Volatility, risks and rates of returns on solid picks holding up.

The new normal of sudden setbacks with strong stock picks outperforming.   Industry comments, short updates on select stocks.

Yesterday September 5th the SET endured another market jolt, the previous one being when the BREXIT event occurred a couple of months ago.  This as I have warned here will be increasing irregular-regular events for all the reasons we know and the ones’ we don’t know.  Yesterday’s panic sell off, especially in the morning, is now reported to have taken place due to so called trigger funds all selling out at once.  This post their combined assessment the SET was not ready yet to breach the 1550 level.  Such jolts give alert institutional and individual investors opportunities to buy on the cheaper, stocks which they have their eyes on, but did dare to chase.  Such events also give light on price behavior tendencies when the market falls on individual stocks we follow.  Note how for example both EPG and AUCT held up well during the day and were among the very few not to drop, or just barely.  AUCT did close at the low of the session yesterday but still held up relatively well, today at the opening its back to 8.30 to 8.40.  This is called price divergence -and has always been a good sign!

The market is fickle due to Thai so called trigger funds moving in cohorts, the US Fed which keeps on sending confusing interest rate rise signals and the other domestic news we should not talk about. In some ways this is good as it allows the SET to “climb the wall of worry” via backtracking, back-filling and consolidating along the way.

In long past times it was more frustrating as the cash alternative did yield respectable interest income. These days, going on for years now and likely to continue for a while, cash sitting at you bank or at your brokerage account, yields near nothing and so the dividend income on our combined stock holdings is several times higher, than the cash alternative.  This means the medium to longer term investor, always our investor objective here, should just hold tight and not get disturbed by sudden (yet often temporary) set backs.  Some fear the US interest rate increase is coming for sure at some point which could revalue the SET downwards.  But this must be balanced and remember that when this happens the US election will be out of the way and the US economy likely doing better;  so one has to balance this concern with the by then better US economic/political environment.  Or if not, % rates will just remain ultra low and so the yield chasing will go on.  Huge amounts of capital around the world is intensively & at nauseam looking for ideas to generate at least some income during these continued low inflationary times.

In recent times this web sit has evolved to add increasing value to contributing members with the many short member postings, at our member-lounge.  These are an integral part of added value given here. Rather the long articles, short updates and comments there seem more poignant.  You all get instant mail notification as these happen, everytime.  If these are bothersome to any of you, you can always log on and visit this link:  https://thaistocks.com/user   , then click on “edit” and scroll down to see and check “unsubscribe from emails”.  All are welcome to contribute!  Regular members postings need to be approved by me first for obvious reasons. I get alerted and take action instantly and near always instantly approve any added value postings.

This morning Philips Securities has a buy on DEMCO (5.85)in which they claim the insurance on their fire on June 20, will pay in full and so has no consequences. I also wonder why DEMCO does not (yet) report on this to the SET and so wrote them a short mail this morning as to why not?  I have stated and state again that all the bad news on DEMCO seems priced in with the stock at 6 Baht and would continue to accumulate this stock, or just hold-on if you own it already as many of us do.

Note how well EPG (14.1) held up so well yesterday, at one point even being in the green when the SET was down near 40 points.   EPG has three strong pillars which warrant resilient growth prospects. Investment theme #1: Aeroflex ... Continuous growth in line with expansive targeted construction sector Investment theme #2: Aeroklas … Expansive growth opportunities to be boosted by global mega trends Investment theme #3: Eastern Polypack … Consumption recovery plus high substitution demand to boost growth.  Investment theme #4: High earnings growth prospects boosted by capacity expansion and margin sustainability and M & A acquisitions.   My price target likely next year is 18.

AUCT (8.20) is the exciting new turnaround growth stock for the reasons mentions in our lounge.  Its earnings turnaround was re-affirmed yesterday in a Thai biz. news report. It also held up so well.  BWG has a strong buy view from me at the current price of 2.06, as does WHA at 3.22 just now and TPCH (17.90) all have price corrected.  Similar with MAJOR just now at 30.  SMT (5.70) is my turnaround electronic pick.  CI (2.06) sorry just now don't have any updates here but working on it...but not bailing out.  Together all these should pay a respectable dividend next year of say 2-3%.  Of course I realize some choices are underperforming for now, the key as always will be the combined group performance; while each of you must consider my updated views on my new more exciting picks.  I realize its never easy but as I have shown over the years even during mass confusion and with various investor mistakes along the way viewed with hindsight, one can and we often do, outperform the SET index.  To me, its just another one of those times to sit back and relax while not over worrying. ***

On a separate matter:  its come first-hand besides brought to my attention the frustration to anybody visiting SCB or K-Bank when asking to transfer even a small amount of Baht, overseas. Lots of long forms, showing of bills etc.. A real nuisance to be avoided.   As its my understanding that the Bank of Thailand (BOT) has made several rounds of liberations over the past many years, so why do these 2 banks give their customers such a hard time when transferring even a token amount of money overseas?   If they have been targeted by the regulators for some reason, they should explain this to their customers.  If you are in a situation needing to send funds abroad, only try Bangkok Bank instead as they seem not be caught up in that.

Now is again a time to be tame, not too active, hold a port of overall good stocks and be patient. We don’t know if it will take a year or end of 2017, but I remain convinced at some point there will be a revaluation on our group, to higher price levels...and with decent dividends along the way.  Keep posted.

Best Regards

PS. Just as I click this article for publication I see AUCT posting a new high at 8.60!!