Kiatnakin Phatra Securities (KKPS) has raised its 2025 year-end target for Thailand’s SET Index to 1,360 points, up from a previous forecast of 1,230, reflecting growing optimism in the local equity market.
The revised outlook incorporates a lower real risk-free rate, now at 0.9% compared to 1.5% previously, and a trimmed equity risk premium assumption from 800bps down to 650bps. Earnings-per-share projections remain unchanged, but the new SET Index target price implies a forward price-to-earnings (P/E) ratio of 16 times, an increase from the earlier estimate of 14.5 times.
KKPS noted that the elevated forward P/E appears somewhat stretched when set against historical averages; the outsized influence of Delta Electronics (Thailand) (SET: DELTA), composing 12% of the index’s current weighting, skews the metrics. Excluding DELTA, the brokerage firm suggests that a 1,300 trading range indicated more accurately reflects the fair value of the market.
In light of DELTA’s continued dominance and absent any imminent regulatory interventions, KKPS has introduced a separate SET ex-DELTA Index target. For 2025, this benchmark stands at 1,245, which would represent up to a 10% upside, based on a 15x forward P/E ratio—substantially above the current 12x. This figure better signals recent trends where market breadth is expanding beyond a handful of large-cap names.
Valuation improvements are expected to be sustainable if investors begin to price in more coordinated fiscal and monetary policies. KKPS indicates a 16x P/E on the SET Index is realistic if 10-year government bond yields remain anchored around 1% and economic growth revives to at least 3%.
Political and policy developments are highlighted as the most potent near-term driver for sentiment, particularly as upcoming elections, government stimuli, and pre-election spending buoy local investment appetite. Despite ongoing fiscal constraints and a cautious stance from the Monetary Policy Committee, KKPS anticipates that any delays in policy coordination are unlikely to derail investor optimism, even with looming downside risks in 2026.
Meanwhile, global easing cycles could further support a broadening of the Thai equity market, should policy guidance emphasise a revival in growth. Profit recovery is identified as the main challenge. However, KKPS expects this will become less of an issue as policy support intensifies and capital inflows continue.
Reflecting its revised outlook, KKPS maintains a preference for domestic cyclical stocks. The brokerage firm has upgraded both Hotels and Commerce to ‘Overweight’, while Property, Energy, Transport, and Utilities have been elevated to ‘Marketweight’.
Materials and Telecoms have been downgraded to ‘Marketweight’ due to limited growth prospects. Top picks cited by KKPS include AWC, BH, CPALL, CPAXT, ERW, KTB, SAWAD, SPALI, TIDLOR, and TOP.
