Daily Strategy for Investors on February 19, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 19, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Gold price has continuously increased to over USD1,600 per ounce, reflecting the ongoing concern for the rapid spread of COVID-19 virus. As of the latest data this morning (24 Jan to present), there are a total infected people of 75,198 cases (98.7% are in China) and 2,009 deaths, with daily death rates increasing at 6%, down from the previous week at 10% – 13% and there were 14,555 recovered patients.

2) Recently, Thai baht this morning stood at Bt31.185 per USD, flat from the previous day.

3)  BEM – The cabinet has approved the draft amendment of the Expressway Concession Agreement between EXAT and BEM by expanding the concession in exchange for dispute resolution, totaling Bt58.9bn, consisting of (1) the Second Stage Expressway, part A, B, C (expired contract on 29 February 2020) to be extended by another 15 years and 8 months (2) the Second Stage Expressway, part D (the contract expires on 22 April 2027), to be extended by another 8 years and 6 months, and (3) Bang Pa-in – Pak Kret Expressway (C+) (Contract expires on 27 September 2026) to be extended by another 9 years and 1 month. All new extending concession contracts will end on 31 October 2035. Revenue sharing for the Second Stage Expressway, Part A and B, EXAT has 60% and BEM has 40%. For part C, D and C+, BEM will recognize revenue in 100%. AWS is optimistic about BEM. This issue reduces concerns about investment in BEM. Recommend “BUY” with a target price of Bt12.50.  

4) MTC – reported 4Q19 earnings of Bt1.1bn, up 4.7%QoQ and 12.8%YoY due to an expansion branch strategy. As a result, the FY2019 net profit stood at Bt4.2bn, up 14.1%YoY. Meanwhile, the company announced to pay an FY2019 dividend of Bt0.30 with an XD date on 29 Apr.

5) BAM – Stock price dropped 7.2% in the week due to concerns over TRIS’s BAM rating of A- (Stable), while Fitch gave AA- (negative), but AWS expects that Fitch will announce the new rating at the end of Feb 2020, causing the market to be worried that Fitch will have downgrade rating equal to TRIS (down 3 levels) so it will affect to the cost of fund around 10bps-20bps and affect to net profit in 2020 around 1.5-2.0%. From this point, AWS sees that the falling stock price has already reflected concern. It is also the point that the market has been aware of the information before IPO so that BAM back to attract investment. In the technical view, the share price is being sold for short term profit but stands above the support line at Bt27.50 and then starts buying slightly back. Recommend “Gradually Buy” around the support level at Bt28.00/27.50 .

AWS selects stocks in the theme investment of accelerating the disbursement of government budget which AWS expects the 2020 budget act to be able to be presented to His Majesty next week and be able to implement the budget act in March 2020.

 

Today, interesting of 4Q19 and 2019 financial statement announcement: SC, RATCH and CPALL

Today’s analysis – Earnings Results: MTC // Key Takeaways: GL

Today, AWS estimates the SET to be in range of 1,509 – 1,520 points (Support: 1,509 1,504 and 1,497 points / Resistance: 1,515 1,520 and 1,527 points).

 

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, AWS favours 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)