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STRATEGY UPDATE

Model Portfolio 22 June 2015Add tourism stocks

SET target: 1570 (YE15)

Index closing (19/6/15): 1491.46

Stock picks

Investment thesis Our model portfolio has delivered a return of +1.2% since our last our report (May 18), and outperformed the SET by 2.5%. On a YTD basis, the collection of stocks delivered a return of 1.2% versus the SET indexs return of -0.4%.

News of the first MERS case in Thailand hit tourism stocks late last week. Prices dipped to the tune of about 10% for hotels and airports, swiftly reflecting the risk of an impact on tourist arrivals in the short term. A well-controlled situation could make the recent price declines a good entry point for tourism-related stocks. However, new cases of MERS could otherwise cause share prices to continue their slide. Learning from the most comparable situation, the SARS pandemic of 2003, we believe that any impacts on share price will be short-lived. We therefore add tourism stocks to our model portfolio.

Added: AOT (strong growth in tourist arrivals), CENTEL (strong growth in tourist arrivals, highest growth in RevPar compared to its peers)

Removed: SIRI, BTS

Risks: 1) Worsening economic and financial data flows from the US, the European Union and Asia, 2) greater risk aversion among investors, leading to a market de-rating, 3) the interim government proves to be incompetent, 4) a weaker-than-expected domestic economy.

The scope for upside includes positive economic data flows among developed markets and emerging markets, which could lift the tide of the overall equity market.

Rec. TP EPS Core PER PBV ROE DY(Bt) (%) EPS (%) (x) (x) (%) (%)

15E 15E 15E 15E 15E 15EAAV BUY 6.5 1,107 3,767.3 9.3 0.7 10.7 0.0ADVANC BUY 270.0 14.0 12.9 16.7 14.6 87.8 6.0AOT BUY 330.0 30.5 30.8 25.9 3.9 15.7 1.5BLA BUY 67.0 65.3 66.7 19.1 2.8 14.8 2.2CENTEL BUY 40.0 56.4 56.4 26.2 3.7 15.8 1.5CK BUY 32.8 -2.5 -3.8 20.2 2.2 11.3 2.0CPN BUY 57.0 14.0 13.4 24.1 4.3 19.1 1.6KBANK BUY 244.0 7.5 6.1 9.5 1.5 18.1 1.9LPN BUY 22.0 31.3 31.3 10.1 2.3 23.8 4.9SCC BUY 590.0 22.6 14.2 15.1 3.1 21.8 2.6

Note: Closing prices as of June 19, 2015

Track recordsince inception

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ModelPort

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Wgt Price (Bt) Return Wgt Prc (Bt)% 18/5/15 19/6/15 % % 19/6/15

AAV 7 4.76 4.22 -11.3 AAV 7 4.22ADVANC 14 237 231 -2.5 ADVANC 14 231BLA 8 45.62 49.25 8.0 AOT 10 290BTS 9 9.15 9.9 8.2 BLA 8 49.25CK 7 24.6 26.75 8.7 CENTEL 7 35CPN 11 43.5 44.75 2.9 CK 7 26.75KBANK 15 206 197 -4.4 CPN 11 44.75LPN 8 16.3 18.2 11.7 KBANK 14 197SCC 14 528 520 -1.5 LPN 8 18.2SIRI 7 1.83 1.83 0.0 SCC 14 520

Return since last report YTD return (%)Portfolio 100 1.2 Portfolio 1.2SET 1,510.4 1,491.5 -1.3 SET -0.4SET50 1,001.3 978.7 -2.3 SET50 -2.2

Source: Bualuang Research

Poramet Tongbua, CFA Securities Fundamental Investment Analyst poramet@bualuang.co.th +66 2 618 1346

Model portfolio - 2

Figure 1 : Stock picksfinancial summaries

Rec. Price TP Upside EPS gwt Core EPS PER PBV ROE Div Yld(%) (%) (x) (x) (%) (%)

(Bt) (Bt) (%) 15E 16E 15E 16E 15E 16E 15E 16E 15E 16E 15E 16EAAV BUY 4.2 6.5 54.0 1,107 16.3 3,767 16.3 9.3 8.0 0.7 0.6 10.7 11.2 0.0 0.0ADVANCBUY 231.0 270.0 16.9 14.0 9.2 12.9 6.4 16.7 15.3 14.6 14.6 87.8 95.7 6.0 6.5AOT BUY 290.0 330.0 13.8 30.5 12.0 30.8 13.7 25.9 23.2 3.9 3.5 15.7 16.0 1.5 1.7BLA BUY 49.3 67.0 36.0 65.3 13.6 66.7 13.7 19.1 16.8 2.8 2.6 14.8 15.3 2.2 2.4CENTEL BUY 35.0 40.0 14.3 56.4 20.1 56.4 20.1 26.2 21.8 3.7 3.3 15.8 17.2 1.5 1.8CK BUY 26.8 32.8 22.4 -2.5 -14.9 -3.8 59.0 20.2 23.8 2.2 2.1 11.3 9.1 2.0 1.7CPN BUY 44.8 57.0 27.4 14.0 24.9 13.4 26.9 24.1 19.3 4.3 3.7 19.1 20.8 1.6 2.1KBANK BUY 197.0 244.0 23.9 7.5 12.9 6.1 10.3 9.5 8.4 1.5 1.3 18.1 17.8 1.9 2.0LPN BUY 18.2 22.0 20.9 31.3 17.8 31.3 17.8 10.1 8.6 2.3 2.0 23.8 24.5 4.9 5.8SCC BUY 520.0 590.0 13.5 22.6 10.3 14.2 13.1 15.1 13.7 3.1 2.8 21.8 21.4 2.6 3.1

beta

1.120.980.990.971.121.391.141.081.091.02

Sources: Company data, Bualuang Research estimates

Figure 2 : Model portfolios performance, YTD

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Model port Change portfolio SET SET50

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Performance of model portfolio relative to SET

Sources: SET, Company data, Bualuang Research

Model portfolio - 3

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