Bangkok: Tisco Flags Undervalued Thai Stocks for Growth
Despite numerous challenges—sluggish economic growth, disappointing corporate earnings, escalating political tensions, and the threat of U. S. import tariffs—Tisco Securities identifies compelling value opportunities in Thai stocks for medium- to long-term investors.
Apichart Phubancherdkul, Head of Strategy Research at Tisco Securities, forecasts less than 3% Thai economic growth this year. He cites weak domestic consumption and a persistent manufacturing slump, exacerbated by competition from cheaper imports, as primary factors. Potential U. S. tariff increases further complicate the outlook. President Donald Trump’s pursuit of reciprocal tariffs to align import duties with those imposed on American goods poses a significant risk. Thailand’s average 6% tariff on U. S. goods, compared to less than 1% on Thai products, and its $40 billion 2023 trade surplus with the U. S. (the 11th largest among America’s trading partners), makes it the second-most vulnerable Asian nation after India to retaliatory tariffs. Mr. Phubancherdkul emphasizes the importance of monitoring ongoing Thai-U. S. trade negotiations.
Weaker-than-expected earnings from Thai listed companies in the final quarter of 2024 further complicate the investment landscape. Tisco’s analysis shows 47% of companies reported earnings below market expectations, compared to 23% meeting and 30% exceeding them. This fueled downward revisions of Stock Exchange of Thailand (SET) index earnings estimates. Year-to-date, earnings per share declined by 2.4%, extending a trend from last year. Anticipated political tensions this month, stemming from constitutional amendment debates and a no-confidence motion against the government, add another layer of uncertainty.
However, Tisco sees opportunities for discerning investors. Mr. Phubancherdkul suggests the market downturn presents attractive entry points for medium- to long-term investors seeking fundamentally strong, undervalued stocks. Blue-chip stocks across various sectors are poised to benefit from the transition from traditional long-term equity funds to Thai ESG funds. Tisco highlights several promising stocks: Bangkok Dusit Medical Services (BDMS), Home Product Center (HMPRO), Minor International (MINT), Krung Thai Bank (KTB), PTT, Amata Corporation (AMATA), and Supalai (SPALI).
Tisco also promotes foreign stock opportunities via depository receipts (DRs) and fractional depository receipts (DRx). The firm sees China’s recent parliamentary sessions as signaling a potential shift toward increased domestic consumption and investment, along with advancements in chip development. For March, Tisco forecasts SET index support at 1,150 points and resistance at 1,250 points. While acknowledging market headwinds, Tisco remains optimistic about long-term prospects for investors willing to navigate current turbulence and capitalize on emerging opportunities.
