Daily Strategy for Investors on August 27, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on August 27, 2019, pointing out some of the must-know events in the equity market as follows:

1) The US President Donald Trump revealed that the US and China will begin a new round of trade negotiation. Investors interpret it as a lessening for their concern.

2) Energy and petrochemical stocks are heavily sold. AWS still underweight but it may rebound in a downtrend. It has a high risk as the overall commodity business based on oil price clearly shows the downtrend, both in lower demand due to a weak global economy and higher supply that swiftly enter the market earlier than scheduled. For long-term investment, AWS still recommend avoiding risks with a short-term buy for IVL, PTTGC, and BCP which are oversold in a short-term.

3) Focusing on safe stocks or defensive stocks such as power plants sector. AWS favors GPSC (AWS TP Bt79.00), CKP (AWS TP Bt7.60), and WHAUP (AWS TP Bt8.00). While EA (AWS TP Bt52.50)recommend speculating.

4) AWS sees industrial estates in the EEC area to benefit from the relocation of Chinese production bases to Thailand. AWS recommends WHA (AWS TP Bt5.20) and AMATA (AWS TP Bt29.00).

5) Expect today’s index range to be 1620-1,640 points. Investment strategy: still focusing on port tightening, despite good shares and positive shares, there were less than 10% upside left. Recommend stocks are EA, WHAUP and AMATA.

 

Stock Comment

EA – (AWS TP Bt52.50)

WHAUP – (AWS TP Bt8.00) benefits from the relocation of Chinese production bases to the EEC area and expands water supply business in Vietnam.

AMATA – (AWS TP Bt29.00) benefits from the relocation of Chinese production bases to the EEC area.

 

Pick of the day: EA with a target price of Bt52.50.

EA reported the 2Q19 net profit of Bt1.44bn (+46%YoY, +19%QoQ). Total revenue increased by 24%YoY and 17%QoQ. The electricity distribution business has COD the wind power plant project for 260 megawatts by gradually being recognized from the beginning 1Q19 to the beginning of the 2Q19. The company has already fully recognized additional revenue from wind power plant since the 2Q19.

In addition, the Bt104mn revenue from the sale of batteries of AMITA has entered in the 2Q19. The future hope of EA depends on energy storage business or backup battery, which EA has currently developed a battery for electric car usage and will commercially launch in the 2Q20 with the production capacity in the first phase of 1 GWh.

It is the technology of AMITA Taiwan of which the advantage is it has already passed the safety testing and has a lightweight which can be used with the electric car and ferry boat. Even though the quality is acceptable, it still depends on how well the market will respond and how fast to start Phase 2 with greatly production capacity of 50 GWh further.

AWS sees the potential of energy storage business of EA, although AWS concerns on the main revenue after adder of the solar farm will be lowered in the next few years. AWS has slightly revised the target price up from Bt49.00 to Bt52.50 with 7% upside remain. It is suitable for trading.

EA remains in the downtrend from the Weekly & Monthly Sell Signal. EA currently has only a short-term strength from the Daily Buy Signal. EA has the next target of Bt48.75 and the significant target of Bt53.50, respectively. Its stop-term stop loss point is at Bt47.50 (Resistance: 48.75, 49.50, 50.75; Support: 47.75, 47.00, 45.75)