Equity Analysis /

Thailand: Technology - Tech babies getting thrown out with the bathwater

  • Let’s start with the conservative scenario

  • What’s our base case scenario?

  • Sometimes dividend can relieve pain

Napon Jaisan
Napon Jaisan

Equity Research Analyst

Bualuang Securities
15 July 2022

Tech shares have been mauled by a bear market this year. Interest rates are a consideration, but not a determinant, in tech investing. While acknowledging that the math underpinning valuations has changed, what has not changed are these firms’ business models. After continuous selling, it’s now possible to argue that the selling has gone too far. It’s time to consider whether Thai tech stock prices are offering an attractive risk/reward proposition?

Let’s start with the conservative scenario

The recent performance might suggest that tech’s time in the sun has passed. We do not think that is the case. Instead, we believe tech’s recent volatility has been the result of valuation adjustments as equity markets recalibrate for an era of higher interest rates and lower growth. Over the last two months, their valuations have started to get to a point where they look quite attractive. Under our conservative scenario, we assume no QoQ earnings growth for 2Q-4Q22 (1Q22 earnings multiplied by four as 2022 earnings assumption).