Daily Strategy for Investors on February 7, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 7, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Crude oil prices might move in a narrow range due to the fact that investors wait for clarity from OPEC after the Joint Technical Committee (JTC) of the OPEC and its partners ask OPEC to cut production by another 600,000 barrels per day. However, the official meeting of the OPEC will take place again on 5 – 6 Mar.

2) AWS sees the possibility of 3 cases, which are 

(1) there is no new resolution, which will reduce the production capacity by 1.7 million barrels per day that is the same resolution ending March 20, resulting in a negative factor to crude oil prices. 

(2) OPEC has resolved to reduce the production capacity by 600,000 barrels per day, ending March 20 or expanding just June 20. We believe that oil prices will remain stable at US$60 per barrel. 

(3) OPEC has resolved to reduce the production by 600,000 barrels per day and to extend the said policy. Such circumstances will make crude oil prices recover.

3) Thai stock market rose 40 points (+2.7%) in the last 3 days (driven by positive factors from Chinese and Thai stimulus measures and the MPC’s policy rate cuts) after the index has declined on the first day of the week. However, aws believes that the market is still waiting for new positive factors, especially domestic factors regarding the Budget Act for 2020.  

4) Domestic factors that need to monitor are the resolution of the Constitutional Court regarding the Budget Act for 2020 enacted correctly according to the Constitution or not on 7 Feb 2020. AWS looked at 3 possibilities: 

(1) In the worst case, the court has voided the whole act.  

(2) In the base case, the court has resolved to re-pass some sections.

(3) The best case, the court decided to lose only the point that are inserted in the card instead which the voting result approve 253 to 0 votes (abstained 196 votes), so it would make Budget Act for 2020 to become effective.

5) ADVANC reported earning 4Q19 at Bt7.0bn (+3%YoY but -20%QoQ) so the firm had profit in 2019 at Bt31.2bn (+5%YoY). Also, the firm announced to pay 2H19 dividend at Bt3.56 per share (XD on 19 Feb 20) and AWS forecasts the dividend in 2020 at Bt8.21 per share (Div. 4.0%).

 

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) 

4) High dividend yield and defensive stock. AWS chooses KKP  (TP Bt80.00) and GPSC (TP Bt97.00).

 

AWS expects the SET to be within the frame of 1,523-1,548 points.

The SET has support points of 1,530, 1,523 and 1,516 points and resistance points of 1,543, 1,548 and 1,555 points.