30 AUGUST 2023

EQUITIES RESEARCH

Thailand Market Strategy

The worst has passed

 Thailand’s new PM and cabinet has been finalised, likely driving investor confidence.
 We expect that foreign fund flows could return after the huge selloff. Meanwhile,
economic growth and companies’ earnings are likely to bottom out in 2H23.
 Roll over our SET target to mid-2024 at 1,650. Our domestic favourites are AOT,
BBL, BDMS, CENTEL, CK, CPALL, CPN, NSL, TACC and TIDLOR.

New PM and cabinet finalised

More than three months after the general election on 14 May 2023, Thailand finally has a
new prime minister in Mr. Srettha Thavisin. The new coalition is led by Pheu Thai and ten
other parties, including Bhumjaithai, Palang Pracharat and United Thai Nation, which have
a majority in the lower house with 314 seats. The new cabinet is expected to be chosen and
sworn in within September 2023. This should encourage investor sentiment from the impact
of major new stimulus packages and policies, especially a one-time handout of THB10,000
in digital currency, which could provide an upside of c2-3% to 2024E GDP growth.

Still expect foreign fund flows to return

We have seen a recovery for the SET index since last week after posting negative returns
during the unclear political situation over the last three months. We expect that foreign
investors could return after selling Thai stocks worth overTHB60b since 14 May 2023
thanks to higher investor confidence and expectations of an improving Thai economy.
However, the magnitude of fund flows might be lower than after the previous election
(cTHB65b during one month after the government’s formation), as external factors continue
to pressure risky assets due to the high inflation and interest rates from key central banks.

Brighter GDP and earnings outlook in 2H23-2024

Thailand’s 2Q23 GDP growth was only +1.8% y-y, way below estimates, and 3Q23 might
be another unattractive quarter. However, we think the worst has passed, and we anticipate
significant growth both q-q and y-y in 4Q23 thanks to the high season for the tourism
industry and consumption. For the earnings side, overall 2Q23 results were slightly better
than our forecast by 2%, and 1H23 earnings contributed around 46% of our FY23E
earnings. We think companies’ profits have already bottomed in 2Q23 and we expect to see
strong q-q and y-y earnings growth in 3Q23, led by the energy sector on the oil price jump.

Roll over SET target to mid-2024 at 1,650; focus on earnings plays

Following the downward EPS revisions in our coverage and the Bloomberg consensus after
the 2Q23 earnings season, we lower our 2023-24E EPS to THB88 (+5% y-y) and THB100
(+14%), respectively. However, we think the worst is behind us. Hence, we roll over our
SET target to mid-2024 at 1,650. We recommend investors to hold and let profits run after
accumulating at the SET index level of c1,500. Our strategy continues to focus on domestic
sectors which have positive outlooks in 2H23 and attractive valuations. Our favourites are
AOT, BBL, BDMS, CENTEL, CK, CPALL, CPN, NSL, TACC and TIDLOR.

Veeravat Virochpoka Songklod Wongchai

Strategist, register no. 047077 Strategist, register no. 018086
veeravat.v@fssia.com, +66 2646 9821 songklod.won@fssia.com, +66 2611 3553

PREPARED BY FSS INTERNATIONAL INVESTMENT ADVISORY SECURITIES CO LTD (FSSIA). ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES CAN BE
FOUND AT THE END OF THIS REPORT
Thailand Market Strategy Veeravat Virochpoka

New government formed at last

More than three months after Thailand’s general election on 14 May 2023, Thailand
finally has a new prime minister in Mr. Srettha Thavisin, who received 482 votes from
the joint parliament on 22 August 2023. The new coalition is led by Pheu Thai and ten
other parties, including Bhumjaithai, Palang Pracharat and United Thai Nation, which
have a majority in the House with 314 seats. The new cabinet is expected to be
chosen and sworn in to start working within September 2023. Summaries of the
coalition MPs and cabinet position allocations for each party are in the tables below.

The new government’s formation was finalised within 3Q23 as expected. We expect
the market to react positively from higher confidence and the hope for key new
stimulus packages and policies, especially a one-time handout of THB10,000 in digital
currency to every person aged 16 and over for spending within a 4-km radius of their
registered address. This package, planned for release in early 2024 and requiring a
budget of about THB560b, would be equal to c3% of annual nominal GDP. If this
package can be released as the market expects, it could provide a significant upside
of c2-3% for 2024E GDP growth from the Bank of Thailand (BoT)’s current expectation
of +3.8% y-y.

Exhibit 1: Pheu Thai coalition formally announced Exhibit 2: New cabinet positions for each party
Party (MPs) Party Minister Deputy Total
Pheu Thai 141 Pheu Thai 8 9 17
Bhumjaithai 71 Bhumjaithai 4 4 8
Palang Pracharath 40 Palang Pracharath 2 2 4
United Thai Nation 36 United Thai Nation 2 2 4
Chartthaipattana 10 Chartthaipattana 1 - 1
Prachachat 9 Prachachat 1 - 1
ChartpattanaKLA 2 ChartpattanaKLA - - -
Pue Thai Rumphlang 2 Pue Thai Rumphlang - - -
Thai Liberal 1 Thai Liberal - - -
The Party of Thai Counties 1 The Party of Thai Counties - - -
Plung Sungkom Mai 1 Plung Sungkom Mai - - -
Total 314 Total 18 17 35

Source: Pheu Thai Party Source: Pheu Thai Party

Look beyond poor 2Q23 GDP growth to an acceleration in 4Q23-2024

On 21 August 2023, The Office of the National Economic and Social Development
Council (NESDC) reported that Thai GDP grew by only 0.2% q-q and 1.8% y-y in
2Q23, missing the market’s expectation of +1.2% q-q and +3% y-y, and decelerating
from the good momentum of +1.7% q-q and +2.6% y-y in 1Q23. The poor numbers
could be blamed on the export and public segments, while private consumption and
the tourism industry remain key growth drivers. Therefore, the NESDC has lowered its
2023E GDP growth to 2.5-3% y-y from 2.7-3.7% y-y. We think the BoT might revise
down its projection for 2023 from the current +3.6% y-y in its upcoming meeting, but
we still expect strong and accelerated growth for 2024 from potential stimulus
packages as mentioned above.

We think 3Q23 might be another unattractive quarter in terms of GDP growth, as

domestic consumption is entering the low rainy season, while the government’s
formation has been delayed to late August 2023. However, if we assume the new
cabinet starts working in September 2023, we think the market could look beyond the
poor number and focus on a brighter economic outlook in 4Q23-2024 thanks to the
potential stimulus packages.

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Thailand Market Strategy Veeravat Virochpoka

Exhibit 3: Quarterly TH GDP growth Exhibit 4: Private consumption continues to rise

(%) (y-y%) (index)
y-y % q-q % SA Private consumption

8 Consumer confidence index (RHS)

10 90
6 85
8
4 80
6
2 75
4
0 70
2
(2) 65
0
(4) 60
(6) (2) 55
(8) (4) 50
(10) (6) 45
(12) (8) 40

3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
Source: NESDC Source: NESDC

Exhibit 5: Government consumption remains negative Exhibit 6: Service exports can offset weak goods exports
(y-y %) (y-y%)
Export Import
Govt consumption Total investments
30
12
10
20
8
6
10
4
2 0
0
(2) (10)
(4)
(6) (20)
(8)
(10) (30)
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
2Q19
4Q19
2Q20
4Q20
2Q21
4Q21
2Q22
4Q22
2Q23

3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
Source: NESDC Source: NESDC

Exhibit 7: NESDC and BoT economic projections

NESDC -------------- Bank of Thailand --------------
2019 2020 2021 2022
2023E 2023E 2024E
(y-y%) (y-y%) (y-y%) (y-y%) (y-y%) (y-y%) (y-y%)
Real GDP growth 2.3 (6.4) 1.5 2.6 2.5-3.0 3.6 3.8
Private consumption 4.0 (0.8) 0.6 6.3 5.0 4.4 2.9
Private investment 2.7 (8.1) 3.0 5.1 1.5 1.7 4.9
Public consumption 1.7 1.4 3.7 (0.0) (3.1) (2.8) 1.1
Public investment 0.1 5.1 3.4 (4.9) 2.0 2.5 6.8
Export value growth (USD b) (3.3) (6.5) 19.2 5.5 (1.8) (0.1) 3.6
Headline inflation 0.7 (0.8) 1.2 6.1 1.7-2.2 2.5 2.4
Current account to GDP (%) 7.0 4.2 (2.1) (3.4) 1.2 - -
Number of tourist arrivals (m) 39.9 0.0 0.4 11.1 28 29 35.5

Sources: NESDC and BoT

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Thailand Market Strategy Veeravat Virochpoka

MPC likely to hold its rate this month after seven consecutive hikes
In terms of monetary policy, Thailand’s inflation continues to slow and is now lower
than the BoT’s target of 1-3%. The latest headline CPI was reported at +0.38% y-y in
July from the high base last year, while core CPI was at +0.86% y-y. The central bank
may still see inflation stabilising at a higher level with some upside risks from potential
increases in food prices from El Nino and cost pass-throughs in the context of
economic expansion. However, from the overall CPI, which is slower than previously
anticipated, combined with the lower-than-expected GDP growth rate, we think the
Monetary Policy Committee (MPC) is likely to hold its policy rate at 2.25% after seven
consecutive hikes since 2H22.

Exhibit 8: Thailand’s CPI and PPI Exhibit 9: Thailand’s core CPI and MPC rate
(y-y%) (y-y%)
CPI PPI Core CPI MPC rate
15 3.5
3.0
10
2.5
5 2.0
1.5
0 1.0
0.5
(5)
0.0
(10) (0.5)
May-17

May-18

May-19

May-20

May-21

May-22

May-23

May-17

May-18

May-19

May-20

May-21

May-22

May-23
Nov-16

Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Nov-22

Nov-16

Nov-17

Nov-18

Nov-19

Nov-20

Nov-21

Nov-22
Aug-17

Aug-18

Aug-19

Aug-20

Aug-21

Aug-22

Aug-17

Aug-18

Aug-19

Aug-20

Aug-21

Aug-22
Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Feb-23

Feb-17

Feb-18

Feb-19

Feb-20

Feb-21

Feb-22

Feb-23
Source: Bloomberg Source: Bloomberg

We continue to expect foreign fund flows to return to Thai stocks

Based on our strategy report published on 31 July 2023, 2019 showed that once the
government’s formation was finalised, the SET index was back to having positive
returns, increasing by c6% in the month after that. Foreign investors poured THB65b
back into Thai stocks after posting a net selling position during the unclear period.

We maintain our view that history might repeat itself. We expect the SET index to
recover after staying in negative return territory during the last three months. Foreign
investors could return after selling Thai stocks worth overTHB60b since 14 May 2023
thanks to higher investor confidence and the improving Thai economy expected in
4Q23-2024. However, the magnitude of index returns and foreign inflows might be
lower than after the previous election, as the external environment continues to
pressure risky assets due to the high inflation and interest rates from key central banks
around the world.

Exhibit 10: Net positions by investor type Exhibit 11: Foreign fund flows and SET index performance
after 2023 election and coalition’s formation
Since election to 20 Since 20
SET Index
August 2023 August 2023 (THB b) (Index)
Foreign fund flow SET Index (RHS)
(THB m) (THB m)
Foreign investors (62,332) 1,130 0 1,580
(10,000) 1,560
Local institutions 23,605 6,144 1,540
(20,000) 1,520
Local investors 34,396 (7,525)
(30,000) 1,500
Proprietary trading 4,332 251 1,480
(40,000)
SET50 index futures
Since election to 20 Since 20
(50,000) 1,460
August 2023 August 2023 1,440
(60,000) 1,420
(Contract) (Contract)
(70,000) 1,400
Foreign investors 22,969 68,357
15/May/23

29/May/23

12/Jun/23

26/Jun/23

7/Aug/23

21/Aug/23
10/Jul/23

24/Jul/23

Local institutions 6,027 4,428

Local investors (28,996) (72,785)

Note: Date as of 29 August 2023 Sources: SETSMART and FSSIA compilation

Sources: SETSMART and FSSIA compilation

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Thailand Market Strategy Veeravat Virochpoka

Exhibit 12: Net positions by investor type following the 2019 general election
SET index Election day to 27 May 2019 +1m +2m +3m
(THB m) (THB m) (THB m) (THB m)
Foreign investors (12,752) 64,982 84,373 33,045
Local institutions 10,582 (21,891) (47,466) (22,678)
Local investors (2,763) (52,041) (49,272) (12,999)
Proprietary trading 4,933 8,951 12,364 2,632
SET50 index futures Election day to 27 May 2019 +1m +2m +3m
(Contract) (Contract) (Contract) (Contract)
Foreign investors 83,341 73,807 32,236 (60,686)
Local institutions (38,846) (28,936) 726 40,025
Local investors (44,495) (44,871) (32,962) 20,661

Sources: SETSMART and FSSIA compilation

Limited upside for global risky assets pressured by abnormally high bond yields
After the strong rally of world equity markets in 7M23, we have started to see some
corrections in global equity, as the S&P500 and MSCI World index dropped c3% and
c4% MTD, respectively. The key pressures are from abnormally high bond yields
which continued to increase due to concerns over high inflation and the interest rate
persisting. In Jerome Powell’s address to the Jackson Hole Symposium, he stated that
the US Federal Reserve may need to raise rates further to cool the still-too-hot
inflation. The US 10Y government bond yield jumped and currently stands near
October 2022’s peak of 4.2-4.3%. Another negative factor came from China which
lately reported a batch of economic data that showed signs of a slowdown in industrial
production, retail sales and the unemployment rate. We think the market will have
more concerns over the global economy for 2H23-2024, as China and the US are
likely to show slow growth numbers and could continue to pressure global trade. We
maintain our view that global equity still has a limited upside and could see a further
retreat.

However, we think the SET index should see a limited negative impact as the index
has underperformed significantly by dropping 6.3% YTD, while internal factors,
especially the political situation, have been resolved. We think upward GDP growth
and corporate earnings trends should be the key drivers to boost the index to
outperform.

Exhibit 13: US10-2YY Exhibit 14: US earnings yield gap

(%) (%)
US10-2YY EY Gap Average
3.5 8.0
3.0 7.0
2.5
6.0
2.0
1.5 5.0
1.0 4.0
0.5 3.0
0.0
2.0
(0.5)
(1.0) 1.0
(1.5) 0.0
Jan-01

Jan-03

Jan-05

Jan-07

Jan-09

Jan-11

Jan-13

Jan-15

Jan-17

Jan-19

Jan-21

Jan-23

Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23

Source: Bloomberg Source: Bloomberg

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Thailand Market Strategy Veeravat Virochpoka

Exhibit 15: China’s PMI Exhibit 16: China’s industrial production and retail sales
(%)
Manufacturing PMI Non-manufacturing PMI Industrial Production (y-y) Retail Sales (y-y)

70 40
60 30
50 20
40 10
30
0
20
(10)
10
(20)
0

2/1/2019
5/1/2019
8/1/2019

2/1/2020
5/1/2020
8/1/2020

2/1/2021
5/1/2021
8/1/2021

2/1/2022
5/1/2022
8/1/2022

2/1/2023
5/1/2023
11/1/2019

11/1/2020

11/1/2021

11/1/2022
2/1/2019
5/1/2019
8/1/2019

2/1/2020
5/1/2020
8/1/2020

2/1/2021
5/1/2021
8/1/2021

2/1/2022
5/1/2022
8/1/2022

2/1/2023
5/1/2023
11/1/2019

11/1/2020

11/1/2021

11/1/2022
Sources: Bloomberg Source: Bloomberg

Slightly better-than-expected 2Q23 earnings results

Based on the 2Q23 results of 152 listed companies in our study, the aggregate net
profit dropped by 17% q-q and 39% y-y, slightly better than our expectation by 2%.
Key pressures came from commodities sectors, i.e. energy and petrochemicals, which
had a plunge in profit from lower oil prices and poor refinery margins, while upstream
foods were pressured by lower meat prices. On the bright side, banking, tourism,
transportation, and property development continued to post strong y-y growth thanks
to rising domestic consumption and higher international tourist arrivals. However,
commerce had disappointing numbers which dragged some stocks down for specific
reasons. The electronic sector’s earnings jumped on strong EV parts demand.

The 1H23 earnings results contributed around 46% of our FY23E earnings. We think
companies’ earnings have already bottomed in 2Q23, and we expect to see strong q-q
and y-y earnings growth in 3Q23 on the back of the energy sector, as crude prices
jumped since late June 2023, while refinery margins skyrocketed. The export sector is
entering its high season, while tourism is resuming from the lowest season in Q2.
Domestic sectors are entering the low rainy season, but the negative impact might be
less than normal due to less rainfall from the El Nino effect.

Exhibit 17: 2Q23 earnings results by sector

Beat / 1H23 as %
Sector 2Q23 1Q23 2Q22 ----------- Change ------------- 2Q23E 2023E
Missed of 2023E
(THB m) (THB m) (THB m) (q-q %) (y-y %) (THB m) (THB m) (THB m) (%)
Bank 52,699 51,683 45,256 2% 16% 51,835 2% 197,325 53%
Energy 45,744 73,266 132,623 -38% -66% 46,281 -1% 260,038 46%
Property 16,172 14,584 14,638 11% 10% 14,090 15% 65,504 47%
Commerce 10,275 13,330 11,874 -23% -13% 11,939 -14% 55,717 42%
Cons. Mat 9,873 18,536 11,123 -47% -11% 6,895 43% 35,262 81%
ICT 9,525 9,154 12,637 4% -25% 9,146 4% 39,873 47%
Financial 6,741 6,549 7,295 3% -8% 6,780 -1% 28,882 46%
Healthcare 6,207 6,284 7,192 -1% -14% 5,901 5% 27,731 45%
Electronics 5,680 4,226 5,080 34% 12% 4,786 19% 21,410 46%
Transportation 4,735 4,984 (3,078) -5% nm 6,103 -22% 26,142 37%
Food 3,834 2,673 14,524 43% -74% 2,495 54% 37,219 17%
Tourism 3,419 42 907 7,987% 277% 3,055 12% 9,300 37%
Insurance 2,512 3,129 2,018 -20% 24% 2,750 -9% 9,462 60%
Packaging 1,712 1,348 2,112 27% -19% 1,649 4% 7,385 41%
Auto 978 1,462 924 -33% 6% 864 13% 4,570 53%
Construction 664 508 470 31% 41% 794 -16% 2,477 47%
Media 638 27 720 2,229% -11% 613 4% 2,382 28%
Agri 349 298 454 17% -23% 344 1% 1,358 48%
Professional 207 208 128 0% 61% 208 0% 950 44%
Petro (5,180) 1,106 21,666 -568% -124% (3,112) nm 20,466 -20%
Grand Total 176,783 213,399 288,563 -17% -39% 173,416 2% 853,452 46%
Excl. Energy & Petro 136,219 139,027 134,274 -2% 1% 130,247 5% 572,948 48%
Excl. Banking 124,083 161,716 243,308 -23% -49% 121,581 2% 656,127 44%
Excl. Energy & Petro and Banking 83,519 87,344 89,018 -4% -6% 78,412 7% 375,623 45%

Sources: SETSMART, Bloomberg and FSSIA

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Thailand Market Strategy Veeravat Virochpoka

Exhibit 18: 2Q23 earnings results summary and 3Q23E outlook

3Q23E 3Q23E
2Q23 earnings results summary earnings earnings
outlook q-q outlook y-y
Agribusiness Agribusiness’s 2Q23 net profit plunged by 54% y-y (flat q-q), due to lower export volumes and declining average + -
selling prices. In particular, the rubber and soybean businesses had the poorest operations in 2Q23, mainly from 1)
a slowdown in China’s economy; 2) lower domestic demand; and 3) declining crude oil prices. However, sugar
companies posted strong results in 2Q23, thanks to seasonality and a spike in the sugar price.
Food & Beverage The meat business was the poorest segment in the food and beverage sector, due to a sharp drop in meat prices, + -
both domestic and overseas. In particular, Charoen Pokphand Foods (CPF TB, HOLD) and Betagro (BTG TB,
HOLD)’s operations turned lossmaking in 2Q23. In addition, food exporters (Thai Union (TU TB, BUY) and i-Tail
Corporation (ITC TB, BUY)) still reported poor results in 2Q23, mainly from the destocking of US and EU
customers. However, we were impressed with the beverage sector’s results, especially small companies. Sappe
(SAPPE TB, BUY) and Ichitan Group (ICHI TB, HOLD) showed solid revenue growth to reach record highs.
Meanwhile, energy drink companies’ (Osotspa (OSP TB, BUY) and Carabao Group (CBG TB, NR)) revenue and
gross margins recovered.
Banking Seven banks under our coverage reported slightly better net profits than our estimates, pushed by strong net + +
interest income under the backdrop of the rate hike cycle. The high level of household debt and the proactive
management of banks to tackle rising NPLs led to higher credit costs in 2Q23.
Finance & Based on the Bloomberg consensus, earnings of the overall non-bank sector fell short of estimates by 5%. The 0 0
Securities pressure mainly came from the low seasonal in 2Q23, spread compression, and asset quality deterioration.
Automotive The automotive sector posted a poor core profit in 2Q23 as expected, largely due to seasonality. The 2Q23 core + -
profit slid 42% q-q but climbed 9% y-y. The y-y growth was a result of the easing supply constraints and the oil-
related raw material costs. The easing of the chip and parts shortages this year led the auto sector’s core profit to
rise 17% y-y in 1H23. However, headwinds from weak consumer demand and tighter lending standards from
financial institutions lie ahead.
Petrochemical 2Q23 results for petrochemical companies (PTT Global Chemical (PTTGC TB, NR)) were weaker q-q due to both + +
& Chemicals lower petroleum and petrochemical product spreads, coupled with stock losses from the lower oil price q-q.
Nevertheless, Indorama Ventures (IVL TB, NR) reported a slightly improved core profit from higher sales volumes,
while the PET spreads were flat q-q, and other businesses were weaker q-q.
Packaging 2Q23 packaging core profit continued its recovery with growth of 76% q-q and more than five times y-y, mainly due to + +
the declining oil-related raw material costs. Revenue, however, gradually recovered because of the improved
economic conditions. The gross margin expansion was the main reason for the big improvement in earnings in 2Q23.
Construction Overall 2Q23 performances were down q-q from seasonality and long holidays. However, the y-y improvement was - +
Materials due to higher domestic demand from the recovery of the tourism industry and house renovations, as well as a
decline in raw material costs following lower oil prices.
Construction In 2Q23, CH. Karnchang (CK TB, BUY)’s performance outperformed peers with strong growth q-q and y-y, supported + +
Services by a construction revenue recovery and higher contributions from its associates. However, Sino-Thai Engineering and
Construction (STEC TB, NR) and Pylon (PYLON TB, HOLD) reported poor performance, dipping q-q and y-y. To
elaborate, STEC posted a plunge in GPM and PYLON had a lower backlog. Meanwhile, Seafco (SEAFCO TB, BUY)’s
earnings turned profitable from a loss in 2Q22, but dropped q-q due to a narrower gross margin.
Property 12 property developers’ aggregate net profit came in at THB10.2b (+14.5% q-q, +0.2% y-y) in 2Q23. Excluding + 0
Development extra items, their 2Q23 core profit would be THB8.7b (+8% q-q, -3% y-y). Overall 2Q23 results were unexciting, in
line with estimates. The q-q improvement in 2Q23 earnings follows more new launches, especially low-rise projects.
However, the slight decrease y-y was due to fewer low-rise transfers thanks to sluggish presales from the impact of
political uncertainty and the high base in 2022. Meanwhile, we see a gradual recovery in condo transfers, supported
by more newly built condos.
Energy For refineries, 2Q23 results were weaker q-q from lower petroleum product spreads, coupled with stock losses from + +
the drop in the oil price q-q. However, 2Q23 results for the utilities sector were stronger q-q, especially SPP players,
due to higher margins from lower gas costs despite the lower Ft q-q.
Commerce The 2Q23 commerce sector’s net profit of THB12b dropped by 11.5% q-q mainly from seasonal effect and - +
increased utility costs, rising by 9.5% y-y due to a consumption and tourism recovery from the Omicron outbreak
last year, which led SSSG to be positive in 2Q23. However, home improvement companies focusing on building
materials saw a continued earnings decline both q-q and y-y due to the impact of the decreased steel prices and
political uncertainty.
Health Care Organic revenue improved q-q despite the low season, led by strong Thai patient volumes and the recovery of + +
Services international patient numbers, especially those from the Middle East. Social Security Office revenue also improved
due to a higher payment rate effective May-23
Media & The core profit of media names continued to recover in 2Q23 due to the high season. Most earnings were from + +
Entertainment Major Cineplex (MAJOR TB, NR) (+660% q-q, 305% y-y) and out-of-home media, Plan B Media (PLANB TB, NR)
(+72% q-q, +32 % y-y), while BEC World (BEC TB, NR) fell 57% y-y but improved q-q from an abnormally low base
in 1Q23.
Tourism & Leisure Overall performance dropped q-q due to the low season. However, it improved y-y due to the low base. In addition, + +
RevPAR of Thai hotels exceeded the pre-Covid level, led by strong average daily rates. European hotels also
reported strong performances due to the peak season.
Transportation [Aviation] Overall performance dropped q-q due to the low season, but grew y-y due to the low base. For AOT, + +
earnings grew q-q and y-y due to higher passenger volumes and the end of assistance measures for retail operators.

[Shipping] Dry bulk carriers’ 2Q23 profit further plunged by 70-80% y-y, primarily due to a 52% y-y reduction in TC + -
rates. Bulk carriers’ 1H23 shipping revenue fell more than 30% y-y and profit dove 80% y-y because of a sharp
decline in freight rates. This was due to the slower-than-expected demand from China and the reduced grain
shipments.
Electronic The electronic sector’s 2Q23 net profit grew by 29% q-q and 2% y-y, beating our estimate by 14%. The main + +
Components reason was a purchase order recovery for Delta Electronics (DELTA TB, REDUCE) and Hana Microelectronics
(HANA TB, BUY), which came from EV parts. There was not only a higher utilisation rate, but the THB also
weakened in 2Q23. Hence, the sector’s 2Q23 gross margin slightly improved, better than our expectation. KCE
Electronics (KCE TB, BUY) had the poorest performance in 2Q23, but it should be the bottom.
Information Advanced Info Service (ADVANC TB, NR) reported a slightly better core profit than the Bloomberg consensus + +
& estimate, both q-q and y-y, due to lower competition, while the tech consulting businesses posted good results,
Communications mostly from inorganic growth.

Sources: Bloomberg; FSSIA analysis and estimates

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Another downward earnings revision from May to August 2023

After the 2Q23 earnings season, the 2023 earnings forecasts for 152 companies under
both our coverage and the Bloomberg consensus were revised down, leading to lower
overall sector aggregate earnings by c5% from May to August 2023. For global-related
sectors, the deepest cuts were in petrochemicals -42%, packaging -9% and energy -
4% on weaker-than-expected crude prices and spread margins. Meanwhile, most
domestic sector cuts occurred in media -42%, transportation -23%, ICT -12%, and
construction and commerce at -11% each. However, we continue to see strong
earnings forecasts in financial sectors, for both banks and non-banks, property
development, and health care services. Moreover, we see an upward earnings
revision in tourism and professional services. This is consistent with our expectation
that the key drivers for the Thai economy will continue to be private consumption and
the recovering tourism industry.

Exhibit 19: Earnings revisions by sector from May to August 2023

20% 12%
6% 5% 3%
10% 1% 1% 1% 1%
0%
-10% -1% -2% -4%
-5% -5%
-20% -9% -11% -11% -12%
-30% -23%
-40%
-50% -42% -42%
Agri

Healthcare

Insurance

Cons. Mat

Packaging

Petro
Financial

Food
Energy

Commerce

Transportation
Professional

Auto

Media
Bank
Tourism

Electronics

Property

ICT
Construction
Sources: Bloomberg and FSSIA estimates

Rollover SET target to mid-2024 of 1,650 – the worst has passed

We cut our 2023 EPS forecast from THB95 to THB88 (+5% y-y). Reopening sectors
such as transportation and tourism should show abnormally high growth thanks to the
low base effect from last year. Key domestic sectors such as construction services,
banking, ICT and commerce are likely to have healthy growth thanks to strong
domestic consumption. Health care services and property sectors should show mute
growth on overall numbers after the high base in 2023. On the other hand, global
plays, i.e. energy, petrochemical, upstream foods and agribusiness are likely to show
negative growth this year due to lower commodity and selling prices.

Despite the lower 2023E EPS, we believe the worst is already behind us in 1H23 in
terms of company earnings and GDP growth. Moreover, we think the market should
focus on positive momentum after Thailand’s 30th prime minister and new cabinet have
been declared and are likely to start working within September 2023. The government
will likely release stimulus packages going forward which should drive GDP and EPS
growth to accelerate next year. For the rest to the year, we anticipate the trading range
for the SET to stay within 1,530-1,620.

Based on our current 2023-24E SET index EPS of THB88 (+5% y-y) and THB100
(+14% y-y), respectively, we forecast the 12-month forward EPS at THB97 (54% of
THB88 for 2H23E and 50% of THB100THB for 1H24E), with a PER multiple of 17x
(10-year average). We roll over our SET index target to mid-2024 at 1,650.

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Exhibit 20: Earnings growth by sector Exhibit 21: Earnings growth by sector

2023E 2024E 2023E 2024E

Professional
Cons. Mat
Construction Transportation
Bank
ICT
Packaging
Commerce
Electronics Tourism

Financial
(%)
Property
Insurance 0 500 1,000 1,500 2,000

Auto
Healthcare
Petro
Media
Energy
Food
Agri (%)
(40) (20) 0 20 40 60 80 100

Sources: Bloomberg and FSSIA estimates Sources: Bloomberg and FSSIA estimates

Exhibit 22: SET EPS Exhibit 23: SET target sensitivity

(THB/shr) (%) ------------- Earnings per share ----------------
EPS Growth (RHS) 2023E 2024E
120 140 EPS 88 100
120
100 - Target index based on FSSIA estimates -
100
80 P/E (x) 2023E 2024E
80 60 SD+1.0 19.8 1,742 1,980
40 SD+0.5 18.3 1,610 1,830
60
20
SD+0.25 17.6 1,549 1,760
40 0
(20) 10-year average 17.0 1,496 1,700

20 (40) SD-0.25 16.2 1,426 1,620

(60) SD-0.5 15.4 1,355 1,540
0 (80)
SD-1.0 14.1 1,241 1,410
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023E
2024E

Source: FSSIA estimates Source: FSSIA estimates

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Our top picks remain domestic plays

We see more positive internal factors, especially political developments, while external
factors have many risks, e.g. slow economic growth and tight monetary policy. Hence,
we recommend investors to hold and let profits run after accumulating at the SET
index level of c1,500 during the last 2-3 months. We stick to our domestic-focused
strategy. Some of these sectors are still lagging the SET index since the election and
YTD. Our favourites that have bright 2H23 earnings outlooks, are likely to benefit from
rising consumption and investment, and still have attractive valuations are AOT, BBL,
BDMS, CENTEL, CK, CPALL, CPN, NSL, TACC and TIDLOR.

Exhibit 24: Sector performance since 14 May 2023 election Exhibit 25: YTD sector performance
(%) (%)
BANK 7 PROF 42.2
ENERG 2 ETRON 23.9
FOOD 1 BANK 5.8
SET 0 HELTH (1.9)

AUTO TOURISM (2.6)

(0)
ICT (3.9)
PROF (1)
AUTO (4.6)
TRANS (3)
SET (6.3)
HELTH (3)
TRANS (7.5)
ICT (4)
FOOD (7.9)
CONS (4)
COMM (8.2)
PROP (4) PROP (9.5)
CONMAT (5) ENERG (10.2)
MEDIA (6) CONMAT (10.4)
COMM (6) PF&REIT (12.1)
TOURISM (7) CONS (13.4)
FIN (7) FIN (16.4)
PF&REIT (9) MEDIA (19.0)
PETRO (10) PETRO (21.8)
PKG (11) AGRI (23.2)

AGRI (12) PKG(29.2)

(40) (20) 0 20 40 60
(15) (10) (5) 0 5 10

As of 28 Aug 2023 As of 28 Aug 2023

Source: SETSMART Source: SETSMART

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Exhibit 26: FSSIA’s top domestic play favourites

Company BBG code Key rationale
Airports of Thailand AOT TB, BUY, TP THB85.0 AOT trades at an attractive valuation of 32.7x FY24E P/E. Upsides include higher passenger service charges
and revenue from the cargo business. We expect 4QFY23 operations to improve as international passenger
traffic recovered to 77% of the pre-Covid level in July, and the momentum should accelerate in the high
tourism season (Oct-Dec). We forecast core profit to reach THB10.1b in FY23 and jump to THB32b in FY24.
Bangkok Bank BBL TB, BUY, TP THB197.0 BBL is our top pick in the banking sector. We expect 3Q23 performance to remain solid, especially for its
NIM, which should see a significant increase due to the reduction in savings rates at the end of 2Q23. We
reaffirm our positive outlook on BBL due to its long-term business growth prospects from both its domestic
and foreign operations.
Bangkok Dusit Medical BDMS TB, BUY, TP THB34.5 BDMS is trading at 33x 2023E P/E, relatively in line with its five-year average of 34x. Its share price has
Services declined by 8% and has underperformed the SET by 5% over the past three months. We see the weak share
price as a buying opportunity to capture the strong 3Q23E earnings, which have the potential to hit a new
record high.
Central Plaza Hotel CENTEL TB, BUY, TP THB55.0 The weak share price is an opportunity to buy the stock, in our view, as operations should improve q-q during
3Q-4Q23 and one-off expenses in 2Q23 should be dismissed in 2H23. CENTEL trades at an attractive
valuation of 30.1x 2024E P/E (vs its five-year average of 27x). In our view, CENTEL is the hospitality provider
with the lowest risk profile under our sector coverage.
CH. Karnchang CK TB, BUY, TP THB26.0 The successful formation of the new government should be a positive catalyst for CK’s share price, in our
view. We expect 3Q23 core profit to rise q-q, supported by higher profit contributions from Bangkok
Expressway and Metro (BEM TB, NR) and CK Power (CKP TB, NR) in the peak season, plus dividend
income from TTW (TTW TB, NR). Moreover, we see a y-y construction revenue improvement on the high
backlog. We maintain our 2023E core profit of THB1.4b (+62% y-y).
CP All CPALL TB, BUY, TP THB77.0 CPALL should benefit from lower expenses such as 1) lower electricity costs; and 2) lower financial costs
from CP Axtra (CPAXT, BUY) following the completion of its debt restructuring in Apr-23. We expect revenue
to peak in 4Q23. In addition, CPALL should benefit from the potential new stimulus packages from the new
cabinet to boost internal consumption.
Central Pattana CPN TB, BUY, TP THB82.0 CPN’s valuation is very attractive as its share price is still 20% below its peak in 2017, although we expect its
EBITDA margin and profit to reach their highest levels in 2023. CPN’s operations have showed continued
growth across all business units and already exceeded the pre-pandemic level in 2019 since 1Q23. The
company’s share price is also currently trading at 23.9x 2023E P/E, lower than the modern trade industry’s
average of 30x.
NSL Foods NSL TB, BUY, TP THB26.0 We have a positive view of NSL’s 2H23 outlook and expect 3Q23 net profit to be stronger than the seasonal
headwinds. Moreover, we expect its 4Q23 net profit to continue to grow q-q and y-y, in line with the high
season of its business. It is trading at 20.4x and 17.7x 2023-24E P/E, respectively, while our target price has
an upside of 12%.
T.A.C. Consumer TACC TB, BUY, TP THB6.6 We like TACC due to the expectation that net profit will continue to recover in 2H23 along with seasonality,
with a gross margin recovery after raw material costs decline. In addition, TACC’s board approved the
treasury stock program with an amount not exceeding THB50m and the number of repurchased shares not
exceeding 11 million shares, or 1.81% of total paid-up capital. The repurchase period is from 17 August 2023
to 16 February 2024. This should support its share price higher further.
Ngern Tid Lor TIDLOR TB, BUY, TP THB28.0 We are optimistic that TIDLOR's leadership and professionalism in the title loan business should distinguish
the company from its peers. TIDLOR’s insurance brokerage business is another source of income that
supports growth and diversifies against risks to long-term profits. Thus, we expect solid 2H23 PPOP as its
asset quality bottoms out in 3Q23.

Source: FSSIA estimates

Exhibit 27: Summary of key valuations for FSSIA’s top picks for 2H23
Company BBG --- Share price --- Up -------- Recurring profit -------- - EPS growth - -------- P/E --------- DivYld ROE PBV

code Current Target side 22A 23E 24E 23E 24E 23E 24E 25E 23E 23E 23E

(THB) (THB) (%) (THB m) (THB m) (THB m) (y-y%) (y-y%) (x) (x) (x) (%) (%) (x)

Airports of Thailand AOT TB 73.25 85.00 16 (10,173) 10,077 31,972 (199.1) 217.3 103.8 32.7 27.9 0.4 9.5 9.4

Bangkok Bank BBL TB 170.50 197.00 16 29,306 37,924 41,031 29.4 8.2 8.6 7.9 7.5 3.4 7.2 0.6

Bangkok Dusit Medical Services BDMS TB 28.00 34.50 23 12,606 13,469 15,295 6.8 13.6 33.0 29.1 26.4 1.8 14.5 4.7
Central Plaza Hotel CENTEL TB 47.25 55.00 16 398 1,703 2,119 327.8 24.4 37.5 30.1 26.9 1.1 8.8 3.2

CH.Karnchang CK TB 23.30 26.00 12 882 1,427 2,394 61.8 67.7 27.7 16.5 14.3 1.4 5.8 1.6

CP All CPALL TB 65.75 77.00 17 13,281 16,396 19,434 23.5 18.5 36.0 30.4 25.0 1.3 15.6 6.0
Central Pattana CPN TB 68.75 82.00 19 10,945 12,898 14,064 17.8 9.0 23.9 21.9 20.7 1.6 15.1 3.4

NSL Foods NSL TB 23.30 26.00 12 298 343 394 15.3 14.9 20.4 17.7 16.2 4.5 23.8 4.7

T.A.C. Consumer TACC TB 4.98 6.60 33 231 201 247 (13.0) 22.6 13.1 15.0 12.3 6.0 26.0 3.9
Ngern Tid Lor TIDLOR TB 23.60 28.00 19 3,640 3,817 4,614 4.9 20.9 17.4 14.4 11.4 1.2 14.2 2.3

Share prices as of 29 Aug 2023

Source: FSSIA estimates

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Public disclosures related to sustainable development evaluation of Thai listed companies

Rating regarding the sustainable development of Thai listed companies, both on the SET and MAI, are publicly available on the website of the Securities and Exchange
Commission of Thailand (SEC). Currently, ratings available are 1) “CG Score” by the Thai Institute of Directors Association (Thai IOD); 2) “AGM Checklist” by the Thai
Investors Association (TIA), a “CAC certified member” of the Thai Private Sector Collective Action Against Corruption (CAC); and 3) Sustainability Investment List (THSI)
by the Stock Exchange of Thailand. The ratings are updated on an annual basis. FSS International Investment Advisory Company Limited does not confirm nor certify the
accuracy of such ratings.

CG Score by the Thai Institute of Directors Association (Thai IOD) 1

The CG Score indicates corporate governance (CG) strength in the sustainable development of Thai listed companies. Annually, the Thai IOD, with support from the Stock
Exchange of Thailand (SET), surveys and assesses the CG practices of companies and publishes the results on the Thai IOD website in a bid to promote and enhance the
CG of Thai listed companies in order to promote compliance with international standards for better investment decisions. The results are from the perspective of a third party,
not an evaluation of operations, as of the date appearing in the report, and may be changed after that date.
The five underlying categories and weighting used for the CG scoring in 2022 include the rights of shareholders and equitable treatment of shareholders (weight 25%
combined), the role of stakeholders (25%), disclosure and transparency (15%), and board responsibilities (35%).
The CGR report rates CG in six categories: 5 for Excellent (score range 90-100), 4 for Very Good (score range 80-89), 3 for Good (Score range 70-79), 2 for Fair (score range
60-69), 1 for Pass (score range 60-69), and not rated (score below 50).

Corporate Governance Report Disclaimer

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the
Securities and Exchange Commission. The survey of the IOD is based on the information of companies listed on the Stock Exchange of Thailand and the Market of
Alternative Investment disclosed to the public and able to be accessed by a general public investor at Thai IOD website. The result, therefore, is from the perspective of a third
party. It is not an evaluation of operation and is not based on inside information.
The survey result is as of the data appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date.
FSSIA does not confirm nor certify the accuracy of such survey result.

AGM Checklist by the Thai Investors Association (TIA) 2

The “AGM Checklist” quantifies the extent to which shareholders’ rights and equitable treatment are incorporated into business operations and the extent to which information
is sufficiently disclosed and the level of its transparency. All the considered factors form important elements of two out of five the CG components. Annually, the TIA, with
support from the SEC, leads the project to evaluate the quality of Annual General Meetings of Shareholders (AGMs) and to rate quality of the meetings.
The Checklist contains the minimum requirements under law that companies must comply with, or best practices according to international CG guidance. Representatives of
the TIA will attend the meetings and perform the evaluation. The assessment criteria cover AGM procedures before the meeting (45%), at the meeting date (45%), and after
the meeting (10%). The first assesses 1) advance circulation of sufficient information for voting; and 2) facilitating of how voting rights can be exercised. The second assesses
1) the ease of attending meetings; 2) transparency and verifiability; and 3) openness for Q&A. The third involves the meeting minutes that should contain discussion issues,
resolutions and voting results.
The results are classified into four categories: 5 for Excellent (score 100), 4 for Very Good (score 90-99), 3 for Fair (score 80-89), and not rated (score below 79).

CAC certified member by the Thai Private Sector Collective Action Against Corruption (CAC) 3
A CAC certified member is a listed company whose Checklist satisfies the CAC Certification’s criteria and is approved by the CAC Council. The core elements of the Checklist
include corruption risk assessment, establishment of key controls, and the monitoring and developing of policies. Note that the CAC does not certify the behaviour of the
employees nor whether the companies have engaged in bribery, and Certification is good for three years.
Companies deciding to become a CAC certified member start with by submitting a Declaration of Intent signed by the Chairman of the Board to kick off the 18-month deadline
for companies to submit the CAC Checklist for Certification. The 18-month provision is for risk assessment, in place of policy and control, training of managers and
employees, establishment of whistleblowing channels, and communication of policies to all stakeholders.
The checklist document will be reviewed by the CAC Certification Committee for adequate information and evidence. It is worth noting that the committee consists of nine
professionals in business law, corporate governance, internal audit, financial audit and experienced representatives from certified members.
A passed Checklist will move on to the CAC Council for granting certification approvals. The CAC Council consists of twelve prominent individuals who are highly respected in
professionalism and ethical achievements. Among them are former ministers, a former central bank governor, the former head of the Thai Listed Companies Association,
Chairman of Anti-Corruption Organizations (Thailand), Chairman of Thai Institute of Directors, and reputable academic scholars.

Sustainability Investment (THSI) 4 by the Stock Exchange of Thailand (SET)

Thailand Sustainability Investment (THSI) quantifies responsibility in Environmental, and Social issues, by managing business with transparency in Governance. The THSI
serves as another choice for investors who desire to adopt a responsible investment approach, according to the SET.
Annually, the SET will announce the voluntary participation of the company candidates which pass the preemptive criteria, and whose two key crucial conditions are met, i.e.
no irregular trading of the board members and executives and a free float of >150 by the number of shareholders, and combined holding must >15% of paid-up capital. Some
key disqualifying criteria include a CG score of below 70%; independent directors and free float violation; executives’ wrongdoing related to CG, social and environmental
impacts, equity in negative territory, and earnings in the red for more than three years in the last five years. To become eligible for THSI, the candidate must pass three
indicators in data declaration: Economic (CG, risk management, customer relation management, supply chain management, and innovation); Environmental (environmental
management, eco-efficiency, and climate risk); Social (human rights, talent attraction, operational health & safety, community development, and stakeholder engagement);
and the incorporation of ESG in business operations.
To be approved for THSI inclusion, verified data must be scored at a 50% minimum for each indicator, unless the company is a part of the Dow Jones Sustainability Indices 5
(DJSI) during the assessment year. The scoring will be fairly weighted against the nature of the relevant industry and materiality.
Note that, from the THSI list, the SET further developed a sustainability SETTHSI Index in June 2018 from selected THSI companies whose 1) market capitalisation > THB5b
(~USD150b); 2) free float >20%; and 3) liquidity >0.5% of paid-up capital for at least 9 out of 12 months. The SETTHSI Index is a market capitalisation-weighted index, cap
5% quarterly weight at maximum, and no cap for number of stocks.

Sources: SEC; Thai IOD; Thai CAC; SET; FSSIA’s compilation

Disclaimer:
1
Thai Institute of Directors Association (Thai IOD) was established in December 1999 and is a membership organisation that strives to promote professionalism in directorship. The Thai
IOD offers directors certification and professional development courses, provides a variety of seminars, forums and networking events, and conducts research on board governance issues
and practices. Membership comprises board members from companies ranging from large publicly listed companies to small private firms.
2
Thai Investors Association (TIA) was established in 1983 with a mission to promote investment knowledge and to protect the investment rights of Thai investors. In 2002, the association
was appointed by the Securities and Exchange Commission (SEC) to represent individual shareholders. To obtain information for evaluation, the association recruits volunteer investors to
join AGMs and score the meetings. Weightings for each meeting are at a 45:45:10 ratio. They have been applied since 2017 and subject to change.
3
Thai Private Sector Collective Action against Corruption (CAC) was founded in 2010 and is 100% privately funded. It is an initiative by the Thai private sector to take part in tackling
corruption problems via collective action. The CAC promotes the implementation of effective anti-corruption policies in order to create a transparent business ecosystem by developing a
unique certification program for large/medium/small companies to apply for and to control corruption risk systematically and efficiently. The CAC’s operations are sponsored by the US-
based Center for Private Enterprise (CIPE) and the UK Prosperity Fund.
4
Sustainability Investment List (THSI), created by the Stock Exchange of Thailand in 2015, comprises the listed companies that conduct sustainable business operations.
5
Dow Jones Sustainability Indices – Wikipedia – Launched in 1999, DJSI evaluates the sustainability performance of companies based on corporate economic, environmental, and social
performance.

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GENERAL DISCLAIMER
ANALYST(S) CERTIFICATION
Veeravat Virochpoka FSS International Investment Advisory Securities Co., Ltd
The individual(s) identified above certify(ies) that (i) all views expressed in this report accurately reflect the personal view of the analyst(s) with regard to
any and all of the subject securities, companies or issuers mentioned in this report; and (ii) no part of the compensation of the analyst(s) was, is, or will
be, directly or indirectly, related to the specific recommendations or views expressed herein.

This report has been prepared by FSS International Investment Advisory Company Limited (FSSIA). The information herein has been obtained from
sources believed to be reliable and accurate; however FSS makes no representation as to the accuracy and completeness of such information.
Information and opinions expressed herein are subject to change without notice. FSS has no intention to solicit investors to buy or sell any security in
this report. In addition, FSS does not guarantee returns nor price of the securities described in the report nor accept any liability for any loss or damage
of any kind arising out of the use of such information or opinions in this report. Investors should study this report carefully in making investment
decisions. All rights are reserved.

This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of FSSIA. Investment in
securities has risks. Investors are advised to consider carefully before making investment decisions.

Company Ticker Price Rating Valuation & Risks

Airports of Thailand AOT TB THB 73.25 BUY Downside risks to our DCF-based target price include 1) a slowdown in the recovery of
international passengers; 2) delays in the Suvarnabhumi Airport expansions (satellite
terminal and northern expansion); and 3) the termination of the duty-free concession
contracts from King Power.

Bangkok Bank BBL TB THB 170.50 BUY Downside risks to our GGM-based TP are 1) prolonged economic sluggishness affecting
loan growth and asset quality; and 2) the impact of new regulations from the Bank of
Thailand.

Bangkok Dusit Medical BDMS TB THB 28.00 BUY Downside risks to our DCF-based target price include 1) a slowdown in international
Services patients due to economic concerns, political protests or floods; 2) regulatory risks from
drug prices and medical bill controls; and 3) higher-than-expected capex and opex for CoE
projects.

Central Plaza Hotel CENTEL TB THB 47.25 BUY Downside risks to our DCF-based target price include 1) extraordinary events such as
political turmoil and natural disasters; 2) a higher hotel room supply and higher competition
in the F&B business, which may result in price competition; and 3) the slower-than-
expected recovery of international tourist numbers.
CH.Karnchang CK TB THB 23.30 BUY Key downside risks to our SoTP-based TP include 1) delays in the signing of the Luang
Prabang hydropower plant and Orange Line projects; 2) fewer new projects than expected;
3) political uncertainty; 4) delays in construction; 5) labour shortages; 6) higher raw
material and labour costs; and 7) intense competition.

CP All CPALL TB THB 65.75 BUY The key downside risks to our DCF-derived TP are: 1) a lower-than-expected impact from
SSSG at its convenience store business; 2) lower-than-expected performance from
CPAXT; and 3) a slower recovery in tourist arrival numbers and private consumption.
Central Pattana CPN TB THB 68.75 BUY Key downside risks to our DCF-derived TP are deviations to our estimates on rental and
occupancy rates, returns on its new investments, capex, and interest rates.

NSL Foods NSL TB THB 23.30 BUY Downside risks to our DCF-based TP include 1) a slower-than-expected consumption
recovery; 2) high volatility in raw material prices; 3) the failure of new products; and 4)
changing consumer demand and lifestyles.

T.A.C. Consumer TACC TB THB 4.98 BUY Downside risks to our P/E-based TP include 1) a slower-than-expected recovery in
consumption; 2) the high volatility of raw material prices; 3) rain and cold weather lasting
longer than expected; and 4) changing consumer demand and lifestyles.
Ngern Tid Lor TIDLOR TB THB 23.60 BUY Downside risks to our GGM-based TP include 1) the expansion into auto-title loans by the
Government Savings Bank and Auto X (subsidiary of SCB X); 2) further weakening asset
quality could potentially hit both loan yield and credit cost; and 3) tighter supervision from
related regulators.

CP Axtra CPAXT TB THB 35.50 BUY The key downside risks to our DCF-based TP include: 1) lower-than-expected SSSG; 2) a
lower-than-expected GPM improvement; and 3) operational losses from its overseas
business.
Charoen Pokphand Foods CPF TB THB 21.10 HOLD Downside and upside risks to our P/E-based TP include 1) a slower or faster-than-
expected consumption recovery; 2) high or low volatility in meat and raw material prices; 3)
a stronger or weaker THB than expected; and 4) a minimum wage increase or decrease
and labour shortage or oversupply.
Betagro BTG TB THB 25.50 HOLD Downside and upside risks to our PE-based TP include 1) a slower or faster-than-expected
consumption recovery; 2) a potential rise or fall in meat and raw material prices; and 3) a
stronger or weaker-than-expected THB against USD.
i-Tail Corporation ITC TB THB 20.80 BUY Downside risks to our P/E-based TP include 1) a stronger-than-expected THB against
USD; 2) the high volatility of raw material prices; 3) labor shortages; and 4) changing
consumer demand and lifestyles.

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Sappe SAPPE TB THB 97.00 BUY Downside risks to our P/E-based TP include 1) a slower-than-expected recovery in
consumption; 2) high volatility in packaging costs; 3) a stronger-than-expected THB; and 4)
increased competition and government policy changes such as excise taxes for sugary
drinks.
Ichitan Group ICHI TB THB 16.50 BUY Downside and upside risks to our P/E-based TP would be 1) a slower or faster-than-
expected consumption recovery; 2) a potential rise or fall in packaging costs; and 3)
competition and government policy changes such as excise taxes for sugary drinks.

Osotspa OSP TB THB 30.50 BUY Downside risks to our P/E-based TP include 1) a slower-than-expected consumption
recovery; 2) higher-than-expected competition; 3) high volatility in energy costs; and 4)
changing legal policies both in Thailand and Myanmar.
CH.Karnchang CK TB THB 23.30 BUY Key downside risks to our SoTP-based TP include 1) delays in the signing of the Luang
Prabang hydropower plant and Orange Line projects; 2) fewer new projects than expected;
3) political uncertainty; 4) delays in construction; 5) labour shortages; 6) higher raw
material and labour costs; and 7) intense competition.
Pylon PYLON TB THB 3.10 HOLD Downside risks to our P/E-based TP include 1) fewer new projects than expected; 2)
bidding delays for new projects; 3) political uncertainty; 4) delays in construction; 5) labour
shortages; 6) higher raw material and labour costs; and 7) intense competition. Upside
risks would be 1) a higher-than-expected additional backlog and new auctions; and 2) the
sooner-than-expected commencement of the high-speed train project linking three airports.
Seafco SEAFCO TB THB 3.18 BUY Downside risks to our P/BV-based TP include 1) fewer new projects than expected; 2)
fewer projects up for bidding than expected; 3) political uncertainty; 4) delays in
construction; 5) labour shortages; 6) higher raw material and labour costs; and 7) intense
competition.

Delta Electronics DELTA TB THB 109.00 REDUCE Upside risks to our P/E-based TP include 1) higher-than-expected global EV car sales; 2)
lower-than-expected raw material costs; and 3) a weaker-than-expected THB against USD.
Hana Microelectronics HANA TB THB 62.50 BUY Downside risks to our P/E-based TP include 1) a slower-than-expected consumption
recovery; 2) a potential rise in raw material costs; and 3) a stronger-than-expected THB
against USD.
KCE Electronics KCE TB THB 49.75 BUY Downside risks to our P/E-based TP include 1) a slower-than-expected automotive
recovery; 2) a potential rise in raw material costs; and 3) a stronger-than-expected THB
against USD.

Thai Union Group TU TB THB 14.30 BUY Downside risks to our SoTP-based TP include 1) a stronger-than-expected THB against
the USD; 2) the high volatility of raw material prices; 3) labour shortages; and 4) tariff and
non-tariff barriers in international trade.

Source: FSSIA estimates

Additional Disclosures
Target price history, stock price charts, valuation and risk details, and equity rating histories applicable to each company rated in this report is available
in our most recently published reports. You can contact the analyst named on the front of this note or your representative at Finansia Syrus Securities
Public Company Limited

FSSIA may incorporate the recommendations and target prices of companies currently covered by FSS Research into equity research reports, denoted
by an ‘FSS’ before the recommendation. FSS Research is part of Finansia Syrus Securities Public Company Limited, which is the parent company of
FSSIA.

All share prices are as at market close on 29-Aug-2023 unless otherwise stated.

RECOMMENDATION STRUCTURE
Stock ratings
Stock ratings are based on absolute upside or downside, which we define as (target price* - current price) / current price.

BUY (B). The upside is 10% or more.

HOLD (H). The upside or downside is less than 10%.
REDUCE (R). The downside is 10% or more.
Unless otherwise specified, these recommendations are set with a 12-month horizon. Thus, it is possible that future price volatility may cause a
temporary mismatch between upside/downside for a stock based on market price and the formal recommendation.

* In most cases, the target price will equal the analyst's assessment of the current fair value of the stock. However, if the analyst doesn't think the market
will reassess the stock over the specified time horizon due to a lack of events or catalysts, then the target price may differ from fair value. In most cases,
therefore, our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value.

14 FINANSIA 30 AUGUST 2023

Thailand Market Strategy Veeravat Virochpoka

Industry Recommendations
Overweight. The analyst expects the fundamental conditions of the sector to be positive over the next 12 months.
Neutral. The analyst expects the fundamental conditions of the sector to be maintained over the next 12 months.
Underweight. The analyst expects the fundamental conditions of the sector to be negative over the next 12 months.

Country (Strategy) Recommendations

Overweight (O). Over the next 12 months, the analyst expects the market to score positively on two or more of the criteria used to determine market
recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to
the market cost of equity.

Neutral (N). Over the next 12 months, the analyst expects the market to score positively on one of the criteria used to determine market
recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to
the market cost of equity.

Underweight (U). Over the next 12 months, the analyst does not expect the market to score positively on any of the criteria used to determine market
recommendations: index returns relative to the regional benchmark, index sharpe ratio relative to the regional benchmark and index returns relative to
the market cost of equity.

15 FINANSIA 30 AUGUST 2023