Independent Insight Provider

Stewart Paterson

Taurus Advisors LLP

Macroeconomics

The Thai consumer faces many headwinds: The household sector is more leveraged than in prior cycles; Thai export performance has been poor and employment growth has been weak. A weakening RMB may put downward pressure on real wages region-wide as Chinese labour costs shrink in Dollar terms. There has been a secular slowdown in consumption growth and what is more within that, retail is losing share.Many Thai consumer related shares are commanding valuations way in excess of those they had when their growth prospects were considerably better. Gearing levels are higher in my view than the market cares to acknowledge and there is the ever present threat of disruption from e-commerce. IRRs on these shares are likely to be very low over the long-run given current prices  in my view. Vulnerable stocks could include <a href="https://www.smartkarma.com/entities/9906" target="_blank" data-smartkarma-citation="entities:9906:1">Home Product Center Pcl (HMPRO TB)</a>; <a href="https://www.smartkarma.com/entities/19449" target="_blank" data-smartkarma-citation="entities:19449:1">Siam Global House Pcl (GLOBAL TB)</a>; <a href="https://www.smartkarma.com/entities/17188" target="_blank" data-smartkarma-citation="entities:17188:1">Central Pattana Pub Co Ltd (CPN TB)</a>; and <a href="https://www.smartkarma.com/entities/13889" target="_blank" data-smartkarma-citation="entities:13889:1">CP All PCL (CPALL TB)</a> in my view.Renewed Dollar strength /Baht weakness; the release of economic data post the King's passing and the rise in EMBI spreads generally and Thai yields specifically are all potential short term catalysts for the market to re-assess current valuations.

The Thai consumer faces many headwinds: The household sector is more leveraged than in prior cycles; Thai export performance has been poor and employment growth has been weak. A weakening RMB may put downward pressure on real wages region-wide as Chinese labour costs shrink in Dollar terms. There has been a secular slowdown in consumption growth and what is more within that, retail is losing share.Many Thai consumer related shares are commanding valuations way in excess of those they had when their growth prospects were considerably better. Gearing levels are higher in my view than the market cares to acknowledge and there is the ever present threat of disruption from e-commerce. IRRs on these shares are likely to be very low over the long-run given current prices  in my view. Vulnerable stocks could include Home Product Center Pcl (HMPRO TB); Siam Global House Pcl (GLOBAL TB); Central Pattana Pub Co Ltd (CPN TB); and CP All PCL (CPALL TB) in my view.Renewed Dollar strength /Baht weakness; the release of economic data post the King's passing and the rise in EMBI spreads generally and Thai yields specifically are all potential short term catalysts for the market to re-assess current valuations.

Macro to Micro: Thai Consumption Has Stagnated. Consumer Stocks Are near Record Valuations- Hmm.

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Thematic (Sector/Industry)

In this review, we predict that Thai equities will rally in October and early November before another major correction in December with the Fed rate hike. In the short term, we expect Thai banks to do well, as they and Asian counterparts (eg. Singapore's DBS) benefit in terms of relative growth if the US banks are hampered by the regulator's decision to increase capital requirements of the largest banks. We also see two companies run by Thailand's second richest tycoon Charoen Sirivadhanabhakdi, namely BJC and Thai Beverage, outperforming companies run by the larger CP Group, primarily due to corporate action and a market's tilt towards consumers and retailing sectors. Needless to say, we will be tactically overweight on banks, retailers, and consumers over the next two months.We also discuss: 1) the overall upgrade of Thailand's growth expectations on the back of stronger domestic consumption; and 2) highight the government's five strategic sectors, named 'The 5 S-Curves'.

In this review, we predict that Thai equities will rally in October and early November before another major correction in December with the Fed rate hike. In the short term, we expect Thai banks to do well, as they and Asian counterparts (eg. Singapore's DBS) benefit in terms of relative growth if the US banks are hampered by the regulator's decision to increase capital requirements of the largest banks. We also see two companies run by Thailand's second richest tycoon Charoen Sirivadhanabhakdi, namely BJC and Thai Beverage, outperforming companies run by the larger CP Group, primarily due to corporate action and a market's tilt towards consumers and retailing sectors. Needless to say, we will be tactically overweight on banks, retailers, and consumers over the next two months.We also discuss: 1) the overall upgrade of Thailand's growth expectations on the back of stronger domestic consumption; and 2) highight the government's five strategic sectors, named 'The 5 S-Curves'.

American Capital Requirement Increase: Charoen and Thai Banks to Lead October Rally

Thailand

Inoue Rubber (Thailand) Public Company Limited manufactures motorcycle tubes and tires and industrial rubber goods.  Its products are supplied as OEM parts to domestic motorcycle manufacturers.

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Inoue Rubber (Thailand) (IRC TB)

Macro to Micro: Thai Consumption Has Stagnated. Consumer Stocks Are near Record Valuations- Hmm.

The Thai consumer faces many headwinds: The household sector is more leveraged than in prior cycles; Thai export performance has been poor and...

Stewart Paterson

American Capital Requirement Increase: Charoen and Thai Banks to Lead October Rally

In this review, we predict that Thai equities will rally in October and early November before another major correction in December with the Fed...

Athaporn Arayasantiparb, CFA

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52-week Range

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