Maybank Reveals Investment Strategies in Post Covid, Seeing Attractiveness in Thai Stocks

In the INVEST ASEAN 2020: Capitalising On The Recovery From Lockdowns conference held by Maybank Kim Eng on June 5, 2020, the analysts from Maybank pointed out the impact of the coronavirus outbreak on Thailand as well as recommended investment strategies for investors amid the gradual lockdown easing across the region.

 

Maybank’s analysts stated that Thailand received a hard hit from the coronavirus outbreak, especially in the tourism sector. The earnings of listed companies in 1Q20, excluding the energy sector and petrochemical, declined 19%, mainly due to the effect of the pandemic. The whole market reported a decline earnings of 69% due to a recognition of stock loss from the energy and petrochemical sector.

 

Hotel stocks took the hardest hit from the virus outbreak, which can be seen from the 1Q20 earnings of MINT, ERW and CENTEL, even though there were 7 million arrivals in 1Q. The situation will get worse in the 2Q when there is no arrival at all.

Beside hotel stocks, retailers such as CRC and CPN were also among those affected by the outbreak due to lockdown measures. Meanwhile, some property developers reportedly transferred the unit with a discount in leverage.

 

In the analysts’ view, the recovery in tourism should be around at year’s end or by the beginning of next year as the Thai government is cautious about easing lockdown in order to prevent the second wave of the outbreak. SMEs and hotel operators should be among those to benefit from the lockdown easing, which allows domestic travelling.

Countries with flat coronavirus cases such as China, Hong Kong and South Korea should be  among the countries to be permitted travelling to Thailand. Business travellers are expected to be in the first group in this allowance, while tourists could be last, according to the analysts’ forecast.

 

Even though SET Index has high valuation due to its recent gains, the analysts believed the market could attract more investors from the short-sell measures and the historic low interest rate, making the equity market more desirable than the other. Moreover, the Thai stock market also offers good quality stocks, such as, PTT, PTTEP PTTGC, SPRC, CPF, GFPT, CBG, SABINA, LH, QH, SPALI, and DIF, TFFIF for the funds.

 

Maybank’s analysts suggested investment strategies during the recovery from lockdown as follows;

 

Sector Play 2Q/3Q 2020

1) Energy : From the higher oil prices (forecast at $40/bbl) and no maintenance, recommended TOP, SPRC and PTTEP.

2) Food : Essential factors, recommended CPF, GFPT, OSP and CBG.

3) Healthcare : Good domestic sales, especially small hospital, recommended CHG and BCH.

4) Basic Retailers : Good operation, recommended MAKRO, HMPRO and GLOBAL

 

Sector Play: Post 3Q20 to Next Year

1) Consumer Finance : People with limited income would seek help from financial providers.

2) Auto Parts : Reopening factory and expected to outperform in 3Q.

3) Construction Material : Resume infrastructure projects.

4) Discretionary retailers and tourism : To recover after the virus outbreak eased.

 

Stocks Pick

1) SCC

2) SAWAD

3) AOT

4) CPALL