The Thai stock market has rallied around 57 per cent so far this year on the back of a capital inflow into Asian stock markets - particularly emerging markets - and signs of a global economic turnaround.
Investors worried if now is a good time to buy stocks, given the recent sharp rise in the stock index, may find it beneficial to take a look at securities analysts' research and compare current prices with the fair value estimates of brokerage houses.
Research papers and price targets for stocks gathered by the Securities Analysts Association (SAA) can be found at www.setrade.com.
Despite the strong gain in Thai shares, due mainly to a buying spree in big market cap stocks, prices of 53 stocks listed on the SET100 Index as of last Thursday were below average target prices, according to the SAA.
More interestingly, the prices of as many as 17 stocks were at least 10 per cent lower than the average target prices.
Bangchak Petroleum's closing share price on September 17 of Bt14.30 was 21.04 per cent below the average target price of Bt18.11.
The market price of the oil refiner not only failed to meet the highest target price compiled by the SAA - Bt21, as set by United Securities - it even lagged behind the lowest target price, forecasted by Trinity Securities at Bt15.50.
All all eight brokers quoted by the SAA recommended "buy" for the stock.
Trinity Securities said in its research paper that Bangchak's Product Quality Improvement (PQI) programme, which is aimed at raising the production capacity of high-margin products including diesel, would commercially commend late this quarter, with the cyclical upturn in the diesel price.
Under the PQI, diesel production will increase to 46 per cent of Bangchak's total production from 35 per cent.
Moreover, Bangchak plans to raise its refining capacity to 100,000 barrels per day (b/d) in the fourth quarter from 90,000 b/d at present.
Trinity estimates that Bangchak's diesel-price hedging, equivalent to 40 per cent of the refining output, will help the company gain at least Bt1.5 billion in the third and fourth quarters.
As a result, it has raised its 2009 net profit estimate by 49 per cent to Bt7.37 billion from Bt4.95 billion.
It also predicted that Bangchak would pay an interim dividend of Bt1 per share for its second-half performance.
"If [investors] are concerned about risk, they can buy BCP-DR1 [Bangkok Petroleum-Depository Receipt1] instead.... It has a minimum guarantee from the Finance Ministry at Bt13, while the securities-holders enjoy the same privilegs as those who hold Bangchak stock," the paper stated.
Siamgas and Petrochemicals had upside gain of 20.19 per cent on an average target price among those quoted by SAA of Bt1.40.
KT Zeamico Securities was the only broker quoted by SAA that conducted research on SGP. It recommended "buy" for the stock.
Bumrungrad Hospital's share price was 16.37 per cent lower than the average target price in the SAA consensus at Bt30.49. However, its price has already exceeded the lowest target price range at Bt21 estimated by Thanachart Securities.
In the consensus, 10 brokers issued research papers for the hospital operator. Of those, eight recommended "buy", while one recommended "neutral" and one "sell".
Apart from BH, Bangkok Chain Hospital and Dusit Medical Services had upside gain from their average target prices.
KH's share price as of last Thursday was almost 14 per cent lower than the average target price of Bt9.93. It was 29.34 per cent lower than the highest target price of Bt12.1 but 0.59 per cent higher than the lowest target price of Bt8.50.
BGH has upside gain of 11.60 per cent from the average target price in the consensus of Bt27.15.
Among PTT's subsidiaries, PTT Exploration and Production (PTTEP) offered the second-highest upside gain after Bangchak.
The petroleum-exploration firm's share price was 11.90 per cent lower than the average target price of Bt165.72.
Thanachart Securities was the most pessimistic among the 15 brokers in the consensus. It recommended a "reduce" rating for PTTEP's stock with a target price of Bt105, far below the closing price last Thursday of Bt146.
Kasikorn Securities was the most optimistie on the stock with a target price of Bt194, a 24.74 per cent upside gain.
PTT itself had 8.52 per cent upside gain from the average target price of Bt289.68.
Sixteen of the 17 research houses in the consensus recommended "buy" the stock, while only one, BFIT Securities, recommended "hold".
Thai Oil offered 3.56 per cent upside gain from the average target price of Bt47.44.
Share prices of IRPC, PTT Chemical and PTT Aromatics and Refining exceeded the average target prices of 5.39 per cent, 13.77 per cent and 7.83 per cent, respectively.
IRPC, PTT Chemical and PTT Aromatics and Refining average target prices are Bt4.08, Bt70.54 and Bt23.88, respectively.
Share prices of 40 stocks listed on the SET100 Index were higher than the average target prices.
Of the total, 15 stocks were at least 10 percent higher than the average target prices.
Amata Corp, Thailand's largest industrial developer, exceeded the average price of Bt6.60 by 36.36 per cent.
Five of the nine brokers in the consensus, however, recommended "buy" the stock, one recommended "hold" and the rest recommended "sell".
True Corp's share price as of last Thursday exceeded the average target price of Bt2.49 by 27.71 per cent.
Kiatnakin Bank's price was 25.42 per cent higher than the average target price of Bt17.70.
Among the 100 securities in the consensus, seven are not covered by any brokers. These are GJ Steel, International Engineering, Loxley, Mill Con Steel Industries, Sabina, TWZ Corp and Tanayong.
Bangchak Petroleum's closing share price on September 17 of Bt14.30 was 21.04 per cent below the average target price of Bt18.11.
PTT itself had 8.52 per cent upside gain from the average target price of Bt289.68. Sixteen of the 17 research houses in the consensus recommended "buy" the stock, while only one recommended "hold".
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