Sawasdee – October 10 , 2024

Highlights

• IEAT approved 11 new industrial estate projects covering 8,900 rai in 9M24, attracting Bt480bn in investment. It plans to send three more projects for board approval. Pinthong recently opened Project 7 on over 1,000 rai to accommodate new industries and is preparing to buy more land for additional estates, confident in the wave of investment relocations.
• Private hospitals are considering withdrawing from social security contracts as there has been no adjustment in treatment fees for five years. The Private Hospital Association says payment for high-cost treatments should not be less than Bt15,000. A review of medical service criteria and rates is scheduled for October 17.
• The Sep 17-18 Fed meeting minutes shows most members supported a 50 basis point interest rate cut, but agreed this cut would not commit to any specific rate reductions in the future.
• The EIA reports US crude oil stocks rose by 5.8mmbbl last week, higher than expected, while gasoline stocks fell by 6.3mmbbl, more than anticipated.
• China's State Council Information Office (SCIO) announced a press conference on fiscal policy for October 12, amid expectations of additional economic stimulus measures.
• The cabinet approved a draft Rail Transport Act proposed by the Ministry of Transport and plans to submit a draft Integrated Ticketing System Management Act by December, expected to take effect in 2025.
• The Tourism Council of Thailand reports a very poor tourism operator index for 3Q24 due to tight money conditions and flood crises, especially in the North. They propose the government immediately implement a "Half-Half" travel scheme to aid affected provinces.

Strategy today

In the short term the SET is expected to move sideways with limited upside as there are no new domestic catalysts; it is waiting for clarification of interest rate direction from BoT and stimulus from the government, which may be offset by short-term baht fluctuation. Global stock markets are in risk-off mode due to the Middle East tension, causing funds to flow out of the Thai capital market. Externally, US inflation does not significantly affect the money market on expectations the Fed’s interest rate direction for the rest of the year will be unchanged. Our strategy is “selective buy”.

Trading today

The SET is seen to have limited upside, with no new catalyst and rising Middle East tension. We recommend “Selective Buy” with four main themes:

• Earnings plays for mid-term investors who want strong fundamentals with strong 3Q24 profit momentum, with growth both YoY and QoQ – BEM, BCH, BDMS, GULF and TRUE.
• Stocks expected to benefit from the Vayupak Fund buying stocks in SET100 with the following characteristics: 1) minimum dividend yield of 3.5%, 2) high SETESG ratings from A to AAA and 5-star CG, and 3) strong financial position with profit growth expected in 2025 – KTB, BBL, BCP, ADVANC and HMPRO.
• Desire to speculate in stocks poised to benefit when the interest rate cycle starts down - Leasing (MTC TIDLOR), Property Development (AP SIRI), Commerce (CPALL), Utilities (GULF) and REITs (LHHOTEL and DIF).
• Rising Brent price on concerns of spreading of the Middle East conflict, setting expected price at US$75-85/bbl. Oil stocks are able to hedge the risk. For investors who can take risks, we recommend an upstream oil stock – PTTEP.

Daily top picks

WHA: Positive view on backlog through 2025. Core profit is expected to grow 12.7% in 2024 and 16.2% in 2025 due to steadily growing FDI and promotional supports in 2024. WHA is positioned to be one of the biggest beneficiaries of the growth in FDI compared to other industrial estate companies.

DELTA: 2H24 profit is expected to grow YoY and HoH from higher sales of more AI-related products. There is also upside from development and sale of AI-related power supply developed by DELTA Thailand, meaning it does not have to pay technical fees to DELTA Taiwan. Recommend to buy for trading at not higher than Bt112/share.