High risks for short-term trading but opportunity for long-term investors
Listed companies reported a combined net profit of Bt1.07 trillion or Bt108.6 per share for 2018, representing growth of 10.93 per cent from the previous year and for the first time exceeding Bt1 trillion in the history of the Thai stock exchange.
A continuous rise in net profits
is expected this year, at a growth rate of 2.4 per cent year-on-year,
to Bt1.11 trillion or Bt112.2 per
share.
That’s based on conservative estimates including a Dubai crude price of US$65 per barrel – lower than the 2018 base above
$70.
Our forecast also took into consideration impacts from the China-US trade conflict affecting some industries.
The SET index failed to respond to robust earning results last year. It dropped 8 per cent, pressing down the market PER to 14.36 times at yearend, from 17.34 times the previous year.
Based on the current level, the market PER will likely fall to 13.9 times at the end of this year, the lowest since 2012.
At this PER, it’s advisable to accumulate stocks for long-term investment.
Market volatility is expected in early 2019 given China-US trade tensions, the Thai election in February, thin trading turnover, a likely selling spree by local institutional investors after a sustained period of net buying, and the
LTF tax privilege expiring at yearend.
Short-term speculation will thus face relatively high risks.
We advise investors to accumulate stocks with strong fundamentals under the theme “domestic play”. Our picks are DTAC (FV@Bt61), CPALL (FV@Bt80), KBANK (FV@Bt251), WHA([email protected]) and SCC (FV@Bt515).
Therdsak Thaveeteeratham,
Executive Vice President/Research,
Asia Plus Securities
