Daily Strategy for Investors on October 25, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on October 25, 2019, stating the must-know events in the equity market and things to focus as follows:

 

Investment Ideas:

Stock market is in the period of crazy right stocks such as utilities power sector, hire purchase, and airport. On the other hand, the wrong stocks clearly are banking sector, construction service sector and petrochemical sector. However, the overall situation of the stock market is still worrying since the right stocks are expensive and more expensive, no signal to indicate when the cycle will be ended. Stocks are down although they are cheap. They still could not find the lowest point and no signal when downturn will be ended. AWS sees overall market in the short-term still be in danger.

 

Select the right stocks and cut the wrong stocks

Banking sector stocks: after cut 2020’s target of KBANK which announced that loan will be dropped next year, worried to set more provision and expect NPL will be increased due to the economic slowdown. Not only KBANK were sold, banking sector also dropped heavily.

AWS recommends “underweight” in construction service sector despite the signing of contract for high speed rail connecting 3 airports, the shares in the sector fell heavily (Both the main contractor and piling contractor (STEC -8%, SEAFCO -6% and CK -5%) so AWS expected to be caused by re-allocation investment of foreign funds and institutions.

Export firms are a weakness after the bath appreciation so the outlook in 2020 is worse than 2019, seen from TU -7% and KCE -4%. If the bath is not depreciated, AWS recommends avoiding buying export firms.

Today’s index range is expected to be 1,605 -1,630 points due to banking sector may continue to decrease.

 

Stock & Comment
AOT – TP ฿84.00/share
CKP – TP ฿7.60/share
HMPRO – TP ฿19.00/share

 

Pick of the day: AOT (BUY; AWS TP84.00)

AWS expects normalized profit 4Q62F (Jul-Sep 62) to be at 5.6 billion baht, an increase of 8.3%YoY due to strong aviation statistics.

Thai tourism outlook recovered from the Chinese tourists has come back strong since August, while early October is the long weekend of the week, celebrating the Chinese National Day (Golden week) and high season of tourism that will start from October. AWS has a positive view on tourism for the rest of the year 2019, which will be reflected in 1Q63 earnings (Oct-Dec 2019).

The company reported that the passenger movement during 1-19 October, increased by 5.8%YoY, with international tourists growing at 11.7%YoY. The aircraft movement increased by 8.3%YoY.

AWS has a positive view on the aviation sector, with AOT get the most benefit. AOT is still very strong in the main uptrend due to the occurrence of both Daily, Weekly, & Monthly buy signal. When considering the AOT that can break with the market closing above 77.75 baht, therefore have the main target of the new high is at 82.25 baht. AOT has short-term stop-loss at 73.50 baht. (Resistance: 78.50, 79.00, 80.00; Support: 77.75, 77.25, 76.25).