SET sentiment buoyed by record earnings

RECAP: The SET Index surged at midweek after listed firms reported record-high second-quarter earnings of 350 billion baht, reviving investor confidence, before easing back on profit-taking yesterday. US equities were rangebound, reflecting mixed opinions on economic data and uncertainty about the size of the Fed's next interest-rate increase.

The SET Index moved in a range of 1,617.00 and 1,642.17 points this week before closing yesterday at 1,625.92, down 0.62% from the previous week, in daily turnover averaging 74.32 billion baht. As of Thursday, foreign investors were net buyers of 22.6 billion baht and institutional investors bought 2.5 billion. Brokerage firms were net sellers of 3.1 billion and retail investors sold 21.9 billion baht worth of shares.

NEWSMAKERS: Thai and foreign companies filed 784 applications for investment promotion in the first six months of 2022, up 4% from a year ago, but combined investment value fell 42% to 219.7 billion baht, according to the Board of Investment. The automotive and digital sectors saw the highest growth.

 

• True Corporation said revenue edged up 0.8% year-on-year to 34 billion baht in the second quarter but fell 3.1% on a quarterly basis, amid high inflation that has undermined purchasing power. The company's consolidated net loss widened to 761 million baht from 299 million in the second quarter last year. Mobile service revenue of TrueMove H was down 1.2% year-on-year to 19.9 billion baht.
• US Federal Reserve officials remain committed to raising interest rates as high as necessary until inflation slows to a manageable level, as the US is now at risk of a recession. Chairman Jerome Powell said the Fed may pause after its September meeting to evaluate the impact of rate hikes. The Fed Watch Tool now suggests a 65% probability of a 50-basis-point hike in September, and only 35% for a 75-point hike.
• Many key US indicators show that inflation has probably peaked. The consumer price index (CPI) in July eased to 8.5% year-on-year from 9.1% in June, while producer prices and real estate figures also dropped.
• The Philippine central bank on Thursday raised its benchmark rate another 50 basis points to 3.75% and signalled it has room to raise borrowing costs further to tackle inflationary pressures.
• Fund flows are expected to continue into the Thai stock market as the economy is recovering, unlike many developed markets, say analysts. Second-quarter earnings were much higher than expected, so forecasts may be revised up. Foreigners have been net buyers of 35 billion baht so far this month, and 152 billion for the year to date.
• Thailand's second-quarter GDP grew 2.5% year-on-year and 0.7% quarter-on-quarter, with a robust rebound expected in the second half thanks to wider reopening, easing of Covid measures, and economic stimulus measures such as Kon La Krueng phase 5. GDP is projected to grow over 3% year-on-year in the third and fourth quarters, versus below 3% in the first and second quarters.
• Banpu Plc plans capital expenditure worth US$3-4 billion over the next five years as Asean's leading coal producer expands its clean energy and energy technology businesses. The company is also diversifying into the health sector.
• Central Pattana Plc has announced plans to develop a mixed-use project on a 48-rai plot on Phahon Yothin Road in a 50:50 joint venture with subsidiary Grand Canal Land Plc.
• Ratch Group Plc, the country's largest private power producer by capacity, has acquired two energy firms for US$605 million to secure long-term revenue. The purchase involves four new energy assets: a renewable power plant in Thailand, a gas turbine plant in Australia, a combined-cycle plant in Vietnam, and a battery energy storage system in the Philippines.
• The cabinet has approved a draft decree to allow the Finance Ministry to guarantee loan repayment and borrowing of up to 150 billion baht by the Oil Fuel Fund Office. The liquidity-challenged fund has racked up debts exceeding 100 billion baht from subsidising fuel prices.
• Central Pattana Plc has teamed up with PTT Plc and Evolt Technology Co, an electric vehicle (EV) charging company, to install charging stations at all Central shopping complexes by year-end. CPN and its partners will spend 200 million baht to install 350 'on-ion' stations at 37 Central malls in 18 provinces.
• Energy Absolute Plc, a renewable energy and EV developer and operator, is conducting a trial run of a battery-powered locomotive as it aims to expand into rail transport, through a partnership with Asia Engineering and Services (Thailand).
• Tipco Asphalt Plc, the country's biggest asphalt producer, expects its 2022 sales to exceed the 1.2 million tonnes achieved last year amid growing demand from government road building and repair projects.
• The Industrial Estate Authority of Thailand (IEAT) plans to develop a dry port in Udon Thani to make the northeastern province a centre for regional land transport linked with the Chinese-Lao high-speed train system.
• The government vows to move ahead with its five-year investment plan for the Eastern Economic Corridor (EEC), aiming to drive economic growth by 5% a year between 2023 and 2027 and draw a combined investment of 2.2 trillion baht.
• Supalai Plc is expecting year-end presales to exceed its 28-billion-baht target after reaching 18.2 billion in the first half, as several negative factors should subside in the second half. Managing director Tritecha Tangmatitham predicted interest-rate increases would be modest and should not affect homebuyers very much.
• Mitsubishi UFJ Financial Group, the Japanese parent of Bank of Ayudhya, is in talks to acquire the assets of the consumer lender Home Credit in Indonesia and the Philippines, worth an estimated US$500 million, Bloomberg reported on Thursday.

COMING UP: China will update its one- and five-year prime lending rates on Monday. The euro zone will report July preliminary manufacturing and non-manufacturing PMI and the US will report July new home sales on Wednesday. On Thursday, the US will report July durable goods orders, and the Fed will open its annual Jackson Hole meeting, attracting economists and central bankers from around the world.

 

• Domestically, the focus is on politics as the Constitutional Court will be asked to determine whether Prime Minister Prayut Chan-o-cha's eight years in office expire this week, or in 2025 or 2027. The Commerce Ministry will release July trade figures on Tuesday, and the SET will hold its annual Thailand Focus investment forum from Aug 24-26.

Stocks to Watch: Capital Nomura Securities recommends stocks that will gain from the tourism recovery, especially hospitality firms. Its investment theme for next week comprises four groups: Defensive stocks with growth potential such as BDMS, BCH and CHG; high-growth and tech firms that rely on domestic demand such as JMT, SINGER, CHAYO, BE8, BBIK and IIG; consumer stocks that stand to gain as inflation eases, such as ADVANC, TIDLOR, INTUCH, DTAC, CPALL, MAKRO, CRC, HMPRO, ILM, KTC and SNNP; and anti-commodity stocks that benefit from lower oil prices, such as SCGP, GPSC, BGRIM, BCPG, CBG, SCC, TOA, EPG, GULF and SAPPE.

• Phillip Securities recommends three themes: stocks that benefit from the BoI incentives such as WHA AMATA, AH, SAT, STANLY, GPSC, EA and BPP; retail businesses BJC and MAKRO; and energy stocks for short-term trading: PTTEP, SPRC and TOP.

Technical view: Capital Nomura sees support at 1,614 points and resistance 1,650. SCB Securities sees support at 1,618 and resistance at 1,650.