Expected to rebound at 1400 |
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Market today | Although the SET has not shown signs of a turnaround, it has approached psychological support at 1400, where we can expect recovery. Upper bound is limited at 1416. A break through would be a positive signal of recovery, with next resistance at 1430. | Today’s highlights | • The FTI is preparing to ask the government to urgently address the issue of electricity costs for 2024, with an average electricity price of not above Bt3.60/unit. The Ministry of Energy is conducting public hearings on green electricity, with the first phase of pricing set at Bt4.56/unit.
• The BoT says its monetary policy is on the right track. It notes the economy's problems are structural and reducing interest rates alone cannot resolve the issues. Discussions are planned with commercial banks to support borrowers struggling with loan repayments, plus efforts to manage costs and efficiency to reduce long-term interest rate differential.
• The Houthi rebels have warned they are expanding their attacks on merchant ships passing through the Red Sea to include US vessels in response to air strikes by the US and UK on Houthi bases in Yemen.
• The IMF warns that China's economy faces both short and long-term challenges. Structural reforms are recommended to avoid a significant economic slowdown.
• The PBOC kept its policy interest rate (1-year MLF) at 2.50%, contrary to expectations of a decrease to combat deflation and stimulate lending to support economic recovery.
• Bloomberg reports China's chip imports fell 15.4% in 2023 to US$349.4bn the lowest annual level on record, due to economic uncertainty and the US export ban on chips to China.
• Robert Holzmann, a member of the ECB's policy-setting committee, suggests that the ECB may not reduce interest rates in 2024. | Strategy today | In the short term the Thai stock market is expected to be pressured by external factors, including gloomy economic figures from China’s 4Q23 GDP and US retail sales and existing home sales. However, there are hopes for stimulus packages in China and a cut in interest rate by the Fed that may reduce pressure somewhat; the market lacks new domestic catalysts. Our strategy is selective buy. | Trading today | Weekly portfolio: In the short term the SET is expected to be pressured by gloomy China and US economic figures, although there are hopes for stimulus packages in China and a cut in interest rate by the Fed, which may reduce the pressure. We recommend “selective buy” in themes with specific drivers:
1) Stocks whose prices are still laggard and have underperformed the SET since the beginning of 2023, resulting in a 2024 PER and PBV lower than 5-year average, with good profit expected in 2024 and interesting upside to prices – AOT, BEM, HMPRO, GULF and ZEN.
2) Stocks benefiting from the Easy e-Receipt measure allowing a personal income tax deduction on purchases of up to Bt50,000 between Jan 1–Feb 15, 2024 – CRC, MINT and ADVANC.
3) For investors who want to play on dividend yield of above 5% on 2023 profit (after interim dividend) and XD between Apr-May 2024 – AP, TISCO and KTB.
In the medium term we recommend being cautious on stocks that are set to be affected by El Nino, which will erode purchasing power in the agricultural sector: Finance (MTC, SAWAD), Automotive (SAT, STANLY), Beverages (CBG has high sugar cost) and Food & Agriculture (CPF GFPT and BTG). | Daily top picks | KTB: 4Q23 profit is expected to grow 27%YoY and be stable QoQ, supported by expanding NIM. 2023 profit is expected to grow 21%, underwritten by the widest NIM expansion and lowest asset quality risk versus other banks. The stock has attractive dividend at 5.6%.
GULF: 4Q23 profit is expected to continue growing, backed by the startup of one IPP unit (GDP) in Oct 2023, and increasing contribution from Jackson Generation. 2023 core profit is expected to grow 32%, followed by 28% growth in 2024, yet stock price is laggard with 2024 PER and PBV lower than 5-year average. | Today’s reports | TISCO – Profit in line but weaker outlook; Downgrade | | Click here to read and/or download file Daily240116_E |
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