Some stocks shine in a falling market

Even though the Stock Exchange of Thailand (SET) Index has slumped 9.68 per cent this year, dampened by political turmoil and inflationary pressure, share prices of the 10 top gainers have increased as much as 255 per cent.

Permsin Steel Works was the biggest riser, giving a hefty return of 255.56 per cent, followed by International Engineering at 193.53 per cent and Thai Yuan Metal at 121.06 per cent.

Thai Film Industries was the fourth-best performer with a 118.18-per-cent rise, GJ Steel's warrant offered provided a 100-per-cent return, Lam Soon (Thailand) (LST) yielded 99.17-per-cent and GJ Steel chalked up 91.67 per cent.

G Steel's stock surged 87.67 per cent, Thai Vegetable Oil (TVO) jumped 83.67 per cent, and Tata Steel warrants rose 75.47 per cent.

Interestingly, the top gainers in the first half of the year were speculative and commodity stocks.

One analyst at a local brokerage said investors had been keen on piling up speculative and commodity stocks since early in the year. The continuing increase in steel prices has given a big boost to Permsin's stock.

The Securities Analysts Association (SAA) said only four of the 10 top gainers were covered by analysts. In the one-month consensus, LST were rated as a "buy" by two brokers, with target prices of Bt5.20 and Bt5.50 per share, respectively, while G Steel was rated as a "buy" by five brokers, with target prices ranging from Bt1.43 to Bt2.20 per share.

TVO was recommended as a "buy" by seven brokers, with target prices ranging from Bt26.85 to Bt38.90 per share, and Tata Steel was rated a "buy" by 10 brokers, with target prices of Bt2.60 to Bt4.80 per share.

A Kim Eng Securities (Thailand) analyst said the short-term outlook was positive for the steel sector, because prices had been rising, and that would be the major driver for the sector's second-quarter earnings.

Regarding the long-term outlook, rising costs and uncertain demand due mainly to the sluggish economy will be negative factors for the sector, the analyst said.

An Adkinson Securities analyst said GJ Steel was an attractive stock, as it was debt-free after the Central Bankruptcy Court approved its registered-capital reduction, and the company would benefit from higher steel prices. The analyst rated the stock as a "speculative" buy.

The first resistance level will be 50 satang, and it is highly likely to hit 70 satang, the analyst said.

Globlex Securities has raised its net profit estimate for G Steel to Bt7.17 billion this year, up 361 per cent from last year.

GJ Steel's contribution to G Steel, its major shareholder, will likely be Bt900 million this year, compared with Globlex's earlier forecast of Bt350 million, which is why the profit forecast was adjusted, the broker said.

A Phillip Securities analyst has put a "buy" rating on TVO shares, with a fair value of Bt31.50 apiece, given the solid demand for soybean cooking oil and the company's dividend forecast.

The broker has raised TVO's net profit estimate to Bt1.78 billion this year, up 42 per cent from last year, assuming the price for soybean cooking oil increases more than 20 per cent.

TVO is expected to pay an annual dividend of Bt1.85 a share, representing a yield of 7 per cent on this year's earnings.