Daily Strategy for Investors on January 31, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on January 31, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas :

The World Health Organization (WHO) announced the epidemic of a new strain of coronavirus as a public health emergency in the world in order to open the way for cooperation in stopping the epidemic. AWS has a positive view on this issue.

Latest, closing crude oil prices dropped significantly due to concerns about the epidemic virus, but AWS believes that the WHO announcement will reduce concerns about the crude oil market. This morning, the most recent WTI crude oil contract (31 Jan, 8.00 a.m.) is at USD53.28 per barrel, up by USD1.14 (+2.19%). We view positive on PTTEP (TP Bt147.00) and PTT (TP Bt52.00).  

Thai baht continued to weaken, this morning at Bt31.16/US dollar, depreciation of more than 4.7% from the end of 2019 so it will negative to overall, but focus on the stocks that obtained the benefit from bath depreciation according to the theme investment.

Must follow the case of the Ministry of Tourism and sports preparing to propose the Economic Ministers’ committee about Visa On Arrival (VoA) to temporary Chinese tourists which will be cancelled or not, but the economic cabinet has not yet obtained the report. Also, Anutin Charnwirakul Vice Prime Minister and the Minister of Public Health will be chairman of the emerging committee meeting today (31 Jan) to propose this measure, if there is a proposal will affect the investment in tourism related groups (Hotel business and aviation business)  

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) (3) Global trade has eased and Thai baht depreciates. AWS chooses HANA (TP Bt39.00), TU (TP Bt18.40) and CPF (TP Bt33.00) and (4) High dividend yield and defensive stock. AWS chooses KKP (TP Bt80.00) and GPSC (TP Bt97.00).

Earning Results Analysis – PTTEP (BUY, TP Bt147.00) The firm reported the earning in 4Q19 at Bt11.6bn or increased 5.5%QoQ and increased 31.5%YoY so the firm had earning in 2019 at Bt48.8bn increased 34.8%YoY

AWS expects the SET to be within the frame of 1,513-1,531 points (Support: 1,522, 1,519 and 1,513/ Resistance 1,527, 1,531 and 1,537)  

 

Stock & Comment

CPF   Pick of the day

DIF  (IAA Consensus Bt16.40)  

KKP  (AWS TP Bt80.00)  

 

Pick of the day: CPF

AWS expects 4Q19 normalized profit to be at Bt3.5bn, up by 75%QoQ, partly due to the continuous high price of pork in Vietnam since November 2019 after the pandemic of Africa Swine Fever (ASF), which is 33-45% higher than the company expected, is supporting factor for CPF.

Pork price in Thailand began to recover. (Data from the Office of Agricultural Economics) Pork price in January 2020 (MTD) stood at Bt76.00 per kilogram, up by 10%MoM and up by 9%YoY.

HyLife, a fully integrated pork business in Canada (CPF holds 50.1%) completed on 29 Dec 2019, resulting in revenue recognition in 1Q20.

CPF got a positive factor from the depreciation of Thai baht. At present, (29 Jan 2020) Thai baht depreciated 2.47%YTD at Bt31.03 per USD. (The proportion of export revenue of CPF is 6% of total revenue)

 

Weekly outlook: the price continued to swing up in the uptrend framework, despite the sell-off last week. The price can still stand above the support of Bt29.75, while the daily outlook is sell-off to low this week at Bt28.75 and have the buying back to test the resistance at Bt30.50 again. AWS looks at the price to pass this resistance and go up to test the next resistance at Bt31.00 to create a 52-Week High. Stop loss is at Bt28.50. Today’s support – resistance is as follows (Resistance: 31.00 / 32.00; Support: 29.75 / 28.75).