Investment Strategy

Market Talk
June 2, 2015
Investment Strategy
SET Index is still swinging sideway, lacking solid indicating factors. We still recommend stocks benefiting
from decreasing oil prices/weak THB (TUF, VNG, HANA, and RCL). Top picks are VNG([email protected]) and
TUF(FV@26).
YTD Change in Return by Sector
YTD return
Agri
Entertain
ICT
Property
Food
SET
Commerce
Auto
Transport
Insurance
Energy
Hotel
Health
Const Mat
Const Services
Finance
Petro
-13%
-20%
Bank
-15%
-5%
2%
-13%
-5%
-5%
-3%
-5%
-2%
-7%
2%
0%
-3%
0%
-2%
0%
2%
-4%
2%
2%
0%
1%
9%
5%
5%
-2%
-10%
Electron
4%
-4%
-5%
-1%
0%
1%
5%
0%
10%
-259.63
-954.23
921.09
292.78
-2%
13%
15%
12%
20%
17%
25%
20%
Net buy and sell by investor type (Bm)
Foreign
Proprietary Trading
Institution
Retail
May return
30%
23%
1,496.05
2.44
39,747.16
22%
SET Index
Change
Market cap (Bm)
No new external issue
US U.S. leading economic figures have still shown a contrary sign. Latest initial jobless claims increased by 7,000
units and the four-week average increased by 5,000, slowing down for two months. Meanwhile, consumer sentiment index
(The University of Michigan) fell from 95.9 in April to 90.7 in May, and April personal spending stayed flat after rising
0.5%mom in March despite 0.4% increase in personal income in April. These may depress U.S. private spending (70% of
GDP) and 2Q15 GDP growth. 1Q15 GDP growth was revised down from the first estimate of +0.2%qoq to -0.7%mom in the
second estimate.
This is contrast with an improvement in the manufacturing sector. ISM manufacturing PMI improved from 51.5 in March and
April to 52.8 in May, while Markit manufacturing PMI was 54 in May (projected at 53.8). U.S. construction spending rose by
2.2%mom (projected at 0.8%), probably due to acceleration of home purchases. Overall, U.S. labor market, household
spending, and manufacturing sector are still volatile, so we believe that Fed would consider hiking the policy rate late this
year.
Europe European economic leading figures have still shown good recovery. May Markit manufacturing PMI made a 11month high at 52.2 (slightly lower than our projection of 52.3). Confidence in businesses, services, and industries has
improved from the previous month owing to the ECB's QE (from late March 2015 to September 2016); total EUR238bn has
Porranee Thongyen, CISA been injected into the system.
License No: 004146
[email protected]
Therdsak Thaveeteeratham
License No: 004132
[email protected]
Pobchai Phatrawit
License No: 052647
[email protected]
English research reports are a rough translation of our Thai-language
research products. It is produced primarily with time efficiency in mind, so
that English-reading clients can see what the main recommendations are
from our Thai-language research team. Given that this is a rough-and-ready
translation, Asia Plus Securities Company cannot be held responsible for
translation inaccuracies.
The Thai language research reports and information contained therein
are compiled from public data sources and our analysts' interviews
with executives of listed companies. They are presented for
informational purposes only and not to be deemed as solicitations to
buy or sell any securities. Best attempts have been made to verify
information from these vast sources, but we cannot guarantee their
accuracy, adequacy, completeness and timeliness. The analyses and
comments presented herein are opinions of our analysts and do not
necessarily reflect the views of Asia Plus Securities.
China On the other hand, China's manufacturing PMI (HSBC) rose from 48.9 in April to 49.2 in May, but still stayed below
50 for the third consecutive month, reflecting contraction in the real factor. Thus, the economy still needs to be stimulated by
easing monetary policies, which will be the only positive sentiment on Asian stock markets.
Foreigners sell net in Asia, sell Thai stocks net for third day
Last Monday, foreign investors possessed a net sell position in regional stock markets at US$208.95m. Taiwan was with net
sell of US$282m (US$3.68m on the previous day), followed by Indonesia and the Philippines of US$1.87m and US$0.92m,
while Thailand's stock market was closed on Vesak day.
Last Friday, foreign investors possessed a net buy position in regional stock markets at US$228m. South Korea was with
net buy of US$236m (South Korea was with the largest accumulated of B1,659m in May), followed by the Philippines of
US$18m (after 15-day net sell). Meanwhile, three countries faced net sell: Indonesia of US$13m (second day), Taiwan of
US$4m (after three-day net buy), and Thailand of US$8m or B260m (third day); whereas institutions bought B921m net.
For the bond market, foreigners bought B16,006m net, while institutions bought B895m net; THB was recently at
B33.72/US$.
SET Index to stay flat or swing sideway in June
SET Index dropped by 2% from the beginning of May, mainly from sales of big- and medium-cap stocks: banking (-4.8%),
energy (-3.8%), property (-3.2%), ICT (-2.2%), media (-5.4%), consumer's finance (-3.5%), and insurance (-2.2%). The Index
has barely changed from the end of 2014. However, some sectors, mostly mid-cap, have outperformed the SET: electronics
(+23.4%), petrochemical (+22.1%), consumer's finance (+20.3%), construction material (+17.4%), contractor (+13.3%),
healthcare (+11.7%), and hotel (+8.6%); while the following sectors have underperformed the market: banking (-13.4%),
media (-12.6%), agribusiness (-7.4%), ICT (-4.7%), property (-4.5%), and food (-3.4%); other sectors have granted YTD
returns close to the market's return. (See the graph above)
Investors have been keeping an eye for possibility in June. We see that there would be no significant positive factor to lead
to an uptrend. After listed companies' 1Q15 earnings were reported, their forecasts are likely to be revised down, especially
domestic plays like ICT stocks; we revise down TRUE and DTAC's earnings forecast today. Traders, both foreign investors
and institutions (securities companies working on mutual funds and investment portfolio), would determine the direction of
SET Index; they are likely to switch between net selling and buying as usual. With YTD accumulated net sell of B5.18bn,
this is possibly the third consecutive year of net sell after facing accumulated net sell of B193bn in 2016 and B36bn in 2014.
Thailand's economic growth has been more sluggish than other Asian countries, and THB has been weakening. According
to the ten-year statistics, there was 60% probability that foreigners would sell Thai stocks net, versus 40% possibility of net
buy.
The following sectors have over 60% possibility of outperforming the market: food (70% probability, 0.7% return),
insurance (60% probability, 1.6% return), healthcare (60% probability, 1.5% return), and auto (60% probability, 0.7%
return).
The following sectors have only 50% possibility of granting positive return: banking (+2.2%), electronics (+1.9%), ICT
(+1.47%), petrochemical (+0.9%), agribusiness (+0.8%), commerce (+0.5%), and tourism (+0.4%).
2
Stocks Recommended in Market Talk
Stocks
Start
Date
SPALI
05-Jan-15
Price
Fair Value
Weight
Start
Last
Accumulated
Return
7%
23.43
18.30
-21.9%
PER
2558F
PBV
2558F
Dividend
Yield
Strategist Comment
30-Min Chart
Inexpensive laggard stock with high dividend.
31.96
5.63
1.48
7.19
Backlog making up 80% of FY2015 income target.
FY2016 profit to leap 66% from Bumble Bee
TUF
11-May-15
26.00
14%
20.90
20.40
-2.4%
18.60
1.78
2.69
Share price substantially absorbed negative factor.
Potential strong profit in 2015-2016
IRPC
21-May-15
5.20
7%
4.26
4.14
-2.8%
10.24
1.11
2.42
from Phoenix project.
Rebounding crude oil price,
PTT
08-Jan-15
402.50
16%
341.06
347.00
1.7%
9.87
1.35
4.00
LPG price float benefiting PTT.
Crude oil oversupply subsides.
PTTEP
03-Feb-15
140.00
16%
115.03
108.00
-6.1%
11.80
1.09
4.15
Benefiting petroleum business.
Growing demand, lower cost, high margin,
VNG
09-Apr-15
10.25
13%
7.70
8.50
10.4%
10.30
1.79
3.88
growing profit, developing new products with attractive
growth story.
Benefiting from policy rate cut.
ASK
12-Mar-15
30.10
13%
22.50
20.20
-10.2%
8.35
1.61
8.38
Low P/E ratio, high dividend yield.
HRCI rising countinuously,
RCL
25-Mar-15
14.70
10%
9.10
10.20
12.1%
16.34
0.81
3.06
low fuel cost promotes earnings growth.
Accumulated contribution returns since beginning of the
year
Accumulated returns since our recommendation
SPALI
SPALI -21.9%
-2.8%
SAMART
SALEE
-1.4%
-1.3%
-1.2%
ASK
PTTEP
-10.2%
ASK
-1.4%
SC
STPI
PTTEP
-6.1%
-0.3%
-0.2%
-0.1%
CASH
-2.8%
IRPC
-0.7%
-0.4%
TUF
IRPC
KBANK
0.0%
0.0%
PTT
M
TUF
0.6%
SCC
ROBINS
-2.4%
0.7%
0.8%
0.9%
GUNKUL
PTT
AIT
SYNTEC
1.7%
1.0%
1.0%
1.2%
PTTGC
VNG
SENA
HANA
10.4%
VNG
RCL
12.1%
1.6%
1.6%
1.6%
MCS
TASCO
2.9%
3.5%
RCL
-20%
-15%
-10%
-5%
0%
5%
10%
15%
4.8%
-4%
-3%
Accumulated returns
Port
14%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Accumulated returns since beginning of the year
SET
Port
12.30%
SET
20%
12%
10%
15%
8%
6%
10%
4%
2%
0.62%
-0.11%
0.16%
5%
0%
-2%
0%
-2.01%
-4.05%
25-May-15
18-May-15
4-May-15
11-May-15
27-Apr-15
20-Apr-15
6-Apr-15
13-Apr-15
30-Mar-15
23-Mar-15
9-Mar-15
16-Mar-15
2-Mar-15
23-Feb-15
9-Feb-15
16-Feb-15
-5%
-1D
2-Feb-15
MTD
26-Jan-15
YTD
19-Jan-15
-6%
5-Jan-15
-4%
12-Jan-15
-25%
3