Daily Strategy for Investors on March 10, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 10, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Dow Jones fell 2,013.76 points (-7.79%), WTI crude oil price dropped USD10.15 (-24.6%), while gold price rose USD3.3 (+0.2%).

2) Dow Jones future returned the positive territory after the US prepares to launch economic stimulus measures by proposing a personal tax reduction.

3) Concerns about the COVID-19 virus are still a factor to pressure investment. The latest data worldwide has 113,575 people infected and 3,995 deaths, while the Italian government has shut down the northern region to prevent the spread.   

4) Crude oil prices started recovery this morning but there is still a risk limiting recovery after the IEA cuts its oil demand by 1 million barrels per day, resulting in the demand for crude oil in 2020 to be 99.9 million barrels per day, the first time drop since 2009 that the demand for crude oil in the world has decreased YoY, while Saudi Arabia plans to increase oil production in April.  

5) The price assumption of crude oil in 2020 at USD45.00 per barrel.  AWS believes that the global market supply will not change. The price of crude oil at USD35-40 per barrel will affect oil production in the US but the supply will be compensated as well Saudi plans to increase production capacity. However, if the decline in crude oil prices does not affect oil production in the US so it will affect our crude oil price assumptions which will have a down-side.

6) The share price of PTT and PTTEP dropped dramatically more than 25% and 30% yesterday (9 March), resulting in the stock price to return upside. The new target price of PTT is Bt42.00, upside by 50%, and PTTEP with the new target price. At Bt92.00, upside 23%. However, in the short-term, the stock price may recover from speculation after yesterday sharply dropped but the fundamentals still have risks Investment so AWS recommends gradually accumulating for long-term investment only. (More than 1 year)

 

Today, AWS expects the SET to be within the range of 1,237 – 1,287 points (with support at 1,237 1,218 and 1,187 points and resistance levels at 1,268 1,287 and 1,318 points).

 

CPALL-The firm announced investments in Tesco in Thailand and Malaysia with an investment of Bt240bn. From these points, AWS estimates that it will not affect the capital, while the liquidity on hand is sufficient to support this investment and expected that the acquisition process will be completed during 2H20. AWS has a positive view and believes that this investment will enhance the share price to CPF (Bt4.25) and CPALL (Bt9.00). AWS has not included in the current estimate.

 

Theme Investment: 

1) Accelerate the disbursement of government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.40), and KKP (TP Bt80.00). 

2) Government stimulus measure, AWS favours AOT (TP Bt79.00), CPALL (TP Bt85.00), BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

3) Global trade has eased, AWS chooses CPF (TP Bt33.00). 

4) Interest rates cut. AWS chooses ORI (TP Bt9.00), SPALI (TP Bt20.00), MTC (TP Bt73.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).

5) High Dividend, AWS chooses KKP (Div.Yld.8.9%), QH (Div.Yld. 7.5%) TISCO (Div.Yld. 6.1%) BAFS (Div.Yld. 4.1%) and RATCH (Div.Yld. 4.1%)