STEC-STPI: Obsessive Stocks over Thai Politics

Are Sino-Thai Engineering and Construction Public Co., LTD. (STEC) and STP&I Public Company Limited (STPI) the two shares that clearly tied to Thai politics?

Major shareholders of STEC is group of Charnvirakul which belongs to Mr. Anutin Charnvirakul, alias “big boss Noo”, the leader of the Bhumjaithai (Proud to be Thai) Party. Interestingly, STPI also has the same major shareholder as STEC, which is big boss Noo!

For this reason, STEC and STPI are the same lineage shares. Previously, after the election, it turned out that Bhumjaithai swept 51 seats off of MPs and was also in the pole position which will be a significant variance to form coalition government.

As a result of the election, it could be said that Bhumjaithai Party will be a coalition government which makes a run of STEC and STPI’s share price faster than the legend of the public bus “Route No.8” (Sai 8) as investors flock to buy both shares for speculation. However, the escalated tension in the parliament seems to be a never-ending story, which makes all of investors to be gone with the wind.

 

Recently, on Monday, 27 May 2019, Bhumjaithai Party responded to a joint coalition government. The announcement had made a comeback of STEC and STPI to move actively as a war horse again!

The highest of STEC during the day (27 May) was THB 25.75, closed at THB 25.25 and increasing by THB 0.25 or 1% while the highest of STPI during the day (27 May) was THB 6.75, closed at THB 6.60, and increasing by THB 0.10 or 1.54%.

Surprisingly, all of the share price that has risen substantially comes from the political trends which has nothing to do with the fundamental factor… However, STEC and STPI declined dramatically on the next day, similarly to wilted flowers. In this case, it is called the extraordinary becomes ordinary, isn’t it?

 

When looking at the fundamental factors, STEC does not have anything special. Over the past 2 years, the STEC’s turnover was fluctuated. As in 2017, STEC recorded a net loss by THB 610 million from a total revenue of THB 21,190 million. But in 2018, STEC had turned back to gain profit with a net profit of THB 1,616 million from a total revenue of THB 28,000 million. The latest quarter, 1Q19, STEC showed the total net profit of THB 343 million from the total revenue of THB 7,555 million.

In the case of STPI, the situation got worse and worse. In 2017, STPI reported a net loss by THB 2,495 million from the total revenue of THB 1,158 million. In 2018, recorded a net loss by THB 629 million from the total revenue of THB 1,344 million. Nevertheless, STPI had just recovered in the first quarter of 2019 to book a net profit of THB 1,821 million from the total revenue of THB 2,485 million, which mostly was the profit from an extra income.

This is to emphasize that the share price of both STEC and STPI depends only on the current trend.

 

Investors expect Bhumjaithai Party to be a part of the new coalition government, and STEC and STPI, which a major shareholder is a leader of the Bhumjaithai, will be swamped with projects. The higher workload will help buoying the profit growth sharply as well as pushing the share price higher.

From now on, keep eyes on the new government’s projects. How many will there be construction projects? Additionally, will STEC and STPI be able to get some supernatural power to help increasing its profit growth to the level of what had been expected?

If the Bhumjaithai Party has become a part of the coalition government… STEC, which already got a construction project for the new Parliamentary building, should be done with the project as soon as possible.

Which implies that if “big boss Noo comes, the new parliament will be done”. So, it the government won’t waste approximately THB 11 million per month to pay for a rental of TOT’s meeting room, which used as a temporary parliamentary.

More importantly, all of the noble MPs and Senators will have a suitable meeting room for a noble position.

Well, “Big Boss Noo’’ is also among those MPs….!