Daily Strategy for Investors on February 21, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on February 21, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The CME Group ‘s  FedWatch weighs the possibility that the Fed will cut interest rates at least once in 2020, while the interest rate futures indicates that if the Fed cuts the rate as soon as possible, it should occur in June or July, but not later than in September.

2) Concerns about the spread of COVID-19 virus reflected by the recent gold price closed at USD1,620.50 per ounce, up USD8.70 (+0.5%), the highest closing since February 2013, after South Korea has revealed the first deaths of  COVID-19 virus in the country. Japan confirmed that two passengers on the Diamond Princess Cruise died (a total of 3), while Beijing found 36 new COVID-19 infected people, causing anxiety that there may be more people infected in the Chinese capital.

3) Crude oil prices continue to increase after the EIA reported US crude oil reserves adjusted up less than the market expected, supporting our theme investment in oil prices. AWS still chooses PTTEP and PTT as outstanding shares.

4) Thai baht has continued to depreciate. Recently, Thai Baht stood at Bt31.455 per USD, which is a positive factor for PTTEP. Every a depreciation of Bt1.00, PTTEP’s net profit in 2020 will increase by Bt3.34bn, up 7.4%, AWS forecasted net profit of Bt44.9bn under the assumption of the baht at Bt30.00 per USD and the Dubai crude oil price at USD60.00 per barrel.

5) BEM – Yesterday (20 Feb) EXAT signed a contract with BEM to officially extend the concession for 15 years and 8 months in exchange for all disputes totaling Bt58.9bn. The details of concession contract extension are as follows:  (1) Second stage expressway (Part: A, B and C which will expire on 29 Feb 2020) will extend for 15 years 8 months. (2) Second stage expressway (Part: D which will expire on 22 Apr 2027) will extend 8 years and 6 months and (3) Bang Pa In- Pak Kret expressway (Part: C+ which will expire on 27 Sep 2026) extends 9 years 1 month. To sum up, all the new concessions will end on 31 Oct 2035. For Second expressway (Part A and B), the EXAT will obtain the revenue sharing at 60% and BEM at 40%, while C, D and C+, BEM will obtain the revenue 100%. From this point, AWS has positive for BEM and recommend “BUY” with a target price at Bt12.50 .

 

SET requires CRC to calculate in SET50 and SET100 indexes on 25 Feb 2020 which BPP will be revoked from SET50 and AAV will be revoked from SET100 according to the criteria for securities selection as SET is a designator.

PTT reported the earnings of 4Q19 at Bt17.4mn, down 13.9%QOQ and 10.7%YoY, so the firm had earning in 2019 at Bt93.0bn, down 22.3%YoY. Also, the firm announced to pay 2H19 dividend at Bt1.1 per share (XD 4 Mar).

Interesting 4Q19 and 2019 financial statements announcement today: BANPU, BPP, SPRC, EA and GULF.

AWS expects the SET to be within the range of 1,483 – 1,502 points (with support at 1,483 1,474 and 1,462 points and resistance levels at 1,493 1,502 and 1,514 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).