Daily Strategy for Investors on July 20, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on July 20, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview Today – AWS expects the SET Index to continue to experience sideways fluctuation in order to wait for new positive factors to support the investment. While the risk pressures the SET Index remains on the same factors, both concerned about the COVID-19 situation in oversea countries and the conflict between the U.S. and China, while the domestic factors follow the 2Q20 earnings announcement that was affected by the COVID-19 pandemic in the past, especially stocks in the banking sector, the cabinet adjustment and new economic teams, including the numbers of Thai exports (22 July). For investment strategy, AWS chooses stocks in the domestic play and stocks with specific positive factors.  

 

COVID-19 is still at risk of pressure on the recovery of oil prices – Crude oil prices last week still pressured by concerns oversupply problems that will increase in August after the OPEC+ resolution to reduce production to 7.7 million barrels per day (MBD), less than the original resolution of 2.0MBD. Although OPEC+ argues that it started to see the recovery of demand for crude oil from global lockdown easing measures. However, the report of the International Energy Agency (IEA) and the oil exporting countries (OPEC) last month indicated that uncertainty from the pandemic of COVID-19 will be a factor to pressure crude oil prices for the rest of 2020.

 

Today, follow the earnings results announcement for the banking sector (20 July) which are SCB, KBANK, BBL, BAY, TCAP and AEONTS.

 

EARNING RESULT: TISCO (BUY; TP Bt107.00) – The net profit in 2Q20 at Bt1.3bn, down 10.1%QoQ and 25.9%YoY lower than AWS and the consensus estimated due to (1) the revenue from non interest rate income dropped both QoQ and YoY, and (2) the credit loss expenses which expected to occur at Bt873mn, down 16.8%QoQ but up 534.7%YoY as a result of calculations according to the new accounting standards and the downturn trend of the economy makes the company tighter.

 

EARNING RESULT: KTC (BUY; TP Bt45.00) – The company reported the net profit in 2Q20 at Bt1.1bn, down 27.7%QoQ and 13.1%YoY, due to (1) expected credit losses which rose to Bt2.0bn (+ 59.3%QoQ, +33%YoY) due to the impact of the new accounting standards (TFRS9) resulting in the company’s NPL rising to 6.6% (1Q20 at 4.0%), coupled with the current economic risk causing the company to set aside more reserves and (2) Fee income in 2Q20 at Bt2.0bn, decreasing both QoQ and YoY due to the reduced card spending.

 

Technical View – This week, AWS expects the SET Index to move between 1,337 -1,387 points, and today, AWS expects the SET Index to move between 1,353 – 1,368 points. (Support at 1,358 1,353 and 1,346 points and resistance at 1,363 1,368 and 1,375 points). The recommended stocks are CBG, EA, GFPT, KCE and BBL.

 

Theme Investment

1)The stock which obtains the benefit from economic stimulus measures, the economic stimulus measure in the 1st phase – CPALL, HMPRO, BJC, OSP, CBG, TTW and MTC, the tourist stimulus measures – AOT, AAV, ERW and MINT, the government budgeting measures – CK, BEM, STEC, SEAFCO, PYLON and TASCO

2)Stocks that benefit from entering the rainy season – BCPG, BGRIM, CKP, GPSC and EASTW

3)Dividend Play – KKP, TISCO, QH, LH, ORI, NOBLE, DIF, INTUCH, HANA, EASTW, TTW, EGCO and RATCH

4)Long-term cumulative shares (DCA) – ADVANC, AOT, BDMS, BEM, CPALL, DIF and HMPRO