Asia Plus Recommends Large-Cap Laggard Plays. Top Picks: BDMS, AOT, and ADVANC

Asia Plus Securities (ASPS) anticipated massive foreign fund inflows as the government’s goal of administering 100 million doses by the end of 2021 is proceeding well. Thailand had the biggest month-to-date foreign net buying in Asia, at 4.6 billion baht, for June. Thus, ASPS has recommended a “BUY” rating on large-cap stocks with strong fundamentals and a price laggard. BDMS, AOT, and ADVANC are the top picks. 

Thailand is making progress with vaccine distribution. On June 7-8, about 800,000 doses were delivered. At the same time, other segments are permitted to procure alternative vaccines.  Thus, herd immunity may develop in 4Q21, resulting in a positive sentiment toward stocks that benefit from city reopening and economic recovery. Global markets remain concerned about rising inflation, the Fed’s less easing monetary policy, and tensions between the US and China. The SET Index is still rising. ASPS’s investment theme still focuses on city and economic reopening.

Since the vaccination drive  in Thailand is heading well, it has boosted foreign fund inflow into the Thai market, resulting in Thailand having the highest MTD foreign net buying in Asia in June, at US$150 million or 4.6 billion baht, comparable to Indonesia and the Philippines, while Taiwan and South Korea experienced net selling.

Hence, ASPS recommended big-cap stocks with solid fundamentals, price laggard, and particular positive factors. Top picks are BDMS, AOT, and ADVANC.

Advanced Info Service Public Company Limited (ADVANC): ASPS has given a target price for ADVANC at 220.00 baht. ADVANC became the exclusive partner with Disney+ Hotstar in Thailand, having positive sentiment on fair value and fundamentals in the medium and long term. 2H21 profit would rebound as COVID-19 subsides and 5G service has better access.  Fair value has additional long-term upside from GULF’s tender offer to acquire INTUCH (ADVANC’s parent company).

Bangkok Dusit Medical Services Public Company Limited (BDMS): ASPS has given a target price for BDMS at 24.00 baht. Profit would rebound from 2Q21 on and in 2022. BDMS has most patients in Bangkok. Thai patient base may rebound better than expected in 2H21 thanks to vaccine progress, while fly-in patient base may partly rebound. ASPS maintained a forecast, estimating 2021 normalized profit to grow 43% and favor BDMS most among peers due to a solid business and large hospital network. Fair value is 24.00 baht, showing 14% upside.

Airports of Thailand Public Company Limited (AOT): ASPS has given a target price for AOT at 67.00 baht. AOT is expected to be in the spotlight soon. Vaccine distribution in Europe and China is speeding up. Thailand will reopen soon, starting with the Phuket sandbox in July. The government aims to inject 100 million doses by the end-2021. AOT rose only 4% YTD, far laggard from SET return of 11.3% YTD.