CGSI Cuts Thailand’s SET Index Projection to 1560 amid Domestic and Global Uncertainties

CGS International Thailand (CGSI) has revised down its projection for Thailand’s SET Index to 1,560 from 1,650, attributing this adjustment to uncertainties prevalent in both the domestic and global economic landscapes, while maintaining its earnings per share (EPS) forecast at THB87.4 (+10%) for the fiscal year 2024.

CGSI noted enhanced first-quarter 2024 earnings among listed companies within its coverage, marking a significant improvement compared to the past two years, with approximately 43% surpassing expectations, representing the highest number of positive surprises since the fourth quarter of 2021.

Positive earnings deviations in the first quarter of 2024 were particularly notable within the agriculture, banking, construction, food, and petrochemical sectors, while adverse variances were observed in the services, technology, and transportation industries. Encumbered by uncertainties in the economic spheres domestically and internationally, CGSI opted to adjust its year-end SET Index target to 1,560 points from the previous 1,650 points, now based on a 15.9x forward-year 2025 price-to-earnings ratio (P/E), representing a deviation of -0.75 standard deviation from its 5-year mean.

CGSI exhibits a penchant for the banking sector, despite apprehensions related to economic fragility and high non-performing loans (NPLs), on account of banks currently experiencing the highest interest rate differential since the ASEAN financial crisis. The brokerage anticipates that the advantages stemming from this differential will become more apparent as NPLs decline.

In terms of the retail sector, CGSI foresees benefits accruing from the government’s digital wallet initiative, whereas industrial estates are poised to reap gains from substantial foreign direct investments (FDIs) within the electronics and electric vehicle (EV) sectors. Among CGSI’s top stock picks are AMATA, BBL, CPALL, GFPT, PTTEP, SCB, and TU.