CPALL, KTB and AMATA equities expected to outperform this year
Kasikorn Securities, a component of Kasikorn Bank, named three equities in the consumer products, industrial estate and financial sectors that are likely to outperform in the second half of 2019.
“We believe our sector and stock picks will withstand a certain amount of market volatility given our bottom-up perspective, as each sector/stock provides a clear set of positive factors,” Passakorn Linmaneechote, deputy managing director of Kasikorn Securities, said on Tuesday.
“We expect the new government to immediately implement short-term economic stimulus measures to stimulate consumer spending, through measures such as handing out more welfare cards or issuing subsidies for the agricultural sector,” he added.
Hence, he said, CP All Plc, a leading firm in consumer products, will likely benefit from the boost in consumer spending making CPALL a promising equity to invest in.
“We also continue to keep big banks in our preferred-sector list due to low downside risks and higher probability to exit the non-performing loans [NPL] cycle as it ages,” he said.
A report from Kasikorn Securities stated that from the fourth quarter of last year to the first quarter of this year, the formation of NPLs fell from 2.12 per cent to 2.04 per cent.
“While the pace of a decline in credit costs has been slow, we expect the sector to reduce it further,” Passakorn continued, adding that he recommends Krungthai Bank (KTB) equity for investment in big banks.
“Krungthai Bank’s strong loan growth should be supported by corporate, retail, and government sectors, while it is less affected by a lower fee income given a low base.”
Furthermore, he said, KTB offers an attractive dividend yield, which is expected to be 4 per cent this year.
The industrial-estate sector, he said, also has high potential for growth in 2019.
“The potential relocation of Chinese manufacturers in this region will remain a key performance driver for the sector. The government’s focus on upgrading infrastructure and roadshows promoting Thailand as a key investment destination should also help support the sale of land,” he added.
AMATA is the equity recommended for this sector, because there have been significant inquiries about its estates from Chinese investors. The company has also said it is confident that its 950-rai (152-hectare) sales target for 2019 is achievable.
Passakorn also predicted that the Bank of Thailand (BOT) will maintain its interest rate at 1.75 per cent all this year, because he reckons the Monetary Policy Committee will prefer to focus on financial stability over stimulating the economy through monetary measures.
However, the committee’s statement after their next meeting in July could signal that BOT is willing to reduce its policy rate if the Thai currency continues strengthening and the economy continues slowing down at an alarming rate. He said this statement could also generate a positive reaction in the stock market.
With dovish sentiments voiced by central banks across the world, with some lowering their policy rates, bond prices will rise and yields will drop, leading to more capital flowing into stock markets, including the Stock Exchange of Thailand (SET), Passakorn added.
He said the SET index could reach 1,775 points in 2019 due to the aforementioned factors.
