Daily Strategy for Investors on August 6, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on August 6, 2019, pointing out some of the must-know events in the equity market as follows:

1) China lets the yuan to fall below 7 yuan per USD, touching the lowest level in 11 years.

2) China announced the suspension import of agricultural products from the US and may impose tariff from US agricultural products which China had bought earlier. It is considered as a countermeasure to President Trump’s threatening to impose tariff on imported goods from China.

3) VIX has risen to stand at 24.59 points which are +6.98 points or +39.64% indicating concern on the global stock market.

4) Thai stock market today is expected to face a heavy selling force continuously with a support of 1,640-1,650 point, and a resistance of 1,680 point.

5) Energy stock announced a weak performance as expected.

6) Recommended stocks are SC, HMPRO and TASCO.

 

Pick of the day: Recommend “BUY” SC at the target price of ฿4.00/share

Yesterday AWS visited the SCOPE Lang Suan project of which SC holds 90% of the share and 10% is held by Mr. Khun Yongyuth Chaiphromprasit. This executive mainly leads the design and sales team by focusing on the design of the world-famous designers such as Thomas Yul-Hansen, co-interior designer of the project, resulting in the unique and elegant of the project.

The average price of the project is around THB 450,000 per square meter which is lower than the market expected to launch at a starting price of THB 500,000 per square meter or more. The outstanding point of this project is its prime location in the middle of the shopping center and business district. It is also the only freehold left on Langsuan Road.

At present, the take-up rate is around 30% which is in line with the target set by the management. The proportion of sales during the launching period: construction period: completed construction is 30%: 30%: 40%. This project has not so high GPM either the SG&A as it has not put much investment in the advertising but will penetrate sales with customers with actual demand. It is expected to get NPM of around 12%-14% which is better than the SC average of 10%.

SC’s 2Q19 performance may not be high at around THB 289 million (-35% YoY and -8% QOQ), but revenue and performance will come in very high in 4Q19 as there will be a large project transfer such as 28 Chidlom from the end of 3Q19. AWS recommends BUY with a target price of ฿4.00/share with a 44% upside.