Daily Strategy for Investors on April 23, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on April 23, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

-Investment Overview – AWS expects the SET Index to have a chance to recover from (1) the recovery of crude oil prices both WTI and Brent (2) easing lockdown measures that begin to clear (3) domestic COVID-19 situation which began to unwind and (4) economic stimulus measures through loan act by the Ministry of Finance can be done faster than the plan is a factor that has returned to create confidence in the economy. However, the investment strategy still focuses on short term speculation and shares with specific factors, AWS still believes that in the short term, the market is still highly volatile.

 

1) Crude oil price trend, AWS sees a low chance of being stable for another 1-2 months. The stocks that will benefit are TASCO, EPG, GPSC, BGRIM, GULF, OSP, CPALL, and BJC. – AWS still maintains its view and believes that the downside of crude oil prices is low, but the recovery still has to wait for the demand factor. AWS expects to revive in 2H20 during the supply which will decline in May. AWS believes that this is not enough. Stocks that benefit will be those with production costs based on oil prices (aviation, transportation and packaging), and the electric sector with a high SPP proportion, as well as retail groups due to reduced purchasing power.

2) Announcement of relaxation of global lockdown measures. AWS looks both positive and negative. – AWS is optimistic for the short-term investment outlook, however, it still has to follow closely if the announcement easing the said measure causes the statistics of the number of people to return increasing, it might be a factor to pressure the overall investment in the next phase. For the said measures in Thailand, it still has to follow up. It is expected to gradually open 3 phases between May by beginning with areas that are vulnerable (have never been infected or no infection has been found in the last 14 days), while Bangkok is expected to be the last.

3) Issues about the Ministry of Finance will begin to borrow from within the country. AWS believes that it can help liquidity but it might not post a positive result to the bottom line significantly – The Ministry of Finance launched a borrowing plan under the Royal Decree of Bt1tn loan, which will be divided into the year 2020 about Bt600bn loans, and for the year 2021 of Bt70bn loans. (according to the fiscal year). The first loan of Bt70bn will be borrowed from a local bank (expected to open for bidding on 29 April) in the form of a 4-year promissory note with short-term interbank loans (BIBOR). To note, the BIBOR is currently at 0.97%.

4) Overall, the bank’s 1Q20 net profit showed a net profit of Bt43.7bn, an increase of 5.8%QoQ but decreased by 17.1%YoY, in line with its estimate. The likelihood of 2Q20 earnings might face a risk of increasing NPL due to COVID-19, especially for banks with high proportion of SME loans and high-risk businesses (related to hotels and tourism). AWS chooses KKP and BBL as the outstanding shares of the group.

 

– Technical view – AWS expects the SET Index to move today in a range of 1,242 – 1,282 points (with support at 1,252 1,242 and 1,222 points and with resistance at 1,272 1,282 and 1,303 points) with technical stocks recommended including BDMS, GPSC, CKP, EGCO, and KCE.

 

Theme Investment: 

1) Low crude oil prices, AWS chooses TASCO, EPG, GPSC, BGRIM, GULF, OSP, CPALL and BJC. 

2) Easing lock-down measures. AWS chooses ADVANC, BTS, BEM, CRC, CPN, PLANB, and HMPRO. 

3) Loan Act of Bt1.9tn. AWS chooses KBANK, SCB, KTB, BBL, KTC, and SAWAD. 

4) Stocks that benefit from the extension of the government reimbursement compensation. AWS chooses ADVANC, TRUE, CPF, CPALL, BJC, CRC, CPN, HMPRO, OSP, and CBG. 

5) Limited downside, the company has strong cash flow. AWS chooses BGRIM, EGCO, GULF, GPSC, and RATCH. 

6) Long-term cumulative shares (DCA), AWS selects ADVANC, AOT, BDMS, BEM, and DIF.

7) SSFx target stocks, AWS selects PTT, PTTEP, BJC, CPALL, AOT, GULF, EGCO, INTUCH, ADVANC, BAM, and BDMS.