Marketwatch

Short-term market corrections are likely but there is a bright outlook for the medium to long term.
Following the SET Index’s new alltime high (the previous was in early 1994), we believe the Index will rise further with a chance to reach 1,850 points, or this yearend PER of 16.30 times – a relatively conservative assessment.
Thailand’s fundamentals remain significantly stronger than in early 1994 in terms of the GDP size and market cap.
As for the Thai economy’s size, GDP in 1993 and 1994 stayed at Bt3.26 and Bt3.69 trillion, respectiveฌly. In 2017, GDP is expected at Bt15.08 trillion, four times the two earlier years. Now, the Thai economy has been growing with stability, different from 1994 when the economy was dragged into a bubble.
Market cap: At 2017 yearend, the market cap was Bt17.59 trillion, five times that of 1994.
Valuation: At the previous alltime high in early 1994, the SET Index was 1789.16 points or 1993 and 1994 PERs of 31.8 and 27.9 times, respectively. Early 2017, 2017 and 2018 market PERs are at 18 and 15.8 times – much lower than those in the two previous years, respectively.
Given sound fundamentals, this round of market corrections does not have many downside risks, with the support line of 1,780 points. After a period of corrections, the SET Index will likely move up further. Accumulate stocks with sound funฌdamentals and prices below fair value gradually. Stock picks: SCC (FV@Bt600), TASCO ([email protected]), WHA ([email protected]) and QH ([email protected]).
 
Prakit Sirivattanaket
Vice president
Kasikorn Securities
Revise the SET Index target. KS Research shifted its method for the SET Index target from a topdown to a bottomup approach, to better reflect changes of targeted prices of each stock in its coverage. After we revised profits and targeted stock prices for the energy, communicaฌtions and air freight groups, and revised targeted prices of property developers, the estimated 2018 marฌket EPS increases to Bt111.7 or a 5.4 per cent EPS growth.
Our revised SET Index target is 1,835 points with 2.4 per cent upside from 1,792 points on January 8, 2018. Combined with the estimated 2018 dividend yield of 2.7 per cent, total market return is forecast at 5.1 per cent.
At the SET Index target of 1,835 points against the estimated 2019 EPS of Bt120.5, next year’s forward market PER will be 15.2 times.
 Although the SET Index target will trade on 12year record high valuation, we expect foreign investors to return to buy Thai stocks again and the SET Index could move higher than our target, given impressive Thai economic growth in years, and more certainty over the Thai general elecฌtion. 
In 2018, we forecast Thai growth at 4.0 per cent, while Thailand is projected to face surpluses of 7.7 and 5.8 per cent of the country’s GDP in current and trade accounts, respectively. Foreign reserves hit a historical high at 45.2 per cent of GDP. These factors could drive foreign capital into the SET again and the SET Index has a chance to test its upper line of 1,976 points.