THERDSAK THAVEETEERATHAM Executive Vice President / Research ASIA PLUS SECURITIES
The SET Index is short of support on expectation of being in a range of 1,760-1,800 points.
This week, first quarter results are expected not to weight positive and push up the SET Index, given a high profit base at Bt288 billion in the first quarter of 2017 as a result of higher commodity prices which led to stock gains then. Net profit could see significant drops particularly in groups involving manufacturing products. And compared to 2017 fourth-quarter results of Bt255 billion – higher than average – first-quarter results in 2018 may be seen steady or slightly slowed down. Foreign capital is believed not to flow back as 10-year US bond yield stays 33 basis points higher than the 10-year Thai bond yield. The US benchmark rate is forecast to rise at least twice for the rest of this year, while Thai policy rate is projected to remain steady. In this situation, the baht is expected to depreciate against the US dollar. Based on these factors, foreign capital is estimated not to move back to Thailand even though foreign investors currently have much lower holdings of Thai stocks.
Given both 1Q18 results and capital movement, the SET Index is expected to be volatile in a narrow range this week. The resistance line is 1,800 points. At 1,760 points, it could be a strong support line with price to earnings ratio of 16 times (based on estimated earnings per share of Bt110 in 2018).Focus on companies whose market caps are not very large with specific positive factors like QH with its dividend yield of higher than 6 per cent, DTAC with less pressure in operations after signing a contract to manage 2300MHz or PLANB and estimated high profit growth in 2018.