Sawasdee – November 14, 2024

Limited upper bound, bad news in a fall below 1440

Today’s highlights

• The Minister of Finance said the Economic Stimulus Committee meeting on Nov 19 will discuss economic stimulus measures, such as addressing household debt problems, debt restructuring, and phase two of the digital wallet policy.
• The Minister of Finance said the government's budget constraints make it more difficult to drive the economy, with public debt ceiling not exceeding 70% of GDP. It targets to raise the deficit from the current Bt1.2tn by no more than Bt300bn, setting the trade deficit limit at Bt800bn/year. It hopes growth exceeds 3% next year.
• The FTI has expressed concern over Trump's policies after meeting with US business groups, as data center and cloud companies have requested investment approval but delayed decisions. The Thai Chamber of Commerce suggests accelerating ecosystem development to support investment.
• The Industrial Confidence Index in October was 89.1, increasing from September after the floods subsided, benefits from the Bt10,000 handout raising sales and a reduction in interest rates by commercial banks. It suggests the government implement measures to encourage vehicle purchases.
• US CPI in October rose 2.6%YoY and 0.2%MoM, while Core CPI increased 3.3%YoY and 0.3%MoM, meeting market expectations. This strengthens investor confidence that the Fed will cut interest rates in December.
• China said that the US order for TSMC to halt high-end chip shipments to certain Chinese customers proves that the US is using Taiwan as a pawn to fuel tensions in the Taiwan Strait.
• US Petroleum Institute has called for cancellation of vehicle emission standards and lifting the suspension of LNG export licenses, viewed as threats to employment and energy security.
  
  

Strategy today

Although in the short term the SET is expected to move sideways-up due to limited overseas and domestic pressure, US inflation is expected to slow down, which suggests interest rates will continue to come down. The passage of the US election is expected to support continued improvement in the market. Expectations of the impact of policies from the new US government on macroeconomics will cause the market to be more volatile and may affect fund flow direction, especially policies related to China. Domestically, the market is expected to be driven by the final week of 3Q24 earnings reports. Our strategy is “selective buy”.

Trading today

In the short term the SET is expected to move sideways up due to weaker pressure, both overseas and domestic. The market is expected to be driven by the final week of 3Q24 earnings reports. We recommend “Selective Buy” with four main themes:

• Earnings plays: stocks for speculation in the final week of 3Q24 earnings reports, on which we rate Outperform with strong fundamentals and 3Q24 profit – AWC, BDMS, CPALL, BEM and AOT.
• Stocks that benefit from Trump’s win – AMATA and WHA (tax wall, manufacturing relocation), and CPF AOT and MINT (cut in revenue tax, higher purchasing power, benefit from dollar appreciation).
• Stocks with high dividend yield and expected to be targets of the Vayupak and tax-deductible funds (SSF, RMF and ThaiESG) and with following characteristics: dividend yield of at least 3.5%, high SETESG ratings and high CG and earnings expected to grow - BBL, ADVANC, HMPRO and BCP. Recommend to buy on dip as prices have already moved up.
• For investors who are concerned about tension in the Middle East and want oil stocks to hedge the risk, we recommend an upstream oil stock – PTTEP.
  
  

Daily top picks

CRC: 3Q24 core profit grew 24%YoY and 4%QoQ, higher than expected, due to low SG&A to-sales and higher-than-expected other revenue. 4Q24 profit is expected to be the year’s peak, driven by seasonality, branch expansion and effective expense control. The company will benefit from the expected new stimulus. Recommend to buy for trading at not higher than Bt31.50/share.

LHHOTEL: 3Q24 core profit grew 104.3%YoY and 12.8%QoQ, higher than expected, due to lower-than-expected cost. 4Q24 profit is expected to grow YoY and QoQ, while there is upside to estimates. An earlier fall in the fund price due to rising US bond yield is seen to be an opportunity to buy as the Fed is expected to continue to cut interest rate.