Market watch
The European Central Bank (ECB) last week pledged to continue with its loose monetary policy stance but probably to a lesser degree next year after the current quantitative easing (QE) programme ends in 2017.
The market, however, still thinks the ECB will roll back its monetary easing policy, thus driving up the euro.
Meanwhile, the US dollar is getting weaker. The problematic US healthcare bill (Obamacare Repeal Reconciliation Act of 2017) has become less likely to be passed this week as it will increase the number of uninsured Americans significantly over the next several years. Some 17 million Americans will be uninsured in 2018 and will increase to 27 million in 2020, then 32 million in 2026. Besides, the bill also comes with a host of other problems. Lower inflation expectations mean the pace of monetary policy tightening will be slow. Global rates might stay low for an extended period, which can benefit the real estate investment trust (REIT) market. Thai investors might want to take a look at the TMB Property Income Plus Fund, which invests in Thai and overseas REITs.
Tisco Securities
The SET remains tightly rangebound (1,5701,580) as investors await likely weak second quarter results. Though we’ve seen DTAC on cost decline, TMB on bancassurance fee access, the majority of stocks have yet to report. Against a backdrop of improving economic data from Europe, stronger-than-expected gross domestic product in China, and deterioration in the US, foreigners have been net buyers of Thai equities Julytodate (Bt2.83 billion).
On the energy front, we’ve cut our 2018 fiscal earnings for PTTEP and PTT by 7 per cent and 9 per cent, respectively to incorporate Deutsche Bank’s revised oil price assumptions. However this year, we’ve raised earnings for PTTEP and PTT by 14 and 8 per cent respectively, to account for lower EP production costs (benefits both).
PTT remains a “Buy” with a higher target price of Bt420 (from Bt400), underpinned by expanding core gas earnings. Upbeat on RS’s shift in focus to health and beauty, we upgraded the stock to “Buy” from “Hold” and raised our target price to Bt17.3 from Bt10. Earnings from health and beauty is expected to jump to Bt1.2 billion this year from Bt228 million last year. Our target price for Work is raised to Bt74 from Bt69 as it is enjoying a rise in ad rates and utilisation thanks to a raft of hit programmes.
We highlight an overall shift in launches to the second half of the year, perhaps indicating developer concern. We flag risk on “Hold”rated Supalai, which announced it was issuing new warrants and suspending its interim dividend. Our top property picks remain AP, PSH, and QH – all should see a pickup in launch activity in the third quarter.
Research Department
Trinity Securities
Based on our study for earnings per share (EPS) revision and price performance from early this year, three sectors: Agriculture; Finance; Petroleum with interesting movements were found. Agri’s price drop was more than the drop in EPS revision (market overreaction), while Finance and Petro price increases were less than rises in EPS revision (market underreaction). Samples are VNT, IVL, KTC, SCC and PTTGC.
Hold stocks in the following groups.
Utilities group has low volatility with high dividend yield. Top picks for growth potential: BCPG & WHAUP. GLOW, EGCO and RATCH are projected to see high dividend yields with interim dividend payment.
Staple products and services group includes consumer staples (CPALL, BJC) and healthcare (BCH, CHG) with resilience against low inflation.
