สวัสดีตอนเช้า - 18 ก.ค. 2567 แนวโน้มอ่อนตัว มีปัจจัยกดดัน

The SET is expected to weaken due to pressure from: 1) negative sentiment from a fall in tech stocks, 2) concern about politics and 3) negative technical indicator after closing below 1320. Supports are at 1315 and 1310, while resistances are at 1325 and 1330.

• The US government is considering stricter measures against tech companies that allow Chinese firms access to US technology. Trump suggests Taiwan should pay the US for protection.
• Fed official Christopher Waller hinted at potential interest rate cuts soon, barring major surprises in inflation and employment. This led to gold prices reaching record highs and 10-year US bond yields dropping to a 4-month low.
• The EIA reported a weekly decrease of 4.9mn bbl in crude oil stocks, exceeding market expectations of a 3mn bbl drop and higher than a report by API of a 4.4mn bbl decline.
• ADB maintained its 2.6% GDP growth forecast for Thailand this year, citing tourism and consumption recovery. However, concerns remain about consumer confidence and delays in public investment; GDP is expected to grow by 3.0% next year.
• The Industrial confidence index for June decreased for the third month to a 24-month low due to slow economic recovery and weak consumer purchasing power.
• The parliament approved a supplementary budget of Bt122bn, including the digital wallet scheme to stimulate the economy.
• The BoI plans to introduce incentives for Chinese EV manufacturers to use more locally produced components, aiming to strengthen Thai parts manufacturers.

In the short term, the SET is still fragile and has limited upside due to prolonged political uncertainty and continued uncertainty over the digital wallet; some support is expected from external factors, including US company 2Q24 results, which are expected to be strong despite a slowing US economy, weak China economy and ECB stance of keeping interest rate unchanged. Our strategy is “Selective Buy”. 

The Thai capital market still has limited upside and is waiting for clearer external factors. We recommend "Selective Buy" with four main themes:
1) Stocks whose 2Q24 profit is expected to grow YoY and QoQ and whose valuations are attractive - MINT, BEM, OSP, TU, KCE and CPF.
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 - HANA, TOP, BEM, MINT, OSP, BBL, SCGP 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, CPALL, BDMS, BBL 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.

GFPT: 2Q24 core profit is expected to be Bt524mn, growing 57%YoY on the back of a wider gross profit margin and higher contribution from high-margin exports and lower animal feed cost; QoQ growth is estimated at 19% on seasonal factors. 3Q24 core profit is expected to grow YoY from higher exports, higher product prices and lower animal feed cost.
BDMS: 2Q24 core profit is expected to be Bt3.4bn, up 11%YoY from growing revenue and EBITDA margin, but down 11%QoQ due to seasonality. 2024 core profit is expected to grow 13% to Bt16bn as on strong profit growth in 2H24. Currently, the stock is trading at a 2024 PER of 26x, lower than -2S.D. of historical average.