Strategy Note /

Thailand (Bualuang): Thai Market Strategy - Eye on the re-opening bounce

  • Price rebounds followed past two waves of COVID earlier this year

  • Eyes on potential bounce after latest resurgence

  • Expect limited earnings downside

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
19 August 2021

After more than a month of stricter outbreak prevention measures, new cases of COVID-19 locally “seem” to have peaked (new cases were below seven-day rolling average for the past three days). Stocks that have seen notable dips during the past month in response to the tighter control measures so could anticipate similar rebounds over coming months. Commodity plays (such as Chemical, Refinery) could also see upsides moving into high season but might be capped by lingering doubts over demand momentum (as many countries have likewise seen resurgences in COVID-19 cases) and new sources of supplies.

Our base-case YE21 SET target is 1605 (a 10% discount to our YE22 SET target of 1784, pegged to a PER of 18.2x, EPS of 98).

Price rebounds followed past two waves of COVID earlier this year

Looking at price patterns during the latest rounds of local COVID-19 outbreaks in January and April this year, rebounds were seen on re-opening theme with similarities in sectoral performance. Sectors affected by local outbreak saw rises and falls in tandem with outbreak/re-opening themes. Commodity stocks seemed to follow global commodity price rather than local COVID-19 cases.