Daily Strategy for Investors on October 10, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on October 10, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) The US-China trade negotiation in Washington starts today.

2) China is ready to enter into a partial trade agreement with the US which is considered a positive signal.

3) The Fed may cut the interest rates further at this month’s meeting.

4) AWC enters the first trading day in the SET with quite a high reserved Market Cap of Bt190bn in the SET50.

5) Expect KKP to fall off SET50, BPP will survive and AWC enters into SET50.

6) Electricity stock is still popular as it has been clear that the economic is in the downturn.

7) HMPRO (AWS TP Bt19.00). It is expected a weak 3Q19 performance in line with the economic condition even though Malaysia has a lower loss. Hoping for better performance from the creation of new DC to enhance the efficiency of the logistics sector significantly. Recommend “WAIT” to buy once the price is weak.

8) Investment theme: switching trading stocks but remain in outperform sectors such as electricity and industrial estates.

9) Today’s index range is at 1,605-1,625 points. Recommended stocks are CKP, BPP and GPSC.

 

Stock & Comment

CKP – TP ฿7.60/share

BPP – IAA ConsensusTP ฿24.65/share

GPSC – TP ฿79.00/share

 

Pick of the day: CKP (BUY; AWS TP Bt7.60)

CKP has been granted a Commercial Operation Date (COD) certificate for seven generators with a total production capacity of 1,220 megawatts (MW) from the total installed capacity of 1,285 MW of Xayaburi Hydroelectric Power Plant (XPCL), the rest will be sold to Laos PDR with an official COD scheduled from 29 October 2019.

Moreover, CKP is the largest shareholder in XPCL with a 37.5% stake. We expect to contribute Bt1.4-1.6bn per year, which is considered to be around 2x-3x higher profit base than CKP’s normal profit of around Bt600mn per year.

Normally, CKP’s main profit comes from electricity production at Nam Ngum 2, Laos PDR (NN2) plant, Bang Pa-in Cogen 1 and 2 (BIC1, BIC2) Thermal plants and other power plants. We expect the 3Q19 net profit of only Bt110mn and the 4Q19 of around Bt350mn which has increased significantly from XPCL by around Bt200mn.

CKP remains in uptrend from the occurrence of Monthly Buy Signal. However, it is still in the short-term and medium-term base adjustment period from the occurrence of Daily and Weekly Sell Signal.

Thus, CKP will resume a new Daily Buy Signal once it could close above Bt5.90 and will resume a new Weekly Buy Signal once it could close above Bt5.80. The first target is at Bt5.95 and the next target is at Bt6.20, respectively (Resistance: 5.90, 5.95, 6.05; Support: 5.80, 5.70, 5.65)