eFinanceThai.com : Yuanta Research Center

Since the beginning of this year, SET has been down more than 200 point from 500 to the range of 260. We has gathered all possible rasons that drove the SET down: (1) The disappointment over the slow economic recovery (2) Still high NPLs (3) Weak Bath (4) Politics uncertainty (5) MSCI to recalculate Thiland weight in portfolio index (6) Foreign investor keep dumping Thai stocks (7) Oil price hike (8) The low indexes of nergboring countries and US stock market. The following table compares economic factors for both time zone periods.

Today Economic Environment (SET = 260)	Crisis at 1998 (SET = 200-250)
1. GDP quarter 2 /2000 grew 6.6% and grew 5.9% for the first half	1. GDP quarter 2 /1998 grew –13.7% and grew –12.81% for the first half
2. NPLs stayed at 31.24% at the end of August	2. NPLs stayed 34-39% for third quarter 1998 and peaked at 47.7% in May 1999
3. Financial Sector improves its capital base and finished its capital increase plan	3. Financial sector had low capital base, had a problem to increase capital, and had a rumor of being bankrupt
4. High interest burden. Average one year deposit rate at 7-12.5%	4. High interest burden. Deposit rate for the third quarter stayed at 7-12.5%
5. Currency is at 40-43 Bath/ dollar	5. Highly panic on currency slump. Stayed 55.5 Bath/ dollar at the beginning of 1998 and 40-42.5 Bath/ dollar at the third quarter 1998
6. Private debt US51.2 bn by which 15% was short term	6. Private debt US85.2bn by which 35% was short term
7. Moody upgraded Thailand to above Investment Grade	7. Moody put Thailand under Investment Grade

By looking at the above table, we could conclude that Thailand today is better than the thrid qurter 1998 where SET was stayed 200-250. Even the new factors of oil price hike and foreign investor net sell, we still believe that SET is now undervalue. The table below shows economic indicators and Index comparing Thailand and neighboring countries.

From the table, Thailand estimated GDP growth is 5% next year which is better than Phillipine and Indonesia, but worse than Malaysia, North Korea, and Singapore. However, Thiland has yesterday index that is most close to the lowest ever 1998 (27%). We think it is not fair and unreasonable for the SET to keep going down from this point. In short, we do not recommend sell, but instead, start to accumulate a good fundamental stocks at the first support at 240-250 where it was the lowest point in 1998.

The table below is the summary of value stocks (good fundamental and attractive valuation) we would like to recommend BUY – especially for long-term investors. However, the safe target to buy is when SET is at 250 (+/-10).

Investment Portfolio
Sector	Company	Reason
Banking	TFB, DTDB & SCB	Low NPLs, high capital base and attractive valuation
Chemical	NPC	Olefin prices up-trend, healthy finance, expected good 3Q00 results
Commerce	MAKRO	Good franchises and net-cash position
Communication	UCOM	Strong support from Telenor and high potential growth in earnings
	TA	Strong revenue growth (15% p.a.) with bright business prospects
Electronics	DELTA, HANA	Major beneficiary from baht weakening and cheap valuation
Energy	PTTEP, EGCOMP	Strong operations and great potential upside
Entertainment	BEC	Strong operations and great potential upside
Finance & Securities	AITCO, SICCO, KK & BC	Low NPLs, high provisioning level, and low P/Adj. BV
	CNS, ASL	Cheap valuation
Others	PPPC	Rising pulp prices and demand
	BECL	Trading at deep discount to our NPV-based target price of Bt25
	EASTW	Huge cash flow generated and low business risk