Daily Strategy for Investors on July 1, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on July 1, 2019, stating that the SET on Friday swung in a range awaiting the G20 summit results. Strong buying pressure was seen on ICT led by ADVANC, TRUE and JAS including power plant GPSC.

The index closed at 1,730.3 points (-1.3 points) with a trading value of THB 61 billion (THB 69 billion the previous day). Foreign investors switched to net sell Thai shares by THB 331 million. Institutional investors net sold by THB 309 million. There were net Long on SET50 index future by 17,642 contracts.

 

Investment Theme: Trade talks results slightly better than our forecast
Over the weekend, US president Trump has announced the trade talks results between the US and China close to our expectations. That is, the US cancelled the tariff hike of USD325b of imported goods as to pave ways to other trade talks. Some details give positive signals such as 1) China is set to import agricultural products like soy bean and others from the US again, 2) Trump allowed US-based companies to trade with Huawei again. This is to avoid tech war and pave the way to the next trade talks.

Next, Maybank believes that the market should put a spotlight on the FED chair Powell statement on monetary policy to present to the Congress on July 10-11 and the FOMC meeting during the late of this month.

Initially, Maybank expects the FED is likely to cut interest rates at least once in 3Q19 (July or September) and the OPEC meeting this week. Maybank maintains our positive view on both incidents.

Maybank believes the SET should swing in a range of 1730-1750 points as the US tariff hike of USD250b still remains. Maybank still recommends investing in domestic plays stocks over global plays. Accumulate CPALL, BEM, TRUE and S. For global plays, Maybank chooses PTTEP as a top pick as its 2Q19 earnings should outperform the sector.

 

Big Issue
1) US president Trump canceled tariffs hike on USD320b imported goods from China.

 

Stock Pick and Trading Idea
SINGER: Initiate coverage, BUY, TP THB10.40 (upside 40%). The company has restructured its business of leasing and improve its lending portfolio in the past few years. From now on, we believe it is entering the growth stage, expecting strong 2H19 earnings ((1Q<2Q<3Q<4Q) as the leasing business is in the high season in 2Q19, boosting QoQ growth. The auto leasing business should return to expand in 2H19. With strong improvements as it turned to profit for 4 quarters consecutively, Maybank, therefore, initiated a BUY rating, TP THB10.40/share, on P/E of 25x from 3-Yr CAGR (2019F-2021F) average of 30%.

 

Technical View
If opens with a gap, BUY on dip, but if dips below 1725, lock profit: The SET index corrects and swings sideways, driven by strong buying pressure on ICT, banking and food stocks. Maybank recommends using support 1725 as a decision making point. If it still holds above 1725, it is good for trading with the resistance at 1740 and 1760. In the morning, if the index opens with a gap, wait to buy stocks when it dips. The intraday support levels are 1730-1735. But if it dips below 1725, lock profit.

 

Investment Strategy
1) With stocks, if holds above 1725, hold stocks and gradually take profit at 1740 and 1760. But if dips below 1725, lock profit.
2) Without stocks, if weakens but holds above 1730-1735, accumulate stocks for rebound trading.

 

Maybank sets a support line at 1715 points and 1725 points while setting a resistance line at 1740 and 1760 points

 

Keep an Eye On
1) Trump may intensify sanctions on Iran.
2) Fed chair Powell to testify before the Congress on July 10-11.
3) The US to consider Huawei blacklist details this week.

 

Technical Stocks:
SCN (3.56-3.64, Tp 3.88//4.00, Cut 3.50)
VIBHA (1.68-1.70, Tp 1.78//1.82, Cut 1.65)