Strategy Note /

Thailand (Bualuang): Thai Market Strategy - Re-opening loop

  • Price rebounds after second round of spread earlier this year

  • Recent dips after third COVID-19 outbreak

  • Expect limited earnings downside

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
29 April 2021

Stricter disease control measures following the recent COVID-19 outbreak could lead to slowing new cases into May. Stocks that have seen notable dips during the past month in reaction to the outbreak (such as Transport, Tourism, Retail, Industrial Estate, Bank) could see decent rebounds over next two months. Commodity plays (such as Chemical, Refinery) are also preferred, as a global demand recovery is in play.

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). Our bull-case target is 1694 (a 5% discount to our YE22 SET target); it assumes a stronger macro-economic recovery in 2H21 and next year and a rising bond yield environment.

Price rebounds after second round of spread earlier this year

The SET dipped only 5% during the second COVID-19 outbreak, which started in Dec 2020 and ran into January. Commodity stocks were initially drivers of the SET, followed by stocks that stood to benefit under the re-opening theme in February and March.