DBS Vickers Securities (DBSVS) forecast Thai stock market earnings to surge 85% YoY in 2Q21 as majority of the listed companies are expected to record greater YoY profit on the back of a low base in 2020.
For the investment theme, DBSVS believes that export stocks and companies earning a high percentage of their revenues in US dollar (e.g. electronics, food, medical latex gloves and LPG cylinders) will enjoy a weak Thai baht.
On the other hand, companies with debt denominated in US dollars, such as power plants, upstream energy businesses, refineries, and petrochemicals, may experience negative sentiments as a result of the baht depreciation.
A spike in Covid-19 cases will continue to cause downward pressure on the market. Countries throughout the world are currently experiencing a new surge in delta variant cases, and the WHO previously stated that this strain would soon become the dominant strain globally. Recently, an infection with two Covid-19 variants was reported.
Hence, DBSVS expects the SET Index to move in the range of 1,560-1,570/1,580 and 1,530/1,510-1,500 points this week and picks 4 stocks with strong earnings outlook in 2Q21 for investing as follows:
CHG : “BUY” recommendation with a target price of ฿4.80/share (Upside 10%)
DBSVS expects Chularat Hospital Public Company Limited (CHG) to report record high earnings in 2Q21 as a result of the Covid-19 outbreak escalating. During April-May, the number of Covid-19 screening tests and treatments grew to 1,000 per day, up from 300 per day in 1Q21. Moreover, the utilization rate for IPD (300 beds) and Hospitel(1,500 rooms) reached its full capacity in June-July after the infection rate jumped to nearly 10,000 cases per day.
Together with a plan to open a cardiac center in 3Q21, DBSVS forecast CHG’s earnings of 330-350 million baht in 2Q21, while net profit in 2021-22 would grow by 31% and 7%, respectively.
GLOCON : “BUY” recommendation with a target price of ฿1.50/share (Upside 26%)
Global Consumer Public Company Limited (GLOCON) is expected to rebound in 2021 before growing by leaps and bounds in 2022. DBSVS forecast 2Q21’s earnings to grow by 22% QoQ to 500 million baht, mainly from frozen foods, ready-to-eat products and dried fruits.
Key growth for the year 2021 is 1) frozen foods and ready-to-eat products; and 2) dried fruit. Meanwhile, growth in 2022 will be supported by 1) the establishment of new plants with a tripled production capacity, 2) the enhancement of the brand’s value, 3) the expansion of the export market, and 4) increased revenue from trading and hemp oil extraction.
Profit in 2021 would stand at 30-50 million baht and 131 million baht in 2022.
KBANK : “BUY” recommendation with a target price of ฿195.00/share (Upside 71%)
DBSVS anticipates earnings of Kasikornbank Public Company Limited (KBANK) to grow 400% in 2Q21 to 9.5 billion baht, increasing from 2.17 billion baht in 2Q20.
The partnership with Muang Thai Life Assurance (MTL) for 10 years is expected to have a significant impact on KBANK’s performance in 2022.
SONIC : “BUY” recommendation with a target price of ฿5.00/share (Upside 11%)
Sonic Interfreight Public Company Limited (SONIC) expects to report a significant YoY net income in 2Q21, owing to sustained high freight rates and effective expense management. As a result, earnings in 2021 should expand by leaps and bounds.