The government's flood relief measures will hurt the banking and non-banking sectors on the Stock Exchange of Thailand (SET), while companies related to home repairs should benefit, say analysts.
The government has asked the Bank of Thailand to act as a mediator in seeking cooperation from state-owned and commercial banks to help households affected by floods in the North.
According to Asia Plus Securities (ASPS), the measures include providing liquidity for home repairs and working capital for affected businesses.
Banks are also requested to allow credit cardholders to pay less than the normal minimum amount, provide emergency loans and relax debt repayment criteria for debtors to help reduce their debt burden.
ASPS has a neutral view of the banking group regarding the relief measures, as they are providing assistance only to affected people.
As of the second quarter, the North accounted for 3.6% of total loans in the banking system, according to the brokerage.
If banks are asked to lower monthly instalments and extend the loan repayment period for 3-6 months, ASPS estimated the impact on net interest income of the eight banks under its coverage would be limited as credit card loans account for no more than 8% of their loan portfolio.
Moreover, loans provided to northern Thai residents are not a large proportion of banks' total portfolio.
The banking sector has an average price-to-book ratio of 0.8 times and an expected dividend yield of 5%-9%.
Investors are recommended to invest in commercial banks with a tendency to continuously control their asset quality, said ASPS.
Although there are no measures related to the non-bank sector this round, the brokerage said it continues to monitor announcements related to the flood.
"If flooding subsides quickly, the impact on agricultural production will be limited. Agricultural exports in July continued to increase, supporting farmers' income," noted ASPS.
For the non-bank group, the brokerage's stock picks are Muangthai Capital (MTC), Ngern Tid Lor (TIDLOR) and Srisawad Corporation (SAWAD).
Globlex Securities recommends an investment strategy focusing on stocks that benefit from remedial work after the floods recede, including TIPCO Asphalt (TASCO), Dohome (DOHOME), Siam Global House (GLOBAL), Dynasty Ceramic (DCC), Diamond Building Products (DRT), TOA Paint Thailand (TOA) and Delta Paint (DPAINT).
The Transport Ministry is expected to propose 14 new megaprojects worth 798 billion baht to the new cabinet.
These projects include the Don Mueang tollway, Expressway No.9 (western Bangkok outer ring road expressway), double-track railway phase 2 and Thailand-China high-speed railway phase 2. The projects should boost government investment and have a positive sentiment on construction stocks, such as Ch Karnchang (CK), Sino-Thai Engineering and Construction (STEC), Siam Cement (SCC) and Siam City Cement (SCCC), noted Globlex.
