Sunday morning in the mist.

PaulRen's picture

The covit19 pandemic situation is again getting more dire in Thailand. The difference now is “all hell has broken loose” in getting millions of vaccines into this country fast. This is starting to happen.

Last month I rightly so turned more SET cautious as here then expressed.  Yet, I turned bullish on 2 new selections NOBLE (7.50) and TOG (7.90).  NOBLE paid a hefty 0.50 Baht dividend since -and is a solid play on the Chinese returning to Thailand as soon as the situation permits.  NOBLE reported solid 1Q results but the Covit situation since got worse, yet again. TOG is up just about 20% since here touted,, evenwhile the SET index turned down and seems at best hesitant at present.  Its not that I believe the SET will tumble much more, I tend to think it will just do little for a while longer?  Nobody can time markets well over time so I have to be humble, the key is to evaluate one’s own financial situation and then decide to stick it through, or take some profits.  Like for example STGT (47) which is up 35% since I here pounded the table amply so for a long time, yet hesitant to take profits as it remains one of the highest dividend paying stocks and a great bellwether.  Similar to STA (45), its/the parent company.  STA will likely be dependent on natural rubber prices as it’s a dominant player in this. Will emerging inflation pull up natural rubber prices? I think so.   You can follow the natural rubber price, as well as other global commodity prices, at this link:

Please don’t ask me if I would still buy TOG at near 7 now, as I amply pounded the table for all the good reasons explained in a member article and in our lounge when it was just below 6 in early and mid May.  I think any member whom read this and followed my thinking (as well as a good post/contribution by a member), had plenty of opportunity to get some as it vacillated for a couple of weeks around the 6 Baht level, only to soar on Friday to 6.90.  A fine company which 90% exports to now emerged-post covit developed countries, along with favorable demographics was to me a nearly “no brainer” pick.  I dare to say so as its apparent that a current p/e estimated at below 8 was just way too cheap!  And still is.  On Friday it woke-up on good volume (5.2 mill shares) all despite the lame SET;  showing again how it’s a market of stocks, more then a stock market.  Why just ETF investing is often for lame ducks.  And, since I am here touting my own horn (nobody else is), I also am rather proud to have called the top on Crypto in April, which all coins took a serious tumble since.

The covit pandemic situation is flared up in Thailand. The difference now is “all hell has broken loose” in getting millions of vaccines into the country!  Which is increasingly happening. During this time -and as nobody knows how more serious it will get- STGT remains the insurance stock to own as it will likely keep-up its sentiment behavior as long as the pandemic continues.  STGT, regularly one of the most active traded/volume stocks of late, hence its new bellwether* status as I say for long.  Likely firming up, before covit relapse here now, getting better in time. Yet, now the wild card as some rightfully fear it may get worse?   My take/assumption remains we are getting closer to some form of covit containment (?), as so its not likely a good call to be over SET bearish. The fast/broad vaccinations is now the key.  When/if the SET gets closer to 1500, assuming ceterus paribus, (i.e things remain more or less the same as now), I will likely re-introduce my next stock model soon.  Remember my model portfolio's are always just a viewpoint in time and then over time, 1 year objectdive, yet never a specific recommendation to you.

STGT is a very good present on going example on how stock markets often move around a theme and sentiment & liquidity, and far less on rational valuations. Yet this choice, despite its superb performance for months, still trades at a trailing p/e of around 5.5 while likely yielding 10% or more in yearly dividends (at least for this year).  Many would ask how can it be this cheap? The answer is the consensus seems the global demand for gloves will drop off (as well as sentiment will vane), when vaccination rates are dominant and the pandemic receeding.  My own view is that demand for gloves will remain buoyant well beyond 2022-23 with countries’ like Africa/India and China rapidly emerging...i.e. very high very growth markets from very low general usage. Hence if it turns out that global glove demand will only increase further in the longer term STGT is superb choice! 

NOBLE, STGT and TOG are a very good combination as I see, as they all tick to a different tune…yest not related and in very different industries.  NOBLE is the domestic play, vs. TOG/STGT are strong export stocks which would benefit if the Baht weakens and yet should do well even if it does not. Of course there are others' secondary choices I have my eyes & senses on.

Happy Rainy Sunday from where I am sitting,

Paul Renaud.


* A bellwether is a leader or indicator of trends. The term derives from the Middle English bellewether and refers to the practice of placing a bell around the neck of a castrated ram (a wether) leading the flock of sheep.    From: Bellwether - Wikipedia