Daily Strategy for Investors on April 25, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 25, 2019, stating that SET yesterday moved narrowly driven by buying pressure on ICT stocks ADVANC and INTUCH and power plants EA and GULF. However, profit taking was seen on PTTEP, PTTGC, and IVL.

The index closed at 1,673.4 points (+2.1 points) with a trading value of THB 46 billion, (THB 37 billion the previous day). Foreign investors switched to sell Thai shares by THB 504 million, institutional investors net bought by THB 894 million. There were net long on SET50 index future by 5,030 contracts.  

Investment Theme: More focus on external factors rather than domestic political factors
For investment outlook in May, Maybank suggests investors put more focus on foreign factors rather than domestic political factors. For now, eyes on 1) earnings results of banking and retail sectors, 2) US-China trade talks outcome, 3) crude oil prices trend.
The Trump administration said Monday that it will no longer exempt countries from US sanctions if they continue to buy Iranian oil, in a move that sparked condemnations from Tehran as well as Iran’s major oil importers, including China and Turkey. Iran has reportedly renewed its threat to close the Strait of Hormuz, the world’s busiest transit lane for seaborne oil shipments, prompting fears about the potential ramifications for oil prices and broader financial markets.
For the domestic political factor, Maybank has neutral view as the Constitutional Court yesterday rejected a petition by the Election Commission (EC) seeking its ruling on the method of calculating and allocating party-list seats. The court ruled 7:2 that it was the EC’s responsibility to calculate the seats, which it needed to do after endorsing the constituency MP results. The EC will meet today to discuss the dismissal. Based on unofficial results, both the anti-junta and pro-junta camps are neck and neck in total MPs counts – the Pheu Thai-led group has 252 MPs and the Phalang Pracharat-led bloc is expected to find 248 supporters.

Investment theme in April:
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%. HOLD PTTEP, BEM, and BJC.

Big issue
1) Dhanin exits CPF chair to address other duties.
2) Cabinet OKs extending visa fee waiver until Oct 31.
3) Thai Baht weakens to THB 32.04 against USD.

Stock Pick & Trading Idea
BUY TASCO: Maybank upgrades target price to THB18.50 (from THB17). 1Q19 earnings are forecast to jump 65% YoY to THB 500 million due to higher asphalt price that rose more than USD 50 to USD 370/ton in the end of last year and stock gain. The gross profit margin is expected to rise to 12.7% from 4.5%. It will continue growing in 2Q19 (recent asphalt price is USD 420/ton). Sales volume for this year is forecast at 1.75m ton (+13% YoY).

Technical View
If holds above 1665-1670, likely to rebound and maintain above 1680: The index corrects for the fifth day, and fails to breakout 1680 and hold above it. In the short term, looking at the 60 minute chart, Maybank finds that the index weakened to test the uptrend’s support levels at 1665-1670 and bounced up. So, if it still maintains above such support level, it is likely to close above 1680. However, if it dips below 1665-1670, it may slide for a correction at around 1655 area for a while.

Investment strategy
1) Investors with stocks, if it dips below 1665, lock profit or if rebounds to test 1680+/-, partly take profit for the next trading round.
2) Without stocks, for risk-takers, gradually buy stocks at support levels 1665-1670 for a brief rebound trading.
Maybank sets a support line at 1655 points and 1665 points while setting a resistance line at 1680 points and 1690 points.

Keep an Eye On
US reports GDP on Apr 26.