Earnings visibility to spice up Thailand shares and sectors in 2022: CGS-CIMB

EARNINGS visibility, slightly than simply earnings restoration, is ready to drive inventory and sector efficiency in Thailand, stated CGS-CIMB, because the brokerage positioned its desire on massive cap firms with home publicity.

In a report on Wednesday (Nov 24), the analysis workforce reiterated its goal of 1,850 factors for the Inventory Alternate of Thailand (SET) in 2022. Draw back threat to the decision is a doable new wave of Covid-19, whereas re-rating catalysts may come from extra overseas inflows into the SET and better than anticipated vacationer arrivals.

The SET index goal is predicated on 18.5 instances the 2023 value to earnings ratio.

CGS-CIMB noticed that traders are overly optimistic on Thailand’s tourism restoration, and too pessimistic on home sectors reminiscent of shopper, retail, property and banks. It believes that Thailand’s border reopening has already been priced in by the market.

“With tighter liquidity abroad, extra stringent guidelines to curb extreme home hypothesis, and better overseas inflows, huge caps would outperform small caps in 2022,” stated CGS-CIMB.

The share of fully-vaccinated folks in Thailand’s inhabitants is “prone to attain” 70 per cent at year-end, up from 55 per cent as at Nov 18, and numbers of latest Covid-19 circumstances are anticipated to lower. It will result in larger shopper confidence and spending, the report famous.

On the political entrance, the brokerage believes that regardless of the opportunity of a rift inside the primary coalition celebration, Palang Pracharat, the federal government “will seemingly” serve out its full 4-year time period till March 2023.

Different key themes the brokerage is looking for in 2022 are a stronger baht, election performs within the second half of 2022, and the notice of environmental, social and company governance in Thailand.

Assessing the a number of themes, CGS-CIMB has an “obese” ranking or optimistic suggestions on the retail, financial institution, property, oil and fuel, and building sectors. Whereas the transport, telecom and lodge sectors have an “underweight” ranking.

CGS-CIMB stated: “Regardless of the robust earnings per share (EPS) development of 51 per cent anticipated in 2021, we imagine company Thailand will proceed to publish one other strong yr in 2022 with EPS development of 14 per cent yr on yr (yoy), adopted by 16 per cent yoy development in 2023.”

Among the many listing of firms that the brokerage expects to carry out properly, it highlighted 3 firms – Central Retail Company, CP All and Kasikornbank, and maintained its “add” name on these counters.

Highlighting CP All as “probably the greatest retail performs” on Thailand’s reopening theme, CGS-CIMB stated the corporate noticed robust gross sales restoration in tandem with growing folks mobility.

A public providing of the group’s wholesale arm, Siam Makro, could be a near-term catalyst, the report added. The goal value of 84 baht is predicated on discounted money movement (DCF), with 7.5 per cent weighted common price of capital (WACC) and a couple of per cent long-term development.

Central Retail Company can also be stated to be an excellent retail play, as the corporate seems to be to profit from the pent-up demand for trend to spice up near-term earnings, whereas its superior omni-channel developments would assist shore up its long-term competitiveness. The goal value of 42 baht is predicated on DCF, with 6.5 per cent WACC and a couple of per cent long-term development.

Kasikornbank is the “prime financial institution choose amongst Thai banks”, given its preemptive provisioning as a buffer towards credit score dangers. The brokerage expects the financial institution to witness internet revenue restoration in 2022 on the again of stabilising internet curiosity margin, enhancements in small-medium enterprise lending and decrease credit score prices.

CGS-CIMB additionally believes that improved earnings visibility ought to enable the financial institution to profit from overseas fund flows, and that doable upside advantages may come from worth accretion from robust retail lending and tech subsidiaries. Kasikornbank’s goal value of 170 baht is predicated on 0.87 instances the 2022 value to e-book worth ratio.

Learn extra:

• A month after reopening, Thailand sees gradual tourism restoration
• Analysts flip optimistic on AirAsia, Airports of Thailand on endemic shift
• Thailand has over 20,000 overseas guests in October after gradual reopening