FSS International Investment Advisory (FSSIA) believed that the current valuation of SET Index is very attractive for a mid-to-long-term investment, following better-than-expected earnings in the first quarter of 2024.
1Q24 earnings results saw a significant jump quarter-on-quarter and a slight increase year-on-year, beating estimates by 10% and recovering from the low point in 4Q23. These earnings accounted for 25% of the estimated net profit for 2024.
The food sector was the best performer in 1Q24, with both upstream and downstream segments experiencing a turnaround from a net loss in 4Q23. The sector showed a remarkable 182% year-on-year growth, exceeding expectations by three times.
Most domestic and service sectors, including banking, telecommunications, transportation services, tourism, healthcare, and commerce, displayed healthy earnings growth in 1Q24 and surpassed estimates by 4-20%. However, the property development sector was the worst performer domestically.
Global-related sectors such as electronics, automotive, and petrochemicals had lackluster results in 1Q24 due to reduced demand resulting from the global economic slowdown.
The better-than-expected 1Q24 earnings are expected to limit the downside for the estimated EPS for 2024. The report suggests the potential for upward revisions in EPS forecasts supported by positive earnings outlooks for 2Q24 to 2H24 aligning with the Thai economic recovery.
The SET index is believed to have already reached its bottom and is expected to recover. The report maintains the SET target for 2024 at 1,470. With a 2024 PER of 15x and a significant earnings yield gap, the current index is considered attractive for medium-to-long-term investments.
The recommended strategy focuses on stocks with strong earnings outlooks and appealing valuations, with top picks including AOT, BDMS, CPALL, CPN, GPSC, NSL, SHR, SJWD, TIDLOR, and TU.
