MarketView

  Therdsak Thaveeteeratham
Executive vice president – Research
Asia Plus Securities
In the last two weeks, the SET Index rose from 1,380 to above 1,420 points again. Below are some observations on the 50-point increase.
1 The rise came from uncertain fundamental support. More, there was pressure on investment, including the Fed’s likely rate hike in the next few months and concerns over Thailand’s economic recovery. Key economic drivers including consumption and private investment could not fully function. Thai exports, excluding gold, continued to slow down. Listed companies’ first-quarter earnings were satisfactory (net profit of Bt230 billion or 27 per cent of the whole year’s profit estimate), but there was no upward revision of net profit yet. 2 There is limited upside for the Thai bourse. ASPS Research sets its target for the SET Index at the year-end at 1,440 points. Based on last year’s estimated earnings per share (EPS) at Bt88.7 with targeted price to earnings ratio (PER) at 16.23 times and market earnings yield gap at 4.75 per cent, the current SET Index gives expected return of less than 2 per cent and PER of more than 16 times at the year-end.
There are two alternative groups for investment.
Expected dividend yield: There are choices that have 5-6 per cent dividend yield per year with dividend payment for the next two years at least: MCS has current purchase orders twice its annual production capacity with a chance to receive more projects when Japan hosts the Olympic Games in 2020. SNC returns to see growth, while its stock price has not factored this in yet. Its dividend yield at the current stock price is higher than 6 per cent per year. BJCHI’s performance has been through the bottom with a trend of certain recovery. Its dividend yield is higher than 6 per cent per year.
Expected capital gain: Construction group is overweighted in the belief that the government’s mega-project bidding will likely start from June onwards. Stock picks with price upside risk in the construction group: UNIQ and CK.

Chaiyaporn Nompitakcharoen
Head of Non-Institutional Broking Group
Bualuang Securities
The SET gained pretty well last week – 1.68 per cent – as market views a potential rate hike by the US Federal Open Market Committee at its June 17-18 meeting should favour profitability for the financial sector. A buying spree in the financial sector apparently outweighed a negative statement to the oil market from the meeting of Opec that allowed all members to adjust their crude oil production freely. High household debt level at over 80 per cent of gross domestic product remains a headwind to private spending and investment growth. We also believe that the market has not priced in the impact of Brexit yet, if Britain decides to terminate its EU membership. Our stock picks are THREL, EPG, ILINK, and KTB.