KASIKORNBANK sees Thai stocks at risk of EPS cut after company costs rise in line with rising oil prices-interest rates

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Kasikorn Securities said that now the world stock market has returned to worry about 2 main factors: 1.) Raising US interest rates to curb high inflation The Fed signaled another 0.75% increase in the July meeting.

As for meetings around September, November and December, the Fed will raise interest rates by 0.50%: 0.25%: 0.25%, respectively. The US interest rate is expected at the end of this year to 3.4% and the end of 2023 will at 3.8%, which high interest rates will slow down the economy and makeThe US is expected to face a recession.

2.) US Real yields, or yield adjusted inflation, is currently up +0.63%, hitting a two-year high from the previous 3 years Real yields have been down more than 1% since the coronavirus pandemic. From the past statistics, if Real yields are positive and strong. found that the stock market Commodity prices, etc., will be lower and will be more sensitive than the inverted yield curve.

in partThai stock market (SET Index) Since the issue of the Russo-Ukraine war earlier this year One of the reasons why the Thai stock market is outperformed compared to other countries

(Since the beginning of the year, the SET Index -5.8%ytd was the least negative compared to China’s stock markets -9.2%ytd, Hong Kong-9.8%ytd, India -11%, the Philippines -12.8%, and against Europe, Germany and France -17%. ytd, US -23.2%)

due to profits of Thai listed companies (By the way, the profit energy group accounted for approximately 31% of the total profit. And this group has benefited from the price of energy such as oil, coal, natural gas, etc., which have increased. and the market has continuously increased its EPS forecast since the beginning of the year)

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However, if assessing the direction of the environment Both from the price of crude oil did not make new highs. and has a downward trend, both due to the increasing recession forecast As a result, the cost of listed companies during 2Q22 increased in line with energy prices.

coupled with the direction of the Thai policy interest rate which saw signs of an increase in 3Q22 and the chance of rising Thai minimum wage. KS estimates that may cause Market EPS trend to begin to see a downgrade trend in the next phase and open Downisde Target Index. (Based on Consensus Trend, EPS forecast is stable at 96.63 baht per share)

investment strategy

KS assesses the key support in the market this round. If the index drops to 1,500/ 1,530 points, it is a point that will gradually accumulate.

– Power Plants 1.) Group profits have hit their lowest level and profit margins are expected to pick up from the 2nd and 3rd rounds of Ft hike in 2022 2.) Evaluate Bond yields pass Peak points recommend GULF, GPSC, BGRIM,

– Defensive groups such as ICT groups recommend TRUE, DTAC

– Hospital groups such as BH, BDMS

– Food export groups such as CPF, TU, ASIAN

As for the sectors that slow down investments, they are Global Play, which are worried about the recession, such as energy groups, petrochemical groups, automotive groups, banks, retailers, and those who have benefited from work from home such as Gadget group IT equipment

The stock market view, the SET expects a movement of 1,500-1,580 points.

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Top pick : BEM (basic price 9.99 baht) We believe that BEM has a bright outlook from

1.) the recovery of traffic from the return to open the country

2.) Real estate developments along the expressways and subway lines, such as the new QSNCC project, shopping malls, and condominiums.

3.) Development of new expressways and railway lines to supply assets to BEM

4.) The EMV system will reduce the total fares for MRT customers, leading to an increase in the number of MRT passengers for BEM.

5.) A double-decker expressway project that will increase traffic and potentially lead to an extension of the concession period which will increase upside to our current target price.

Economic issues worth following

– Jun 20: Bank of China (PBoC) prime customer loan interest rate, German Producer Index (PPI) report (Month-Month) (May), market expected 1.5%MoM.

– Jun 21: Minutes of the Australian Monetary Policy Meeting, Existing Home Sales (May) increase 5.41 million units.

– Jun 22: Monetary policy meeting minutes, British consumer price index (CPI) (year-on-year) (May), markets expected 9.1%YoY, central bank chair Powell’s statement. united states

– Jun 23: Quarterly US Crude Inventory Report (API), Japan Services PMI Report, European Central Bank Monthly Report, US Manufacturing Purchasing Managers’ Index (PMI). Month (Jun) Markets expected 57.5 points out of 57, US crude inventories report.

– Jun 24: Federal Reserve crisis test results, US new home sales (May) estimated to be 600,000 units.

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