Consider taking profits as volatility rises

The SET Index was volatile in October, fluctuating between 1,432 and 1,506 points. After a pullback in the first week of the month, the index found support at 1,430 and subsequently rebounded, even reaching a one-year high of 1,506.
However, a subsequent sharp decline of 63 points tested the 10-week moving average, bringing the index to 1,443. Among the factors expected to influence the market in November:
Fed meeting: The Federal Open Market Committee on Wednesday is expected to announce a 25-basis-points interest rate cut to a range of 4.50%-4.75%, following September’s reduction of 50bps.
US presidential election: The outcome of the election, especially if the results are delayed or disputed, could lead to volatility in global risky assets. Both the Democrat and Republican parties are targeting China, which would benefit industrial estate stocks as more investors could shift production from China to Thailand and Asean. However, a victory by Donald Trump and his more extreme trade protectionism might accelerate US inflation in the medium to long term, potentially impacting future Fed rate decisions.
China economic stimulus: Following a 10% surge after Beijing announced a major economic stimulus package in September, the Shanghai-Shenzhen CSI 300 Index has pulled back. Market participants eagerly await this week’s meeting of the Standing Committee of the National People’s Congress, the country’s top legislative body, anticipating additional stimulus announcements.
Geopolitical conflict: While the Israel-Hezbollah conflict in Lebanon has escalated, it is not clear if Iran plans to retaliate against Israel for the Oct 26 strikes that took out Iranian military facilities. This geopolitical instability is affecting market sentiment and poses a significant downside risk to investment.
NOVEMBER OUTLOOK
The SET Index is expected to continue fluctuating significantly in November. A break above the 1,470 resistance could pave the way for further upside, with targets at 1,500 and 1,535. Conversely, a failure to breach the 1,470 level may trigger a correction towards the 1,430 support level.
Given the potential market volatility, we recommend taking profits on stocks that have experienced significant gains. Additionally, investors should closely monitor the upcoming third-quarter earnings season. Our stock picks for November:
BEM (Buy, target 11.40 baht): Our valuation for the expressway and rail mass transit operator is derived from a sum-of-the-parts analysis. Key catalysts include the double-deck road project, expected to conclude by the first half of 2025 at the latest, and potential negotiations for the Purple Line South operating contract in 2025.
CBG (Buy, target 88 baht): Our valuation for the energy drinks company is based on a forward price/earnings (PE) ratio of 30 times, which is 0.75 standard deviation (SD) below the five-year historical average. We anticipate that CBG will enter a new phase of growth, with the robust earnings outlook for the third and fourth quarters of 2024 serving as a key short-term catalyst.
KTB (Buy, target 23 baht): Our valuation for the bank is based on a 2025 price to book value (PBV) of 0.68 times, which is positioned at 0.75 SD below the 10-year historical average. The current valuation of 0.7 times PBV represents 0.5 SD below its 10-year historical average, and the stock price has yet to fully reflect strong quarterly profits above 11 billion baht for the third consecutive quarter.
MOSHI (Buy, target 58 baht): Our valuation for the lifestyle product retailer is based on a 2024 PE of 36 times, in line with its historical average. The stock is expected to outperform the SET Index, driven by strong earnings growth and ongoing store renovations and network expansion. Despite projected earnings per share (EPS) recording a compound annual growth rate (CAGR) of 14.3% from 2023-25, the current price trades at a relatively low 27.5 times the estimated 2024 PE.
SCGP (Buy, target 33 baht): Our valuation for the petrochemical company is derived from a 2025 PE of 24.1 times, which is 1.0 SD below the long-term historical average. Given the current 2025 PE ratio of 18.1 times, the stock is trading at a significant discount of 1.9 SD.
SISB (Buy, target 40 baht): Our valuation for the international school operator is based on a discounted cash flow (DCF) analysis, using a weighted average cost of capital (WACC) of 7.2% and a terminal growth rate of 3%. Key catalysts include the expected increase in student enrolment and the annual tuition fee adjustment.
SJWD (Buy, target 14.50 baht): Our valuation for the logistics and supply chain firm is based on a 2024 core PE of 33 times, aligning with its five-year historical average. We believe the company’s performance reached a trough in the first half of 2024. There is also a potential upside to our 2025 forecast, particularly if new merger and acquisition deals materialise.