Indicators are still negative, recovery is limited. |
| Market today |
| The SET closed below support of 1,520, bring a negative technical indicator and souring sentiment, after US bank credit ratings were downgraded, pressuring the index down. Next supports are 1,510 and 1,500. Recovery is limited at resistances of 1,530 and 1,540. A breakthrough would be positive for a rebound. |
| Today’s highlights |
• UTCC forecasts Bt10.6bn in money circulating during the August 12 holiday, a 2.3% YoY drop, as people are more cautious on spending and just had a 6-day holiday at the end of July.• NCB reported household bad debt in 2Q23 of ~Bt1tn, with mortgage and vehicle debt NPLs of Bt380bn, while debt under restructuring rose to ~Bt1tn.• Moody’s downgraded the credit ratings of 10 small and medium-sized US banks by 1 level and announced it was considering downgrading the ratings of six banks, including Bank of New York Mellon, US Bancorp, State Street and Trust Financial.• The US Department of Commerce reported a decline in the trade balance deficit in Jun of 4.1%YoY to US$65.5bn, though the deficit was higher than expected.• EIA raised US 2023 GDP forecast to 1.9% from 1.5% and expects average Brent crude oil price in 2H23 at US$86/bbl, +US$7 from its earlier forecast.• China’s imports and exports declined more than expected in Jul. Exports fell by 14.5%YoY, the steepest fall in three years and were lower than expected due to a decline in global demand; imports slowed 12.4%YoY. |
| 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 |
PTT: Valuation is seen as inexpensive with PBV of 0.9x and PE of 9.4x, equivalent to 10-year average of 1.3x and 14.6x. The stock price is more stable than the market backed by its strong financial status, and dividends are regular and yield is attractive at 5.8%.SPALI: 2Q23 profit was Bt1.7bn, higher than INVX and market expectations, due to more other revenue than expected, related to the project in Australia. It is paying an interim dividend of Bt0.7/share (XD on Aug 22), equivalent to yield of 3.4%. Recommend SPALI for short-term speculation at a price not higher than Bt20.6/share. |
Today’s reports |
Petrochemicals – Higher feedstock cost depresses spreads AP – 2Q23: Profit in line with estimatesDCC – 2Q23: Missed estimates; outlook challengingKEX – 2Q23: Below expectations on weak volumeMTC –2Q23: Slight beat on NIMSPALI – 2Q23: Beat INVX and consensus forecastsSPRC – 2Q23: Below estimates on weaker GRM THREL – 2Q23: Miss on combined ratioTU – 2Q23: Slightly above estimates |
