Daily Strategy for Investors on January 29, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on January 29, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Positive sentiment on investment returns after the Chinese leaders expressed confidence that China has the ability to fight the epidemic of coronavirus and China is ready to cooperate with the World Health Organization (WHO) to protect public health security on regional and global scale.

Chinese stock market (Shanghai stock market and Shenzhen stock market) announced to postpone the trading day after the Chinese New Year holiday to Monday, 3 February (originally 31 January), hoping to help prevent the outbreak of coronavirus in China.

Crude oil prices recover, concerns regarding the situation of the spread of coronavirus have declined in the short term. Recommend investing in previously affected stocks such as PTTEP (BUY, TP Bt147.00) and AOT (BUY, TP Bt84.00) as well as speculate on stocks in the refinery sector (there is still a risk of weak earnings), but the stock price has fallen too much in the past. Recommend BCP (BUY, TP Bt34.00) and TOP (BUY, TP Bt73.00).  

Beware of Thai baht that has a chance to return to appreciate and the price of gold that has a chance of decreasing after the virus situation eased concerns in the short-term. Thai baht yesterday closed at Bt30.77 per USD, appreciated by Bt0.04, while the recent price of gold (COMEX) dropped by USD7.6 to USD1,569.80 per ounce.

Follow up the decision of the Constitutional Court today (29 Jan), the process of the Constitutional Court (1) If the Budget Act 2020 is not considering, it will be effective (expected not later than March 63) and (2) If considered (the court has the right to open an investigation or not) in the case that the Budget Act 2020 is approved by the Constitution, the Budget Act 2020 is applicable. In the case that Budget Act 2020 is not approved by the Constitution, it must see the opinion of the court that it will be void (go back to start a new process) or vote again on some sections (may be delayed until mid-2020).

Theme Investment – (1) Accelerate the disbursement of the government budget in 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 Thai 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. We choose KKP (TP Bt80.00) and GPSC (TP Bt97.00).

Large firm financial statement announcement: 29 Jan – SCC / 30 Jan – PTTEP  

DTAC reported the earning 4Q19 at Bt501mn dropped 72%QoQ, but loss of Bt4.9bn during 4Q19, resulting in net profit in 2019 of Bt5.4bn, and turning from loss of Bt4.4bn in 2018. Also, the firm will pay dividend at Bt1.61/share (XD on 11 Feb 2020), with a dividend yield at 3.6% compared to the last closing price.

AWS expects the SET to be within the frame of 1,502-1,529 points (Support: 1,502, 1,491 and 1,475/ Resistance 1,518, 1,529 and 1,546)

 

Stock & Comment

PYLON

AOT  

PTTEP 

 

Pick of the day: PYLON

The 4Q19 is expected to grow YoY and QoQ, driven by (1) an increase in construction revenue after entering into Queen Sirikit Convention Center worth Bt600mn (2) declining SG&A cost, supporting the SG&A cost-to-Sale ratio to hit a level of 5.9% compared 3Q19 of 8.4% due to using technology to manage costs.

The construction works are returning into the bidding process. Yesterday (28 Jan), the cabinet approved the MRT Western Orange Line, Thailand Cultural Center to Bang Khun Non, worth Bt140bn. The auction is expected to be held in Oct 20 and the results might be announced at the end of 2020.

Hope the Court to consider the draft of the Budget Act 2020 , worth Bt 3.2 tn (with the investment budget in the infrastructure worth more than Bt 170 bn) today (29 January). If the Court agrees with the constitution, it will allow the Budget Act to be enforced immediately which will be a positive factor for the construction sector, especially bored pile contractor to be able to proceed with the construction and recognize revenue before the main contractor.

 

Weekly outlook: the price dropped after not passing the key resistance at Bt5.30 while the daily price outlook turned up to test the 5-day average line with the trading value close to the previous day. In addition, the price stands above the support of Bt4.68, seeing it to continue to test at Bt5.00. Stop loss point is at Bt4.60. (Resistance: 4.94 / 5.00 / 5.20; Support: 4.74 / 4.68)