| Limited upside. Follow the vote for PM. |
| Market today |
The SET in the short term is seen to have little upside with resistances of 1,545 and 1,555 as short-term technical indicator enters the overbought zone and political uncertainty is leading risk-averse selling ahead of the second round of vote for a PM today. Supports are at 1,526 and 1,518. |
| Today’s highlights |
• Today keep an eye on the second round of voting for PM vote as the House Speaker has not said whether or not Mr. Pita will be put up for PM or not. • OFFO will freeze diesel price at Bt32/litre starting on Jul 21, using the Oil Fund mechanism, to ease cost of living after the excise tax cut ends on Jul 20. • TCCT approved the BCP and ESSO M&A, seeing it as a business necessity and though the market may see competition ease, it will not harm the economy. It approved the merger under six conditions. Within these is not allowing the Ministry of Finance and Social Security to increase BCP’s weighting for five years, controlling the amount of crude oil purchased per supplier to not more than 50% for 5 years to maintain supplier contracts until maturity. • US retail sales in Jun increased more than expected, while US industrial production in Jun continued to decline from May, indicating the Fed may end its upward interest cycle. • 2Q23 profit for Bank of America and Morgan Stanley beat estimates. • HP plans to relocate its PC and notebook manufacturing base from China to Thailand, and will move the commercial laptop manufacturing base to Mexico to diversify risk from China. • Russia oil exports in the last four weeks declined to 3.1mnbbl/day, a six-month low. • China plans 11 stimulus packages, focusing on electrical appliances and furniture markets. |
| Strategy today |
In the short term the SET will continue pressured by politics, as there is still no new government. Concerns from external factors – a slowdown in the global economy and monetary policy - have begun to ease to some extent. We recommend “Selective Buy”. |
| Trading today |
Weekly portfolio: Investors are waiting for clarity on politics, affecting the SET. We recommend “selective buy” in themes with positive drivers: 1) Stocks whose 2Q23 profit is expected to grow YoY – BBL, ADVANC, 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 investors who can handle risk, recommend speculate in stocks in case the political scene shifts – GULF, GPSC, CPALL, SIRI and SC. 4) A fall in the SET to 1,450 is seen as an opportunity to buy stocks whose prices have fallen deeply and have been trading at PER and PBV of below -1SD – CRC, SCGP and OR.In the short term we recommend avoid investment in: 1) Food (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) Tourism stocks that may be negatively affected by politics. |
| Daily Focus |
BBL: 2Q23 profit is expected to grow 56%YoY and 8%QoQ, the strongest in the bank sector, on lower provisions and higher NIM. It is also positioned to benefit the most from an upward interest cycle and has lower quality asset risk than other banks.OSP: 2Q23 core profit will decline YoY but increase QoQ, then grow more strongly in 2H23, supported by higher gross margin from greater efficiency, lower average cost and higher sales volume. |
Today’s reports |
Petrochemicals – Spreads continue to narrow WoW OSP – Solid recovery in 2023SIRI – Preview 2Q23: Up both YoY and QoQ |
