CGS Expects “Domestic Plays” to Outperform in 2H21, Maintaining Accumulative-Buy Rating
CGS is positive towards the SET Index this week, expecting the market will prioritize vaccines rollout over the number of Covid-19 cases and giving an "Accumulative-Buy" rating on Domestic Plays.
Country Group Securities (CGS) stated that it has positive outlook towards the SET Index this week, foreseeing that the market will give priority to vaccines over the number of Covid-19 confirmed cases.
In terms of external factors, the US Core PCE inflation report on Friday, despite rising to 3.1% year on year, was higher than the market’s expectation of 2.9% year on year, sparking more concerns about the Fed’s possible tightening of monetary policy. Markets, on the other hand, responded positively. For instance, the yield on the 10-year US Treasury note reduced, the Dow Jones closed 0.2% higher, and the US Breakeven 5Y (inflation expectation) lowered. This expressed less anxiety about high inflation and may have been influenced by the Fed’s mid-June meeting, during which the market anticipates the Fed will continue to ease monetary policy.
This week’s highlights include the following: 1) the OPEC+ meeting on June 1, 2021. 2) The Thai Cabinet meeting on Tuesday. The government is expected to approve more relief packages that will benefit retail stocks (BJC, CRC, CPALL, and HMPRO) and restaurant stocks (CENTEL, M, and MINT).
For investment strategy, CGS maintained a “Accumulative-Buy” rating on Domestic Plays such as retail (BJC, CRC, CPALL, HMPRO), public transportation (BEM, BTS), malls (CPN), and cinemas (MAJOR). BCH, CBG, CHG, CK, KCE, MINT, NER, and STEC are the top picks.
Carabao Group Public Company Limited (CBG) (BUY / TP: 157 baht) is predicted to turn around in 2Q21 on the back of increased orders from the CLMV market, while sales in China are likely to reach triple digits growth. Additionally, CBG will profit from the launch of new products (Woody C+ Lock Vitamin C Drink Mixed Berry).
CH. Karnchang Public Company Limited (CK) (BUY / TP: 23.25 baht). The company, recently, acquired 2 construction contracts 1) Water Transmission Tunnels along Kanchanaphisek Road and 2) project in Chulabhorn Royal Academy, with a total combined contract value of 8.9 billion baht. In the long run, several large projects are awaiting development, including the MRT Orange Line, the MRT Southern Purple Line, and the 90 billion baht Luang Prabang dam. If the company is able to acquire all of the above jobs, it will regain the backlog to a hundred billion.