SET Index target is revised to 1,390 points
Therdsak Thaveeteeratham Executive Vice President for Research Asia Plus Securities Listed companies' first-half net profit rose 5.6 per cent year on year to Bt441 billion or about 49.7 per cent of estimated net profit of Bt888 billion for the whole
1 The economic recovery is slower than expected, given a lack of economic drivers from household consumption, private investment and exports. Hence financial institutions’ asset quality and credit growth have been affected.
2 The baht has depreciated swiftly. Last Friday, the Thai currency peaked at more than 35.80 per US dollar. Since the beginning of this year, the baht has averaged 33.39 per dollar. Thus our research department revised its baht estimate of 33 per dollar to 34 this year and 35 next.
3 The global oil price dropped rapidly. Last year, the oil price fell to its low at $42.26 per barrel. From the beginning of this year, the oil price has averaged $55.60 per barrel. Based on expectations for a consistently steady oil price in 2H15, our research department’s estimated average Dubai crude-oil price of $63 per barrel may not be possible. Our estimated Dubai crude price is cut to $53 per barrel.
Under changes in fundamental factors, ASPS has cut its forecast of listed companies’ net profit by Bt52.5 billion to Bt836 billion for this year. Estimated EPS (earnings per share) is revised down by 6.14 per cent from Bt95.49 to Bt89.63. However, the EPS estimate is still a rise of 16.8 per cent year on year. Thus the estimated SET Index for the 2015 year-end is cut. ASPS is maintaining its estimated market PER (price-to-earnings ratio) at 15.50 times with the targeted SET Index at 1,390 points. This means limited upside risk for the Stock Exchange of Thailand.
This week, the key issues weigh on external developments, starting with the US interest rates. There is uncertainty over the US rate direction after the growth of US gross domestic product in 2Q15 was much higher than expected at 3.7 per cent. Hence the Federal Reserve’s view on an interest-rate increase may be weighed more, which could increase pressure on stock markets.
Next is China’s stock market, which could see consistent fluctuations. If the Chinese government’s relief measures soften, stock prices may or may not stay at the current levels.
Domestically, the key is the government’s economic stimulus measures and when they will yield results.
This week, the SET Index is expected to move in a range of 1,320-1,380 points. Screen stocks with dividend yields higher than 5 per cent and low Beta for long-term investment portfolios.
Stock picks: INTUCH (InTouch Holdings), ADVANC (Advanced Info Service) and BTS (BTS Group). Trading may be possible in stocks expected to gain from the government’s stimulus measures. These stocks are in construction and construction materials.
Chaiyaporn Nompitakcharoen
Head of Individual Client Research Group
Bualuang Securities
The Stock Exchange of Thailand recovered strongly to close at 1,364.62 last week, as investors expected additional measures to address slack domestic consumption. The Finance Ministry will propose a stimulus package to the Cabinet.
Short sales were recovered. Selling pressure temporarily paused.
We take the view that the market has recovered by 5 per cent from its previous low of 1,294, so sales are always used for short-term price swings.
The additional stimulus measures will take a few months to show positive developments. In general, the market should remain volatile with current weak data.
It is too early to conclude that the Thai stock market is moving into an up-cycle. Current fundamental data appear to lag for identifying a turning point for the stock market. Our quantitative and technical models have no confirmation of a market bottoming out, either. Our strategy remains defensive while we wait for the market to prove itself. The bear market is still on.
