FSS Expects New Additional Stocks on SET50 i.e. KEX-OR-STGT-SCGP to Drive Up SET Index

Finansia Syrus Securities (FSS) forecasted the SET50 could lead the market to be more volatile, but at the same time provide more upside potential because stock markets across the world continue to rally ahead of economic recoveries, stated Songklod Wongchai, FSS’ analyst. However, the current SET50 is so far still underperforming the market. But FSS believed that the upcoming stocks to enter SET50 within the next 6 months, which mostly are high-growth stocks, such as stocks in IT-related, EV-related, packaging, fuel retail and package delivery, would foster the SET index. Pointing out that BAM, COM7, KEX, SCGP, STGT and OR could be the game-changer of the stock market.

 

The new stocks to be listed on SET50 would make index volatile as a consequence of the swift rebalancing of index funds, and would also lead to the overvaluation of large-cap stocks within the SET50. For stocks in SET50 that have low free float, FSS warned that could face a high fluctuation for their share prices.

FSS believed that the Covid-19 will affect the stock market only in the short-term and those companies suffering from the pandemic will make a turnaround to pre-Covid-19 levels by the end of 2021. 

 

Key catalysts for the SET50’s returns in 2021 are 1) additional stocks to the SET50 index which could potentially drive the SET50 up even higher in 2021. Moreover, 40% of stocks in the SET50 are in uptrend businesses 2) new sector weightings in the SET50, including tech-related, IT devices, packaging, parcel delivery and the beverage sector and 3) large-cap stocks and excellent returns would attract funds and foreign investors.

 

Still, FSS expected a decline in SET index due to a short-term market correction and profit-taking, reflecting a market cycle after the index rallied 25% to nearly 1,550 points, then started to consolidate. In the long-term, FSS maintained its Overweight view on Thai stocks and targeted the SET index to reach 1,550 by the end of this year, based on 18.2x 2021E P/E, or close to 0.5 SD above its 10-year average.

For investment theme, FSS recommended “BUY” on EA (TP ฿76), AH (TP ฿22), PTTGC (TP ฿86), ESSO (TP ฿14.30) and MINT (TP ฿29).