Investors are urged to overweight Banking, Food, and Electronics sectors, which should still perform well in the next few quarters, according to DBS Vickers Securities (Thailand).
In its research, the house said food should remain little affected by the political unrest, while Bank earnings will remain strong this year on the back of stronger loan growth, wider net interest margins, higher fee income, and lower credit costs (percentage points of total loans). The Electronics sector is now enjoying robust demand in line with the global electronics industry, particularly the segment related to the computer industry. Orders are still strong for the next two quarters for most electronics companies.
"Our top picks for July are those that we believe will report strong second-quarter results and will continue to perform well in the second half. These include Bangkok Bank (BBL), Kasikornbank (KBANK), and Charoen Pokphand Foods (CPF) for large caps. Our small/mid cap picks are Delta Electronics (DELTA), LPN Development (LPN) and Thai Union Frozen Products (TUF)," it said.
In June, the Thai market out-performed regional peers. The Thai market rose 6.2 per cent from May against 1.9 per cent gain for regional peers. Foreign investors turned net buyers during the month after being net sellers for two consecutive months. Total foreign net buy position amounted to Bt3.0 billion in June vs net selling positions of Bt58.8 billion in May and Bt4.1 billion in April.
DBS retains the end-2010 SET target at 887 points. At this target, the stocks would be trading on 2010 price/earning (PE) ratio of 12.5 times, in line with the historical average.