Pick up key stocks on market weakness
Although the SET Index rose on Monday after the US consumer confidence touched a five-year high, it dropped by 20.48 points from the middle to late last week (the SET Index hit a low of 1,263.05 points) on concerns over the US "fiscal cliff") and the Eu
The concern over Europe came after the European finance ministers postponed the decision to provide borrowings to Greece to November 20.
However, we remain positive about the Thai stock market this week. The SET Index is forecast to have support from external situations, including the result of a meeting between US President Barack Obama and the Congress on “fiscal cliff” and the expected positive decision of the euro zone’s finance ministers on financial assistance to Greece.
Besides, we expect strong or better-than-expected figures for both US housing and China’s HSBC Manufacturing Production Manufacturing Index. Such factors will help boost the SET Index until the end of this week.
This week, we suggest selective stocks, whose prices have sharply dropped, on expectations that they have a chance to make a sharper recovery than the market. Stocks with sound fundamentals and cheap valuations or those with possibilities of earnings estimates’ revision include ADVANC, DTAC, THCOM, KTB, PTTGC, SC, PS, NMG, MAJOR and CCET.
Tisco Securities
Worries over the US “fiscal cliff”, coupled with the euro zone’s return to recession, are likely to undermine sentiment for Thai equities for the rest of November.
Other factors weighing down global markets are the escalating conflict in Gaza and a wave of anti-austerity strikes across southern Europe.
In Thailand, political tensions are on the rise again ahead of Pitak Siam’s anti-government rally on November 24. Also, investors are waiting for the Administrative Court to rule on a legal challenge to the NBTC’s 2.1 gigahertz spectrum auction, which threatens to further delay the rollout of 3G services. Given current uncertainties, foreign investors have turned increasingly risk adverse, with net sales of Bt6.7 billion of Thai stocks month to date after offloading a net Bt17.9 billion in October.
Although SET weakness is likely to persist in the near term, we view the current pullback as a good opportunity to accumulate stocks offering exposure to robust consumer spending and the strong tourism outlook.
Among our top picks is CENTEL where we anticipate stunning earnings growth of 75 per cent this year and 43 per cent in 2013 driven by a strong recovery in hotel operations after several years of expansion.
Two other stocks we like with a similar consumer/tourism theme are CPN and CPALL. We raised our target price for the former by 14 per cent to Bt82 to reflect our 7-8 per cent upgrade in 2012-14 earnings and the company’s plan to open six new shopping malls in 2016-17. For CPALL we are positive on its plan to open 550 new stores a year (vs 500 previously) as well as its move to develop larger-sized branches.
In the banking sector, KTB is now our top pick given its 37 per cent upside to our upgraded target price of Bt24. We believe KTB is well positioned to capture loan demand from the government’s extended stimulus packages and accelerating public investment.
Other stocks we recommend buying on market weakness are HEMRAJ (better than expected land sales), SCC (rising cement demand) and BGH (strong third-quarter results and upside from potential mergers and acquisitions).
