
• DoEB reported fuel consumption in 6M23 of 28,730 million litres, up 2.7%YoY, reflecting recovery in the economy as tourists flood into Thailand.• CAAT reported airlines around the world are starting to request slot allocations for the winter (Oct 23 – Mar 24) for new flights to land in main airports in Thailand.• US nonfarm payroll in Jul increased by 187,000, lower than the 200,000 expected, while unemployment rate in Jul is 3.5%, below the 3.6% expected. Average hourly wage increased by 4.4%, above the 4.2% expected.• The market expects the Fed to stop tightening monetary policy soon, with the US economy experiencing a “soft landing”. JP Morgan now expects the US economy to avoid recession and expand this year, then slowing next year.• OPEC+ decided to maintain the production policy as agreed in June, resulting in an oil production cut of 3.66MBD until 2024. Saudi extended its voluntary production cut of 1MBD until September.• Reuters reported that President Biden may use an executive order to limit the transfer by US companies of sensitive technology for semiconductors and quantum AI to China by requiring them to obtain government permission first.• AAPL fell 4.8% on a fall in sales for the third consecutive quarter and it is expected to continue falling. The stock price has fallen the most in a day in percentage terms since Sep 29, 2022, pulling S&P500 down by 16 points. |
| Strategy today |
The SET remains range-bound, still waiting for some progress in the formation of a government and the 2Q23 earnings season amid lower inflation forecasts, with inflation expected to slow from last month. Outside Thailand, watch China and US economic data and 2Q23 operating results, expected to show slower recovery signals in 2H23. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is waiting for some progress in the local political scene and watching 2Q23 earnings reports, both at home and abroad. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to continue growing YoY and QoQ – ADVANC (defensive), BEM (defensive) and GULF (priced below pre-election period). 2) Speculative stocks whose 2Q23 profit is expected to beat market expectations – AOT (the first quarter of a return to collecting the minimum guarantee) and MINT (NHH profit at a record high). 3) A stock whose 2Q23 profit was good and is expected to continue good in 3Q23 – SCGP (high season for the packaging business).In the short term we recommend avoid investment in: 1) stocks whose 2Q23 profit is expected to be weak and may be subject to downgrades, specifically in Food (TU, CPF GFPT and BTG) and Securities (ASP and MST), and 2) stocks expected to be affected by El Nino, which will erode purchasing power in the agricultural sector: Commerce (GLOBAL), Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG, where sugar plays a leading role in cost), Hydropower (CKP) and Food & Agriculture (CPF and GFPT). |
| Daily Focus |
PTTEP: In the short term, stock price will directly benefit from the rise in oil price in response to the OPEC+ meeting to cut production until the end of the next year. 2Q23 profit was reported at Bt21bn (+2%YoY and +9%QoQ), slightly beating expectations, with 2023 dividend yield at 4-5%.MINT: Valuation is seen as inexpensive with 2023F PER of 29x, equivalent to historical average, with solid profit. 2Q23 core profit is expected to be Bt3bn (+YoY and +QoQ), improving in 2H23, leading stock price to outperform the market. |
Today’s reports |
BAM – Preview 2Q23: Up QoQ, down YoYBBL (High conviction) – The best with upsidePTT – Preview 2Q23F: Driven by gas business |
