Alpha Picks
Strategy - Alpha Picks: Short-term Pain, Long-term Gain
Analyst
Analyst
Krit Tanarattananon
krit@uobkh.co.thAnalyst
Thailand Research Team
research@uobkh.co.thAnalyst
Natthida Chuaysong
Highlights
- Our portfolio's returns outperformed the market in Oct 26 (our portfolio: +3.0% vs SET Index: -2.6%).
- The outperforming stocks were: a) PLANB (+19.4%), b) BJC (+12.4%), and c) BH (+5.2%). The underperforming stocks were: a) THAI (-10.5%), b) TOP (-6.1%), and c) TRUE (+0.8%).
- For Nov 26, the Thai equity market may face short-term volatility due to the earnings reporting season. Nevertheless, we believe the downside risk for the Thai equity market is quite limited and should be supported by the wide yield gap between equities and government bonds, which should encourage further capital inflows into the equity market.
- Nov 26 Alpha Picks: BDMS, BH, BJC, CPN, DELTA, ITC, KBANK, KTC, RATCH, THAI, TOP and TRUE.
What’s New
- Portfolio outperformed in Oct 26. Our portfolio outperformed the market in Oct 26 (+3.0% vs SET Index: -2.6%). The outperforming stocks were: a) PLANB (+19.4%), b) BJC (+12.4%), and c) BH (+5.2%). The underperforming stocks were: a) THAI (-10.5%), b) TOP (-6.1%), and c) TRUE (+0.8%).
- Thai equities moved down in October. The Thai equities market moved down in October, and the broader market outlook remains unchanged. However, the market was pressured by stock-specific factors, particularly DELTA, which reported earnings below consensus expectations, and the refinery sector, which was affected by the government’s planned energy restructuring. The outperforming sectors were: a) media (+5.4%), b) commerce (+4.3%), and c) energy (+3.4%). The underperforming sectors were: a) electronics (-20.5%), b) packaging (-5.6%), and c) construction (-4.7%).
- More volatility in the short term, while long-term outlook remains strong. The Thai equity market may face some volatility in the short term amid the earnings reporting season for both Thai and US listed companies. However, we view the current SET Index correction as an attractive buying opportunity as: a) headwinds from DELTA and refinery stocks have largely been priced in. In fact, we expect DELTA’s earnings momentum to improve in 4Q26 and 2027. We also maintain our view that refining margins will remain elevated throughout 2027. Therefore, we believe current share price levels offer an attractive opportunity for accumulation; and b) at current levels, the SET Index offers an attractive earnings yield of 6.8%, significantly above the Thai government bond yield of approximately 2%. This substantial yield differential should increasingly encourage capital rotation from the bond market into equities, providing further support for the Thai stock market.
- Be more selective amid headwinds. We recommend adopting a bottom-up investment strategy, focusing on stocks with limited downside risk and strong business outlooks.
Highlights
- Our portfolio's returns outperformed the market in Oct 26 (our portfolio: +3.0% vs SET Index: -2.6%).
- The outperforming stocks were: a) PLANB (+19.4%), b) BJC (+12.4%), and c) BH (+5.2%). The underperforming stocks were: a) THAI (-10.5%), b) TOP (-6.1%), and c) TRUE (+0.8%).
- For Nov 26, the Thai equity market may face short-term volatility due to the earnings reporting season. Nevertheless, we believe the downside risk for the Thai equity market is quite limited and should be supported by the wide yield gap between equities and government bonds, which should encourage further capital inflows into the equity market.
- Nov 26 Alpha Picks: BDMS, BH, BJC, CPN, DELTA, ITC, KBANK, KTC, RATCH, THAI, TOP and TRUE.
What’s New
- Portfolio outperformed in Oct 26. Our portfolio outperformed the market in Oct 26 (+3.0% vs SET Index: -2.6%). The outperforming stocks were: a) PLANB (+19.4%), b) BJC (+12.4%), and c) BH (+5.2%). The underperforming stocks were: a) THAI (-10.5%), b) TOP (-6.1%), and c) TRUE (+0.8%).
- Thai equities moved down in October. The Thai equities market moved down in October, and the broader market outlook remains unchanged. However, the market was pressured by stock-specific factors, particularly DELTA, which reported earnings below consensus expectations, and the refinery sector, which was affected by the government’s planned energy restructuring. The outperforming sectors were: a) media (+5.4%), b) commerce (+4.3%), and c) energy (+3.4%). The underperforming sectors were: a) electronics (-20.5%), b) packaging (-5.6%), and c) construction (-4.7%).
- More volatility in the short term, while long-term outlook remains strong. The Thai equity market may face some volatility in the short term amid the earnings reporting season for both Thai and US listed companies. However, we view the current SET Index correction as an attractive buying opportunity as: a) headwinds from DELTA and refinery stocks have largely been priced in. In fact, we expect DELTA’s earnings momentum to improve in 4Q26 and 2027. We also maintain our view that refining margins will remain elevated throughout 2027. Therefore, we believe current share price levels offer an attractive opportunity for accumulation; and b) at current levels, the SET Index offers an attractive earnings yield of 6.8%, significantly above the Thai government bond yield of approximately 2%. This substantial yield differential should increasingly encourage capital rotation from the bond market into equities, providing further support for the Thai stock market.
- Be more selective amid headwinds. We recommend adopting a bottom-up investment strategy, focusing on stocks with limited downside risk and strong business outlooks.
Analyst
Analyst
Krit Tanarattananon
krit@uobkh.co.thAnalyst
Thailand Research Team
research@uobkh.co.thAnalyst
Natthida Chuaysong
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
