สวัสดีตอนเช้า - 1 ส.ค. 2567 เแนวโน้มทดสอบกรอบบนเดิม

The Fed signaled a cut in interest rate in September, which will brighten the SET and encourage it to test its previous upper bound at resistances of 1330 and 1335. However, be cautious of selling at resistances, as the index has already risen and believed to already reflect the rate cut to some extent. Plus, it is approaching technical overbought level, limiting the upper bound. Supports are at 1315 and 1310.

• The Fed decided to maintain interest rates at 5.25-5.50% as expected, but with a signal of a potential rate cut in September. The BoJ raised interest rates to 0.25% and reduced monthly government bond purchases to ¥3tn by 2026.
• US private sector employment in July increased by only 122,000 positions, the lowest since January and below expectations.
• The EIA reported US weekly crude oil stocks decreased by 3.4mn bbl, more than the market expected.
• Today, the UN Security Council is holding an emergency meeting following the assassination of a Hamas political leader in Iran yesterday. This raises concerns that tensions in the Middle East will escalate, potentially affecting oil supplies in the region.
• The Office of Industrial Economics reported the Industrial Production Index in June contracted by 1.71%YoY, with capacity utilization at 58.41%. This is due to lack of domestic purchasing power, high household debt, high interest rates, rising energy costs, and an influx of imported goods into Thailand.
• The BoT reported an economic slowdown in June, with tourism and exports declining. Foreign tourist arrivals in June decreased by 4.4MoM, while export value excluding gold fell by 0.7%MoM.
• The Ministry of Finance identified household debt as a major issue for the Thai economy, focusing on resolving car and credit card debt. The BoT will consider reducing the minimum credit card debt repayment to 5% to help address non-performing loans.
• Today marks the first day of registration for the digital wallet for smartphone users, while registration for those without smartphones will begin on September 16. The BoT expects this to stimulate GDP growth by 0.3% this year.

In the short term the SET is expected to rebound but with limited upside, awaiting 2Q24 earnings releases, which are expected to show growth, while waiting for clearing of the murky political skies. External factors are also expected to support a rebound after profit-taking in technology stocks last week: the Fed and BoE are expected to keep interest rates unchanged and 2Q24 earnings announcement of US listed companies are expected to be strong; China's economy is weak, and the technology war is expected to escalate. Our strategy is "selective buy".

The Thai capital market is expected to rebound but with limited upside, while waiting for clarification of domestic factors and release of 2Q24 earnings. We recommend "Selective Buy" with four main themes:
1) Earnings plays: 2Q24 profit to grow YoY and QoQ and valuations are not expensive - MINT, BEM, OSP, TU, KCE, CPF, TRUE and AMATA.
2) Stocks expected to benefit from short covering after the uptick rule started on July 1, also with strong fundamentals with SETESG Ratings between AAA and A - DELTA, TOP, BEM, MINT and AOT.
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 attacks 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.

PTTGC: The company benefits from rising oil price as a petrochemical producer using natural gas, which is cheaper, and expects positive sentiment from China's stimulus package, which will increase consumption and thereby raise petrochemical demand. 2H24 core profit is expected to grow HoH on recovering GRM and the valuation is attractive with 2024F PBV of 0.4x. Recommend to buy at not higher than Bt27.50/share.
HANA: 2Q24 profit is expected to grow, moving greater growth in 2H24, backed by the AI smartphone replacement cycle. RFID and PMS businesses are expected to be unaffected by rising copper price as they are able to pass costs through to customers; impact from a raise in the minimum wage will also be limited. Recommend to buy at not higher than Bt47.00/share.