สวัสดีตอนเช้า - 6 ส.ค. 2567 ลุ้นรีบาวด์แถว 1250-1260 จุด

Expect a rebound at 1250-1260

The SET still faces pressure from correction in world stock markets, while politics is still concerning with a verdict on the dissolution of the Moving Forward Party scheduled for tomorrow. The index is expected to continue to fall to supports at 1260 and 1250, where it is expected to rebound. Resistances are at 1280 and 1290.

• Global stock markets and risk assets faced selling pressure due to concerns about US economic recession. Yesterday, the Nikkei 225 dropped 12.4%DoD, the most severe decline in history. US markets continued to fall, dropping about 3%DoD.
• China services PMI by Caixin in July rose to 52.1, better than market expectations, expanding for the 19th month. US services PMI by ISM also increased to 51.4, higher than market expectations, bolstered by increases in new orders and employment.
• Goldman Sachs has raised the probability of a US recession to 25% from 15% and predicts the Fed will cut interest rates by 25bps in Sep, Nov, and Dec. However, it noted several reasons that a recession is not a concern.
• The BoT announced measures to assist debtors by maintaining the minimum payment rate for credit cards at 8% for another year until 2025 with the aim of reducing the debt burden on households, especially vulnerable groups. This is expected to slice about Bt1bn from bank revenue per year.
• The Deputy Minister of Finance revealed progress on the digital wallet program, with nearly 25mn already registering. The application update process has gone smoothly, and he confirmed that everything is still on schedule.
• President Biden held a meeting with national security officials to discuss the situation in the Middle East, as the US and several other countries urged their citizens to leave Lebanon as soon as possible.
• Apple stock fell 4.8%DoD after Berkshire Hathaway slashed its stake in the company by nearly 50%, raising Berkshire's cash flow to US$277bn.

In the short term, the SET is expected to decline in tandem with world equity markets on worries over a US recession, while waiting for a clearer political picture at home and this plus uncertainties in the Middle East and the technology war, which may escalate and impact investment, continue to dog the market. However, the SET may decline less than world markets as 2Q24 earnings begin to be released showing earnings recovery. The index is also expected to benefit from fund flows returning to emerging markets. Our strategy is "selective buy".

The Thai capital market is expected to decline on concerns about a US recession but the fall may be less steep than global markets since 2Q24 earnings are expected to show improvement plus more fund flows are expected into emerging markets. We recommend "Selective Buy" with four main themes:
1) Earnings plays: 2Q24 profit to grow YoY and valuations are not expensive - ADVANC, TU, CPAXT, BTG, CBG, BCP, GPSC and AU.
2) 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.
3) 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 and AOT
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.

CPAXT: 2Q24 core profit is estimated at Bt2bn, growing 20%YoY on higher sales and margin and lower SG&A/sales. Growth is expected to continue YoY in 3Q24 and reach the year's peak in 4Q24. There is upside risk from the digital wallet program (not included in the forecast). We recommend to buy at not higher than Bt29.25/share.
KTB: Profit is expected to be stable in 3Q24 and grow YoY in 4Q24, giving 2024 profit growth of 11% on lower credit cost, a return of loan growth and growing fee revenue. The bank has lower quality asset risk than peers and attractive valuation with 2024F PER of 6.0x (-2SD). Recommend to buy at not higher than Bt17.30/share.