Beware of SET stock investor broker deviances. CHO & SET emergency fund.

paulren's picture
Category: 
Introduction

Be careful on new broker stock recommendations -and other traps.  Post Ante.

Already getting some mails of members asking "oh I missed it would you still buy at these higher prices".  This is always a trickery question and one I least like, because my view was max. bullish when I posted the model, not weeks later when stocks already made a nice move, which most have.   Its tricky because human nature wants to buy cheap and sell expensive and so then there is a tendency to accumulate the ones which have not moved yet.  But this can be a trap as there may be a reason why they have not moved.  Yet, the Thai market is not so efficient and its not even been 1 month.  So the laggards may well not be blooming yet, but its critical to understand I advocate a basked of all, not cherry picking as one never knows where the true winner(s) is/are. I also fully assume there will be some duds, its always like that. Not all work out!  Its the sum of the basked which matters! Its not an grocery list where you check the boxes on each one working out, expecting all to.

PPS (0.42) stock price has stood still as their Yamu project is on CV19 lockdown just now and hence they SET cannot announce any sales there, "due to paper work incomplete",  as the CEO explained at their annual meeting last week.  I do not expect PPS do report impressive 1Q. earnings by mid May 2020, perhaps barely as much as last year so say around 8 to 12 mill. ?  The key with PPS is their Yamu, Phuket project, here amply described/analyzed, as any mega villa sale there will result in a very big profit.  This Yamu is the whole bullish case on PPS and a sideline is the likely hood they scoring an unrelated big contract in 2020.  By the way my bottom fishing model is up as of just now +18.7%, vs. +10.5% for the SET index.  So its made further good progress last week -and way ahead of SET index, so far. :)

One of the things I wanted to warn newer and remind older members is about Thai broker stock research -and how things work here.  Many times (example yesterday with CHO, which was up its daily 15% max. limit) a stock rocks up, out of nowhere -on heavy volume. There are no news announcements or reasons we readily know. Then a day or a few day's later we find out a broker or some newspaper comes out with a favorable opinion, post ante, i.e. after the fact.  But since the stock price ran up before, its obvious some knew before.  This is almost always so, its not the exception its the norm.  In markets like the US this can also happen but the opposite is true there, the exception rather then the norm.  A responsible brokerage firm, analyst or newspaper will not leak to traders the gist of a new upbeat (or negative) report, but this is Thailand and the Thai broker industry for the most part, meager. So get used to it. Its called front running and its in theory an illegal practice.  Same, same on the sell side. 

Anyway, the thing with CHO (0.54) is that it was/is much, much too cheap and finally got discovered. CHO's book value is 0.73 Baht and their core biz. is doing well...its dividend is near 4% with XD on May 11th.  (O.021 Baht, per share). Also, not in tourism, hotel, or hospitality sector...so badly affected by CV19.  Take a look at this link: https://www.kaohoon.com/content/344227

The other thing to be careful on are new broker stock recommendations: note how just about always when a broker publishes new positive stock research on a company with a buy call, if you look at its stock graph, you will almost always see it just ran up in price days or weeks before.  Its called buy high and sell higher, here too its so obvious the broker comes in late, post ante...well it ran up already.  This does not mean it can't move-up further or that its ready to fall, it just means what it means: privileged others got in before.

In mid March the Bangkok Post Editor published a firm editorial stating the Thai Govt. should not set up an emergency fund to buy stocks! "Why bail out the rich" or something like this they acclaimed and when on and on.  Here below is how a day later wrote the editor a letter for publication, but never published it.  Note how this was exactly the SET mkt. bottom and any such fund would already sit on high profits to date, yes for Thailand.  While at the same time instilling confidence at a very dire moment in history.

Regarding your editorial today on a SET fund. (Sent March 16th 2020).
The reason a SET stock emergency fund should now be established, but not mentioned, is because Thailand then (this new fund) would purchase into hugely oversold panic priced stocks at true bargains -many dividend yielding 4-5 times more then the Thai Govt. 10 year Bond.   In 1-2-3 years, or before, then reap enormous capital gains. Even while it helped stabilize the panicked present stock exchange which surely is broadly speaking not good for anybody.  This would be similar to what the US did in year 2008-9, at a gigantic windfall to the US Govt., no long after.

Paul A. Renaud.
 

Looks like they missed it.  Realize in years/decades passed the Thai Govt.  often came out with such a SET stabilization fund -at different dire times. Not anymore it seems.

Paul A. Renaud.
www.thaistocks.com