Daily Strategy for Investors on October 16, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on October 16, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) European and US stock markets are bright.

2) Investors are still waiting for clarity on trade talks between the US and China.

3) The US economic figures came out well with good performance of major US listed companies.

4) England and the EU are likely to be able to reach a Brexit agreement this week.

5) The adaptation to technological innovation is good for business in the future. We see many Thai companies that are serious on this issue including ADVANC, KBANK, SCB, HMPRO, CPALL, ORI and ANAN etc.

6) TISCO performs well even with low growth loans, lower reserves and higher fees. Recommend “BUY” with AWS TP Bt115.

7) HMPRO expects the 3Q19 net profit to be Bt1.41bn, while SSSG revised down. With improved margin and good management of DC or Distribution Center and Logistic, it will enable cost-to income to be lower in the future.

8) Expect today’s index range will be at 1615 -1,635 points. Recommended stocks are TISCO, HMPRO and BDMS.

 

Stock & Comment
TISCO    – TP ฿115.00/share
HMPRO – TP ฿19.00/share
BDMS – TP ฿27.50/share, expecting the 3Q19 performance to improve due to high season and laggard share price.

 

Pick of the day: TISCO (BUY; AWS TP Bt115.00)

AWS expects to see TISCO’s NIM to increase from the downtrend of interest rate causing the financial cost to decline from the 4Q19 onwards.

For credit in 2019, we expect total loans to grow by only 0.1%, but expect it to grow well by around 1.5% in 2020 from the good growth of Auto Cash through the “Somwang” channel.

As for the costs, AWS expects credit costs to remain low at around 20 bps (0.20%) until the end of 2019 before revising up to around 50 bps (0.50%) in 2020. However, reserve costs that expected to increase will be offset by the beginning of excess reserves in accordance with the new IFRS9 accounting standard. It is expected to have a reserve of Bt300mn per year from 2020 onwards.

 

Thus, AWS recommends “BUY” TISCO with the 2020 target price of Bt115 based on 1.26x Prospective PBV. Expect the 2020 net profit to grow by 5%. The highlight of TISCO is its high dividend yield of 6.0% per year.

TISCO is likely to be in the uptrend from the occurrence of Weekly and Monthly Buy Signal. It is awaiting the return of the new Daily Buy Signal once it could close above Bt101 to resume a full uptrend. TISCO has a significant target in making a New High at Bt107 (Resistance: 100.00, 82.50, 85.25; Support: 78.00, 76.00, 73.25).