Sawasdee – November 19, 2024

Sentiment positive, expected to continue to move up

Today’s highlights

• Watch today's economic stimulus board meeting, scheduled to discuss policies such as the second phase of the Bt10,000 handout for elderly, debt relief, real estate stimulus and tax deductions to boost spending.
• The Minister of Finance has led a BOI team to Shanghai to attract investment amid Chinese company concerns over US election results. They have met with battery and electronics companies to promote Thailand as production base in ASEAN. In 9M24, Chinese investment applications in Thailand reached Bt114bn.
• The NESDC reports 3Q24 GDP growth of 3%, driven by non-agricultural production, services and accelerated government investment. It revised its 2024 GDP growth forecast to 2.6% from 2.5% and projects 2.8% growth in 2025. Risks identified include Trump's economic policies and high household and business debt levels.
• The US Home Builder Confidence Index for November rose to 46, the highest in seven months and above market expectations, supported by an anticipated increase in sales and hopes for government deregulation in the housing market.
• Yesterday, Russia launched its most severe aerial attack on Ukraine in three months, damaging Ukraine's energy infrastructure. The US government approved Ukraine's use of US long-range missiles to strike Russia, raising concerns about escalation.
• The Chinese government has cancelled the 13% export tax rebate on aluminium as of December 1, pulling aluminium producer stocks down yesterday, while on the London Metal Exchange (LME), aluminium prices rose ~6%.
• Nvidia's new AI chip, Blackwell, is reportedly having overheating issues, raising concerns about delays in Data Center launches, compounding existing delivery delay problems.

Strategy today

In the short term the SET will move sideways as external factors are limited after the market has accepted that Trump will be the next US president, as seen in funds flowing to US financial and small cap stocks, while still flowing out from EM and China markets due to concerns about US tariff policy. Domestically, the market will be adjusting earnings forecasts after 3Q24 overall earnings weakened YoY and QoQ. There are also key issues to follow: the economic stimulus board meeting on Nov 19 and the constitutional court deciding whether to accept Phue Thai party dissolution on Nov 22. Our strategy is "selective buy".

Trading today

In the short term the SET is expected to move sideways on few external factors and standing by for Trump's tariff policies; at home, the market is waiting for additional economic stimulus. We recommend "Selective Buy" with four main themes:
1) Event plays: stocks expected to benefit from additional stimulus: Bt10,000 handout phase 2, Easy e-Receipt, etc. Recommend Commerce - CPALL, CPAXT, CRC, HMPRO and TNP.
2) Stocks benefiting from a strong dollar and weak baht. Recommend those with revenue from exports - CPF and DELTA - and involved in tourism - AWC, AOT, MINT
3) Earnings plays: stocks whose 4Q24 profit is expected to grow YoY and QoQ, and on which we recommend outperform - GULF, OSP, CBG, AMATA, AU and TIDLOR.
4) 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 and HMPRO.

Daily top picks

CPALL: 4Q24 is expected to be the year's best quarter, growing both YoY and QoQ on high season, strong SSS growth and margin continuing to rise on more high-margin products; additional government stimulus and interest rate cut are seen as upside.

PTTEP: Strong oil price in the short term will be a catalyst to stock price; it is also is a hedging asset to the Middle East conflict. Profit and balance sheet are also strong. 2024 core profit is expected to be Bt80bn, growing 2%YoY. Recommend to buy for trading at not higher than Bt125/share.