Daily Strategy for Investors on January 27, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on January 27, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Interesting international issues this week (27 – 31 January) should follow (1) the situation of the new strain of coronavirus (2) the direction of crude oil prices after being pressured by the situation of the spread of new strain of coronavirus (3) 2 Central bank meetings: Federal Reserve between 28-29 January and the Bank of England (BoE) on 30 January. AWS expects the Fed to maintain the policy interest rate unchanged at 1.5% – 1.75% as well as BoE. (4) US GDP Annualized QoQ announcements during 4Q19 and (5) Brexit has been scheduled for the UK on 31 Jan 2020.

Local issues (1) The Economic Cabinet meeting on 31 January will consider the exemption of visa fees for tourists from China and India or not (2) the progress on the draft of the Annual Budget Act 2020 and (3) the 4Q19 earnings announcement of SCC and PTTEP.   

Situation of the spread of new strain of coronavirus, AWS still views it as a risk. AWS believes that it is an opportunity to gradually collect stocks that are less affected, but the stock price has decreased sharply, such as AOT (TP Bt84.00) and stocks that benefit from the mentioned events, according to the theme investment, which is HANA (TP Bt39.00) has the most benefit from the depreciation of Thai baht. The current Thai baht is at 30.635 baht/USD, depreciating more than 0.87 baht/USD, compared to the exchange rate at the end of 2019.

Delay of budget expenditures in 2020 due to the case of MPs inserting ballots instead, causing the matter to be submitted to the Constitutional Court for decision. AWS evaluated the impact in 3 ways. Option 1 is the best. The decision of the Constitutional Court does not affect the Budget Act at all. Option 2, it impacts slightly if the Constitutional Court rules to fix only some sections that have problems. Then, vote again. Option 3 is the worst. The Constitutional Court rules void as a whole Act which will have to go back and create a new Budget Act. AWS also outweighs for option 1 and 2.

Investment theme- (1) Accelerate disbursement of the government budget in year 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), CPALL (TP Bt94.00), KKP (TP Bt80.00) (2) Government stimulus measures, AOT (TP Bt84.00), CPALL (TP Bt94.00) and HMPRO (TP Bt19.00) (4) Global trade has eased and the baht depreciates. AWS chooses HANA (TP Bt39.00) TU (TP Bt18.40) and CPF (TP Bt33.00) and (3) High dividend yield and defensive stock, AWS chooses KKP (TP Bt80.00) and GPSC (TP Bt97.00).

AWS expects the SET this week (27 – 31 Jan 2020) to be within the range of 1,540 – 1,580 points.  

AWS expects the SET to be within the 1,556 – 1,571 points (Support: 1,566, 1,562, and 1,556 points / Resistance: 1,571, 1,575, and 1,580 points).

      

 

Stock & Comment

ADVANC TP Bt250.00

HANA TP Bt18.40

 

Pick of the day: ADVANC (BUY, AWS TP B t250.00)

AWS expects the 4Q19 net profit of the company to recover YoY as the Fix Speed Unlimited package war has lessened. The broadband business is also growing by leaps and bounds. At the end of 2019, there was 37%YoY growth in broadband users to 1 million users. The 2H19 dividend yield is expected to be Bt3.71 per share, representing a full year dividend yield of 3.4% in 2019.

AWS expects 5 interested operators to participate in the 5G auction (ADVANC, DTAC, TRUE, CAT and TOT) which will help reduce concerns on new players entering to a commercial competition and on the issue of the resignation of DTAC’s CEO who has a different viewpoint with Telenor. The company wishes to wait for the 3500MHZ auction. If it is as the news, AWS expects it will help reduce the violence in the auction of 2600 MHz spectrum.

AWS anticipates the company’s total revenue in 2020 to continue growing at 5% driven by higher revenue from mobile business after seeing a signal of price competition in the prepaid system has lessened in the 1Q20 in coupled with broadband business is likely to grow by around 20% – 30% per year.

 

Weekly outlook: although the price is still swinging in the range of Bt207-224, there is a Buy Signal from reaching Higher High and Higher Low. Daily outlook: the price has moved up along the uptrend and RSI has continuously increased to the level of 60. The price is expected to test the previous High resistance at Bt224. If it could stand at this level, we look at the target of Bt230 and stop-loss point is at Bt215 (Resistance: 224.00 / 230.00; Support: 220.00 / 218.00).