In last month’s analysis, we assessed the downside of the SET limited index due to the cheap valuation, but there is still a downside risk to the profit estimates of listed companies. because the economy is slower than expected
In last month’s analysis, we assessed the downside of the SET limited index due to the cheap valuation, but there is still a downside risk to the profit estimates of listed companies. because the economy is slower than expected
The SET index is moving within the support-resistance range we previously estimated, namely 1,350 – 1,410 points. In February, analysts reduced the EPS estimate of the SET index by 1.8%.
Value factor: Valuation Thai stocks are cheap (based on current information)
i) Adjusted yield gap (M yield gap): The latest M yield gap was 2.38 points, down slightly from 2.45 points a month earlier, although analysts cut their earnings estimates. But the yield on government bonds (Bond Yield) has also continued to fall, while the SET index has not changed significantly. The yield gap M is positive by more than 2.0 points, which shows that the current valuation of the Thai stock market is much higher than that of government bonds
ii) Implied equity risk premium (iERP): The Thai stock market’s iERP was 4.03%, up from 3.97% last month, The difference between iERP and the risk-free rate (10-year Bond yield) increased to 1.5%, which higher than the long term average rate in Historically at 1.0% and higher than last month at 1.3%.
iii) Cyclically adjusted PE (CAPE): Latest CAPE ratio is 16.6 times, up slightly from 16.5 times last month Current CAPE is well below the 120-month (10-year) historical average of 20 work, while the difference between Long-term Earnings Long Earnings (1/CAPE) and 10-year Bond (also known as Additional CAPE Earnings: ECY) is at 3.49%, which is the highest level since July 2021.
Investors have allocated approximately 28.2% of the total money supply in the Thai stock market.
The aggregate allocation of investors to equity index (AIAE index) is equal to 28.2 points, which reflects that investors have allocated about 28.2% of the total money supply to the Thai stock market. This fell close to the historical long-term average of 27.6 points.
There are stocks in the portfolio that are recommended to continue to hold / or wait to receive stocks if the stock market goes down.
The SET index is weaker than other stock markets. In the last period, the valuation of the Thai stock market was at a very low level. Based on our model Therefore, we still assess that the downside of the Thai stock market is quite limited. Based on current information We still recommend keeping stocks in the portfolio or waiting to buy stocks if the price falls.
Although the valuation of the SET index is very cheap. However, profit estimates for listed companies have been continuously lowered. It is a risk factor that must be monitored. We have warned about this risk since our analysis in January. And that the estimate at the start of the year There is a downside risk that the forecast will have to be revised down, but the dividend per share (DPS) estimate has not been significantly revised down. It reflects that most analysts have raised their assumptions on the dividend payout ratio, which will be an issue that will help support the SET index.
In summary, we still recommend investors Buy when the price is weak if the SET index falls below the important support area of 1,350 – 1,330 points. However, there is not much upside to the Thai stock market. Due to the lack of short-term positive factors Except for adjusting the Pay-up ratio assumption, we therefore maintain the “Sell to Strength” recommendation and take profit if the SET index increases to test the resistance area of 1,410 – 1,440 points .
Related content
The remaining stocks for February that we recommend give a total rate of return of 1.9% and 2.4% based on the calculation of Equal weight and Market cap weight methods, respectively, while the SET index rose only 0.5% MoM The remaining stocks for March Our recommendations are in Table 1.
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