Analysts Recomm. Petrochem-Hospital-Insurance for Investing amid Thai Partial Lockdown

Bangkok declared a partial shutdown beginning today (June 28). Analysts anticipate a sell-off in property and restaurant sectors, setting a resistance level at 1,570 points and recommending investors to shift their focus to petrochemical, hospital, and insurance stocks.

The Royal Gazette on Saturday (June 26) night published a statement indicating a lockdown restriction in Bangkok and five surrounding provinces, including Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon and Nakhon Pathom to combat the coronavirus (Covid-19) as the new wave that has been tormenting the country since April was more contagious than the previous one.

The restriction, which will be implemented for 30 days starting June 28, will allow restaurants to be only available for takeaway, while community malls and department stores will close at 9 p.m. 

Activities involving a gathering of more than 20 people will be banned for the time being. Construction camp sites in the six areas will be shut down, and workers will not be allowed to move elsewhere to contain the new cluster that occurred in the campsite. 

Maybank Kim Eng Securities (Thailand) (MBKET) stated the partial lockdown announcement in the Bangkok metropolitan area and 4 Southern provinces, which includes a restriction on dining in and the closure of all construction camps beginning Monday,  will cause a small panic in the Thai market. As a result, the initial resistance level is set at 1,570 points. The stocks most likely to be impacted are restaurant, construction, and real estate, but this will not have a direct effect. While recommending Global Plays such as energy, petrochemical and electronic.  

Meanwhile, Asia Plus Securities (ASPS) expected the SET Index to fluctuate in the short-term. Rising prices in both stock market and commodity are projected to have positive sentiment on SET. Yet, weak Thai baht hinders foreign fund inflow and Covid-19 is still worrying in Thailand. As a result, to avoid fluctuation risk, ASPS recommended buying stocks with solid fundamentals and positive factors that are not closely correlated to the SET Index. Top Picks BDMS, BLA and NER.

North East Rubber Public Company Limited (NER) (TP: ฿9.50) –Thai baht weakened 1.9% mtd to B31.8/US$, good for rubber plays. The economy is recovering worldwide, so orders from new and existing customers will increase, boosting NER’s rubber business from now on. Net profit is estimated to grow 87.5% yoy in 2021 and 17.4% yoy in 2022, driven by rubber sales volume and selling price. P/E ratio is only 7x. Dividend yield is expected over 5.6%.

Bangkok Life Assurance Public Company Limited (BLA) (TP: ฿35.00) – BLA benefits from higher bond yield. 2021 net profit is estimated to grow 109.6% yoy from a low base in 2020. Life insurance business would rebound thanks to economic recovery and new products. 

Bangkok Dusit Medical Services Public Company Limited (BDMS) (TP: ฿24.00) – BDMS is op healthcare pick for its strong business and large hospital network. Profit would rebound from 2Q21 on and in 2022. BDMS has most patients in Bangkok. Thai patient base may rebound above projection 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%.