THERDSAK THAVEETEERATHAM

Executive Vice President / Research

ASIA PLUS SECURITIES

Although foreign holdings of Thai stocks have come below the should-be level – as of April 2018, foreign holdings stayed at 23.60 per cent – based on the current situation there are no signals for diverse movement of foreign capital. The 10-year US bond yield is 0.30 percentage point higher than the 10-year Thai bond yield, which has encouraged capital to move to US dollar-denominated assets and, as a result, has prompted the greenback to appreciate and the baht to depreciate.

Given its market capitalisation at higher than Bt17.5 trillion, if the Thai stock market finds no capital support, its rise is expected to be limited.

Fundamentally, the Thai stock market is strong, reflecting higher-than-expected first-quarter net profit of Bt285 billion, up 11.2 per cent quarter on quarter but down 1.93 per cent year on year. The first-quarter net profit accounts for 26 per cent of estimated net profit for the whole year. There is a higher possibility for this year’s estimated earnings per share of Bt110.

If the market price-to-earnings ratio at 16 times is believed as the strong base and the SET Index drops below 1,750 points, long-term investors should gradually accumulate stocks. Stock picks are: AMATA (fair Value@Bt35.70) for estimated gains from likely higher land prices in the Eastern Economic Corridor (EEC) areas after the enforcement of the EEC bill; BANPU (FV@Bt25.60) for its laggard stock price and indirect benefits from high crude price.

PRAKIT SIRIWATTANAKET

Vice President

KASIKORN SECURITIES

Aside from the China and US trade issues, the Thai stock market has been pressured by capital outflows from emerging-market countries. This week will see several positive factors, particularly local ones to unlock the stock market.

Today: First-quarter GDP growth. Based on the consensus, GDP growth is forecast at 4 per cent. KS Research projects it at 4.2 per cent.

Wednesday: The Constitutional Court will deliver its ruling on whether or not the bill on the selection of senators goes against the charter. If the final ruling says that the bill is not against the Constitution, markets will expect the election to take place early next year and the SET Index will sharply rise in response. On the same day, the court will also discuss the bill on the election of MPs and the final ruling is expected on May 30.

If both bills are ruled as not against the Constitution, the bill on the selection of senators is expected to come into force in early September and the bill on the election of MPs is expected to take effect in November. Then, the EC will organise the election. If it takes 120 days to organise the elections, the polls are likely in February-March 2019.

Based on KS Research’s coverage of 97 listed companies (who make up 72 per cent of market capitalisation), their net profit totals a combined Bt227 billion, +5.9 per cent year on year and +12.3 per cent quarter on quarter, about 7.6 per cent higher than KS Research expected and 5.4 per cent higher than consensus. Finance, hospital, communication, property, and utilities groups recorded higher-than-estimated net profit for the quarter. Although second-quarter market profit will be pressured by the banking and tourism sectors, it will be offset by the energy and export sectors. Therefore, the market profit is estimated to expand. Therefore, consensus is expected to revise up this year’s estimated earnings per share from Bt109.8.

The SET Index is expected to rebound and rise to test 1,888 points in the latter half of this year. Focus on KS Research’s monthly picks with high upside such as BBL, KTB, MTC, ORI, LH, CPN, CPALL, BEAUTY, KCE, SPRC, TISCO; high dividend group with high upside such as ADVANC, INTUCH, SC, HANA and the group relying on new investment cycle such as AMATA, WHA, STEC, PYLON (KS does not cover WHA and PYLON).