Executive vice president / research
Asia Plus Securities
This week, external factors will probably ease more after the Fed chairman’s statement. It’s possible to see capital flowing into emerging markets from now. The Thai bourse also sees positive signs from this issue, with net foreign purchase of Thai stocks and long positions opened in the futures market. Meanwhile, we’ll adopt a waitandsee attitude for a while.
In the country, negative sentiment is putting more pressure on banking stocks. The BOT plans to launch its regulations on noncollateral credit, including credit cards and personal loans (new extension). If the regulations come into force, the reduction of the creditcard loan interest ceiling is expected to shed 2 per cent off banks’ estimated 2018 net profit of Bt234 billion.
Besides, the big NPL of EARTH will affect the market with higher loan loss provision, which could lead to 2017 earnings estimate cut. For 10 banks in ASPS’s coverage, net profit combined is forecast at Bt215bn. 2Q17 earnings are expected to drop from 1Q17 figure. The SET Index could see such pressure on banks whose market cap accounts for 15 per cent of total.
In regard to alien worker regulation, its impact is expected to be limited on Thai listed firms. Construction stocks will see a higher impact, given intensive use of alien workers and labour costs at about 30 per cent of total costs.
This week, the SET Index will likely test the resistance line of 1,585 – 1,590 points. However, whether or not it will surpass the line depends on support from capital flow. Investment strategy remains a selective buy. Stock picks: JWD, SENA, UNIQ, AIT and INTUCH.
The SET Index remains the same, driven mainly by domestic capital. One interesting economic figure is a 14.03 per cent rise yearonyear in sales of motorcycles in May. Sales are at a fouryear high due mainly to consistent rises in farm income.
Given this, there comes a chance to speculate on the 2Q17 earnings performance of leasing firms for motorcyฌcles (GL, S11 and TK). S11 and TK are not expensive in terms of valuations with Bloomberg Consensus’s forward PER at 1112 times.
Property stocks are expected to see speculation in 2Q17, a recovery from their 1Q17 bottoms before growing in a ladder style in 3Q and 4Q this year. We pick PSH and SPALI.
SPALI fell to Bt24.30, a chance to buy for longterm investment on expectation of higher growth in the future. Its upside is 19.34 per cent from its fair price of Bt29.
Also, MEGA has a high upside of 18.50 per cent. KResearch forecasts MEGA’s 2Q17 net profit to rise 12.3 percent yearonyear and 27.7 per cent quarteronquarter from higher income from MegaWeCare and the integraฌtion of BioLife MEGA acquired in November 2016. It is expected to see an FX gain of about Bt10 million, compared to an FX loss of Bt35 million in 2Q16.