Market Watch

  Therdsak Thaveeteeratham
Executive Vice President / Research
Asia Plus Securities
 
THE STOCK market will likely enjoy positive factors in the first half of 2018 ranging from net earnings and capital movement to local political developments.
Net profit in 2018 is forecast at Bt112 trillion or Bt113.56 per share, a 14.5 per cent rise. Earnings per share (EPS) growth is estimated at 4.92 per cent in 2017. Given estimated GDP growth of 4.2 per cent in 2018, high EPS growth rates are expected in commercial banks (14 per cent), energy (6 per cent) and ICT (63 per cent). The construction group is projected to double its growth due to a low profit base in 2017.
Foreign holdings in Thai stocks are much lower than normal at 24.12 per cent, a record low since we started gathering data in 2004. We see positive signs of foreign capital moving back, such as estimated high EPS growth, the promised elections in November, an upgrade for Thailand from the US priority watch list to the basic watch list, a removal of ICAO’s red flag for Thailand’s aviation and positive signs for IUU fishing. Thus, the Stock Exchange of Thailand Index (SET) will likely stay above PER 16 times or 1,815 points.
In 2018, political factors will weigh more positively in the first half given the roadmap to the general election and it could present both opportunity and risk to the Thai exchange.
In early 2018, investment strategy will go to laggard industries and those with recoveries in fundamentals such as ICT and construction groups. The ICT group is expected to have bottomed out in its earnings performance after operating costs reached saturation and income has increased continuously. We pick INTUCH, which holds stakes in ADVANC and THCOM. The construction group is believed to have signed contracts for three MRT routes, and double-track railways in 2017 will generate income in 2018. We prefer STEC.