สวัสดีตอนเช้า - 23 ก.ค. 2567 มีปัจจัยถ่วง กรอบบนยังจำกัด

Even though the SET will be given a boost by the rise in US markets after technology stocks rebounded, the index is expected to be pressured by the energy sector due to falling oil price and a weak baht, which hampers fund flows. The upper bound is expected to be limited with resistances at 1325 and 1330, while supports are at 1310 and 1300.

• Donald Trump claimed he could defeat Kamala Harris more easily than President Biden in the November election, after Biden announced his withdrawal from the presidential race and endorsed Vice President Harris to run against Trump.
• Jake Sullivan, US National Security Advisor, indicated sanctions are being prepared against Chinese organizations supporting Russia's war in Ukraine, suggesting banks could be potential targets.
• Yesterday, the PBoC unexpectedly cut the one-year LPR to 3.35% from 3.45% and the five-year LPR to 3.85% from 3.95%, contrary to market expectations of unchanged rates.
• South Korea's July exports continued to rise, increasing by 18.8%YoY, with semiconductor exports up 58%YoY.
• Russia announced on July 19 that it was going to raise import taxes on consumer goods, wine, beer, candy, biscuits and shampoo produced in countries supporting sanctions against Russia. This will be effective 7 days after the announcement until Dec 31, 2024.
• The Ministry of Commerce says that after the Prime Minister announces the details of the digital wallet on July 24, stores will be able to register from August 1.
• The Ministry of Energy confirmed electricity rates for Sep-Dec 2024 will remain at Bt4.18/unit, with PTT forgoing compensation from this period's electricity charges to help the public.
• The Ministry of Finance described the Ignite Finance project as a medium to long-term measure to establish Thailand as a global financial economy, focusing on three key areas: new financial business laws, new privileges, and an appropriate business ecosystem.

In the short term, upside is still limited, as the local political scene remains in turmoil. As well, the market is waiting for details about the digital wallet and 2Q24 earnings announcements, which are expected to show some growth. Externally, the market is expected to be supported signals that interest rate will be stepped down, as the US PCE and PMI are expected to slow, plus strong 2Q24 earnings for US companies. However, fund flows returning to EMs may be limited by a weak Chinese economy and insignificant weakening of the US dollar, while the technology war is expected to escalate and may amplify risk on equities globally. Our strategy is “selective buy”.

The Thai capital market is seen to have limited upside, still waiting for domestic clarification and now anticipating 2Q24 earnings announcements, while the escalating technology war is expected to raise risk globally for risky assets. 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 and TRUE.
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 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.

KCE: Sentiment is boosted by the growth in South Korean exports in July and declining copper price. 2Q24 profit is expected to grow 11.4%QoQ on booking revenue from high-margin backlog, aggressive cuts in expenses and benefit from higher taxes in the US and China. The stock is currently trading at a 2024F PE of 23x. Recommend buy at not higher than Bt45.50/share.
BDMS: 2Q24 core profit is expected to be Bt3.4bn, up 11%YoY on growing revenue and EBITDA margin, but falling 17%QoQ on seasonal factors. 2024 core profit is expected to grow 13% to Bt16bn, as operations are expected to be stronger in 2H24. Currently, the stock is trading at a 2024F PER of 26x, lower than -2SD of historical mean.