Daily Strategy for Investors on January 30, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on January 30, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

FOMC remained the fed fund rate unchanged at 1.50 – 1.75% in line with the market’s expectation.

The short-term investment stumbled after the Court accepted the budget bill for the fiscal year of 2020. AWS views it as a short-term impact on theme investment stocks, especially stocks that benefit from accelerating government disbursement (CK SEAFCO CPALL and KKP) after the court ordered to accept the request and let the petitioner know and give related parties to submit the clarification in writing with relevant information by 4 February.

AWS looks at two possible ways: (1) in the case that the FY2020 Budget Bill is unconstitutional, it must see the opinion of the court that it will be void (Go back to start a new process which may lead to less than 4 months of spending time) and (2) vote on some sections (May cause the delay of disbursement until April – May 2020)

Monitor the outbreak of the new coronavirus. Although the situation has been resolved in the short-term, it has, however, not yet clear. Investment signals highlight in the group that has benefited from the depreciation of Thai Baht according to the theme investment that AWS recommends. Recently, Thai Baht has depreciated to Bt31.06 per USD.

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).    

ADVANC (BUY; TP 250.00) The firm has notified the SET about the outcome of the arbitral award in the case of prepaid and roaming dispute which was decided by 3 to 2 points, the firm must pay Bt31.1bn with 15% interest per year since 30 Nov 2015 to TOT. Comment: AWS expects this issue will pressure the stock price in the short term, but the award of arbitrator is not yet final which the firm will file a petition with the Central Administrative Court within 90 days. Also, this issue does not affect the firm’s financial statement and liquidity.

AWS expects the SET to be within the frame of 1,515-1,538 points (Support: 1,522, 1,515 and 1,504/ Resistance 1,531, 1,538 and 1,548)

 

Stock & Comment

MTC  

DIF   

GPSC 

 

Pick of the day: MTC

The 4Q19 earnings are expected to make new high continuously due to (1) continuous loan growth. AWS expects loans at the end of 2019 to be at Bt58bn or up by 21.2%YoY and 7.0%QoQ from branch expansion strategy. (2) AWS expects higher yield spread from lower financial costs after twice interest rate cuts in the 2H19 (3) for expenses, AWS expects SG&A to decrease QoQ in which we evaluate the ratio of SG&A-to-Sale Ratio to fall back to 45.5% compared to 49.3% in the 3Q19 due to the record of employee incentives which are one-time expense.

Expect to continue growing in the 2020. The company set the 2020 loan growth target at 25-30% with a target to expand to 4,500 branches or up from 3,900 branches in 2019. In addition, financial costs are expected to revise down from the issuance of new debentures to replace the existing debentures. It will drive yield spread (at 19.0% in the 3Q19).

MTC Technical view – Weekly outlook: the price runs trend in line with the uptrend along the weekly EMA20 line in accordance with the outlook which is swinging along the EMA100 line. Yesterday, there was a buy signal from the Higher High. AWS recommends waiting to buy at the support level of Bt64.25 or if it could stand above Bt65 on the day, recommend to buy at Bt65 at the end of the day. It is expected to swing up to test the previous resistance level at Bt67.2 5. Stop loss is at Bt60.00. Today’s support – resistance are as follows (Resistance: 66.50 / 67.25; Support: 64.25 / 63.50).