Daily Strategy for Investors on February 18, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 18, 2020, indicating the essential events in the stock market as follows:

Investment Ideas:

1) The Chinese central bank announced 3 new stimulus measures: (1) lowering the medium-term lending facility rate (MLF) by 10bps to 3.15% for commercial banks (2) providing loans to commercial banks in the amount of 200 billion yuan (about US$29bn) and (3) injecting 100 billion yuan (about US$14.3bn) into the financial system.

2) Moody’s Investors Service releases the latest economic report. Moody reduced China’s FY2020 GDP forecast to 5.2% (formerly 5.8%) due to the impact of the covid-19 virus outbreak, affecting global tourism business during the 6M20 and short-term supply chain disruption.

3) The NESDC reports Thai GDP in 4Q19 grew by 1.6%YoY, down from 3Q19 which grew by 2.6%QoQ, the lowest in 21 quarters, resulting in the overall Thai economy growth of only 2.4%YoY, expanding the lowest level in 5 years. (2018 grew by 4.2%YoY)  

4) The NESDC’s Economic Perspectives on GDP by 2020, it is expected that Thai GDP in 2020 will expand at a reduced rate of 1.5% – 2.5% (formerly 2.7% – 3.7%) due to the effects of the Covid-19 virus, drought and delayed budget disbursement. The positive factors come from the reduced risks of (1) trade negotiations between the US and China and (2) the Brexit without agreement. The NESDC expects the investment might recover from a low base in 4Q19 with the expected export value to increase by 1.4%, private consumption growth by 3.5%, and total investment growth of 3.6%.

5) The Senate approved the FY2020 Budget Act, leaving only the legal process and verifying the accuracy within 7 days before being presented to His Majesty. AWS expects to be able to implement the Budget Act in March 2020.

6) TU revealed the performance of 4Q19 at Bt1.1bn, down 23%QoQ and 1%YoY, but overall profit in 2019 was still at Bt4.5bn, up 45%YoY. The firm announced a dividend of 2019 at the rate of Bt0.22 per share (XD on  2 March and Payment Date on 22 Apr)

7) PTTGC reported the earnings in 4Q19 at Bt374mn dropped both QoQ and YoY. Also, the firm had earnings of 2019 at Bt1.17bn, down 71%YoY. The firm announced to pay 2H19 dividend at Bt1.0 per share (XD on 28 Feb and Payment Date on 28 Apr)

Theme Investment: 

1) The tendency of oil prices to recover, posting low downside. AWS chooses PTTEP (TP Bt147.00) and PTT (TP Bt52.00)  

2) Accelerate disbursement of government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt5.20), and KKP  (TP Bt80.00). 

3) Government stimulus measure, we favor 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) 

5) Interest rates cut. AWS chooses ORI (TP Bt10.00), SPALI (TP Bt20.00), MTC (TP Bt75.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00).

The banking sector will announce a dividend payment gradually. This week, there is BBL (AWS estimates the 2H19 dividend of Bt4.50 per share, Div.Yld. of 3.1%) and SCB (AWS estimates the 2H19 dividend of Bt4.00 per share, Div.Yld. 4.0%)

AWS estimates the SET to be in range of 1,519 – 1,537 points (Support: 1,524 1,519 and 1,514 points / Resistance: 1,532 1,537 and 1,541 points).