| Fluctuate in a bound and still has a chance. |
| Market today |
The SET is expected to be range-bound with lower bound at supports of 1,487 and 1,478, which should hold, then recover to the upper bound at a resistance of 1,510, or at its previous high of 1,520. A break through this would be a good signal. Follow politics, which is generating uncertainty in the market. |
| Today’s highlights |
• Today the ETC meets regarding Mr. Pita’s holding of ITV shares, continuing from yesterday, at which time it was resolved not to put this to the constitutional court to rule on the qualifications for a member of parliament. • Today the Administrative Court will rule in the case BTS filed against the committee about the revision of the Orange Line’s TOR. • The Homebuilder Association reports lower new house orders in 1H23 than targeted in response to the delay in forming the new government, since it has said it would propose a measure to cut the house building tax by Bt10,000 per house. • The BOI reports applications for investment promotion in 6M23 valued at Bt360bn, growing 70%YoY, notably in electrical appliances, electronics, agricultural and processed food industries. • Loretta Mester, the Fed Cleveland president, said inflation pressure is the reason the Fed is continuing to raise interest rate. Mary Daly, the Fed San Francisco president, also supports two more steps up in interest rate in 2023. Michael Barr, the vice chair of the Fed, said the Fed is progressing on monetary policy and the upward cycle for interest rate is nearing the end. • China CPI in June was stable YoY and lower than expected, after rising 0.2%YoY in May; China PPI in June declined by 5.4%YoY, lower than expected, after falling 4.6%YoY in May. • China will pass two monetary policies to support steady development in the real estate market until end-2024. • NASDAQ100 will rebalance its weighting to reduce the dominance of the “Magnificent Seven” before the market opens on Jul 24. |
| Strategy today |
In the short term the SET will be pressured by the Fed’s Beige Book which expects slowed US economic activities and overly slow declines in US and UK inflation. At home keep an eye on the vote for the PM on July 13, 2023. We recommend “Defensive and Selective Buy”. |
| Trading today |
Weekly portfolio: The SET is being pressured by politics and a slowed world economy. We recommend “defensive and selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY – AOT, BBL, ADVANC, MINT, OSP, BDMS and BEM. 2) Stocks with strong fundamentals that are seen as having high dividend potential with 2023 dividend yield of over 5% - TISCO, LH and AP. 3) For those who can handle risk, we recommend if the SET falls to around 1,450 speculate in stocks expected to recover after a steep fall in price that pulls PER and PBV below -1S.D. – CRC, GULF and SCGP.In the short term we recommend avoiding investment in: 1) Food sector (TU CPF GFPT and BTG) which is seen by the market as likely to be downgraded as 2Q23 profit is expected to weaken QoQ and YoY; 2) stocks expected to be affected by El Nino in 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) and 3) Technology (DELTA, HANA and KCE) due to the conflict between China and the US and expected slow recovery in 2Q23 profit. |
| Daily Focus |
MINT: Valuation is inexpensive with PER 23F at 29x, equal to its historical mean, while profit is expected to be strong, with a 2Q23 core profit of Bt2.8bn (up YoY and QoQ). Improved 2H23 profit will help lead the stock to outperform the market.BCH: The stock is trading at a 23F PER of 32x, equal to -2SD. The low valuation help cushion any price downside. 2Q23 core profit is expected to be Bt277mn, down 76%YoY (off a high base due to COVID-19 services) but improved 9%QoQ. |
Today’s reports |
BCH – Earnings bottomed, valuation undemanding |
