Daily Strategy for Investors on April 3, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 3, 2019, stating that SET yesterday continued gaining, driven by strong buying pressure on banking and financial KBANK, SCB, MTC and SAWAD including power plants EGCO, GPSC and RATCH.

The index closed at 1,651.4 points (+6.8 points) with a trading value of THB 41 billion, (THB 44 billion the previous day). Foreign investors net bought Thai shares by THB 1.2 billion, institutional investors net bought by THB 1 billion. There were net long on SET50 index future by 10,359 contracts.

 

Investment Theme: SET struggles at key resistance, likely to correct in short term
The SET index gained more than 34 points in the past 7 trading days as the market concern about the political issue has cooled down. Recently, it rose to test the key resistance at the EMA200Day line at 1655 point. This area reflects the average PER of the past 9 years based on EPS19 at 110x.

Initially, Maybank expects the market is likely to correct and wit for 1) the clarity on the US-China trade talks, which will indicate the direction of the global plays stocks such as the energy and petrochemical sectors. 2) earnings preview of the banking sectors, 3) more than 80 stocks gradually post XD, led by SCC, KBANK, SCB, BBL and others.

Keep an eye on the BOT to continue inspecting the auto leasing industry as the household debt remain high at 78.6% as of the end of 2018 (50% from house and auto loans). Especially for auto loans. We are not able to assess the impact from the BOT’s move but we believe it may take time (about 6-9 months) as it needs many processes to deal with it such as data research, measures, public hearing and officially implementation.

 

2Q19 Investment Theme
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. BUY global palys stocks like PTTEP, BCP and HOLD BEM and CPALL.

 

Big Issue
Thai National Shippers’ Council (TNSC) has cut the year’s export growth target to less than 5.0%.

 

Stock Pick & Trading Idea
TRADING BUY STEC at a target price of ฿29.00/share, on average 10 years PER of 0.5SD. 1Q19 earnings of THB370m (+57% YoY) from revenue recognition from the Yellow, Pink, Orange lines, and GULF power plants. STEC targets new projects worth THB 35 billion this year, to add to the current backlog of up to THB 105 billion.

Gradually accumulate stocks with 2 themes; sector expected to face limited impact from political factors led by retail BJC with a target price of ฿65.00/share and tourism SPA with a target price of ฿5.80/share and sectors with limited downside, recovering margin with attractive valuation led by BCP with a target price of ฿39.00/share and BCH with a target price of ฿20.00/share.

 

Technical View: If fails to breakout 1656, take profit for the next trading cycle
The SET index opened with a gap and moved sideways all day. It gained to test the resistance 1656 (EMA200Day) but failed to breakout. In the near term, if it rebounds to retest the resistance 1656, it gives a chance for profit taking for the next trading cycle. Investors may wait to buy stocks at the support 1640-1645 when they weaken or follow buy if it breaks out the resistance 1656. If passes this level, the next resistance is 1675.

 

Investment Strategy:
1) Investors with stocks, continue holding stocks. If rebounds intraday, consider selling pressure at resistance 1656. If fails to breakout, sell stocks for next trading cycle. Wait to buy back stocks at supports or if breakout resistance, let profit run.
2) Without stocks, gradually buy stocks if weakens intraday to test supports 1640-1645, only for a rebound trading at 1656, 1675.

 

Maybank sets a support line at 1630 points and 1640 points, while setting a resistance line at  1656 points and 1675 points.

 

Keep an Eye on
Election Commission to unveil the formula to calculate the number of the party-list MPs.