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ท่านสามารถอ่านและดาวน์โหลดเอกสารได้จาก Daily240821_T
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Energy sector weighing on the market
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| Market today |
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The SET is expected to weaken due to pressure from the energy sector following selloffs in the US stock market after oil prices fell. Buying is expected to slow ahead of the Fed's Jackson Hole meeting. Key support levels are at 1310 and 1300, while resistance is ~1335. Today's focus is on the BoT's MPC meeting.
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| Today’s highlights |
• The US State Department says the Israeli PM has accepted a ceasefire proposal for Gaza, reducing risks to Middle East oil supply.
• The BoT's MPC meeting today is expected to keep the policy rate at 2.50%.
• Watch: new cabinet formation and government policies; former PM Thaksin's view that digital wallets must comply with the law and that cash handouts have pros and cons in stimulating the economy.
• Increased non-tariff trade barriers, with the US intensifying import checks on Chinese goods, impact investment and exports to the US for everyone, including Thailand.
• International tourist arrivals fell 9.7% WoW on Aug 12-18 for nearby markets and 9.49% WoW for long-haul markets after holidays in many countries. Since the beginning of the year through Aug 18, Thailand has welcomed 22.47mn foreign visitors.
• SMEs, especially small legal entities, face rising debt repayment issues, with 31,000 NPLs and 34,000 delayed payments in 2Q24.
• PTT has revised its 5-year strategy, ordering business units to complete investment plans by year-end. It plans to sell unprofitable assets, reduce stakes in petrochemical and refinery entities and open up to new partners in TOP, PTTGC and IRPC; the EV charging business continues to be profitable.
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| Strategy today |
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In the short term, the SET will be volatile pending the formation of the new government and announcement of its policies. Support for entry is around 1280. Weak August PMI figures from the EU and US prompt expectations of a Fed rate cut, aligning with the Fed's minutes. The MPC is expected to keep the policy rate at 2.5%. Thailand's 2Q24 GDP growth came in at 2.3%, just under the expected 2.4% (our estimate: 2.1%), up from 1.5% in Q1. Our strategy is "selective buy".
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| Trading today |
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While the SET is expected to fluctuate while waiting for the formation of the new government to learn about its economic policies, there are still hopes the Thai stock market will be aided in its recovery by increased fund flows into emerging markets and greater political clarity. We recommend "Selective Buy" with four main themes:
1) Earnings plays: strong profit momentum, with 3Q24 profit expected to grow YoY and QoQ and grow YoY and HoH in 2H24, while valuations are attractive - DELTA, GULF, 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 (expected to pay interim dividend with a 2% yield) and TU (announced interim dividend of Bt0.31/share, ~2% yield).
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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CPAXT: 3Q24 earnings are expected to continue growing YoY on improved sales and margin, though flat QoQ due to seasonality. Earnings may peak in 4Q24 as high season approaches, with upside potential from the new government's economic stimulus measures.
CKP: In the short term, the company stands to benefit from declining bond yields, and 3Q24 profit is expected to remain strong due to the rainy season, with peak annual electricity production capacity. Latest data shows July electricity output and water inflow increased YoY at both the Xayaburi and Nam Ngum 2 dams. A buy recommendation is given with a target price not exceeding Bt3.82.
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Today’s reports
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Petrochemicals - Lower demand hit product spread
BTS - Searching for the turning point
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