Daily Strategy for Investors on March 12, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 12, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The Dow stock market dropped by 1,464.94 points (-5.9%). WTI crude oil prices were down USD1.38 (-4.0%) and gold prices were down by USD18.00 (-1.1%).

2) Concerns about the situation of COVID-19 virus returned to pressure the investment overview again after the World Health Organization (WHO) issued a statement that COVID-19 virus has entered a worldwide pandemic after it has spread to many countries in different regions, especially in Italy, Iran and South Korea.

3) The Bank of England (BOE) announced to cut interest rates to 0.25% (formerly 0.75%) to reduce the economic impact of the UK from COVID-19 virus. While it needs to monitor the European Central Bank (ECB) meeting today (12 March), the market expects the ECB will cut interest rates by 10bps to -0.6%.

4) Another interesting central bank meeting is the Fed’s Monetary Policy Conference (Fed) on 17-18 March 2020 by the CME Group FedWatch Tool indicates that investors expect the Fed to have a 56% trend to cut interest rates from 1.00% to 0.00% – 0.25% (formerly 1.00% – 1.25%) and with a trend of 44.3% to cut interest rates 0.75% to 0.25% -0.50%.

5) Crude oil prices continue to fluctuate after Saudi Arabia is planning to increase its production capacity to 13 million barrels per day (MBD) more than the market expected at 12MBD, causing oil prices to be pressured by supply factors.   

 

Today, AWS expects the SET to be within the range of 1,213- 1,256 points (with support at 1,232 1,213 and 1,188 points and resistance levels at 1,256 1,275 and 1,300 points).

 

Banking Sector – AWS expects that if the MPC cuts the policy rate by 0.25% or 0.5%, it will affect the performance of the 8 banks that AWS does coverage about 4.1% and 6.4% respectively, with the SCB, BBL and KTB being the most affected, while the measures to help debtors, AWS estimates that it will have the most impact on TMB. Even though the banking sector has negative factors, we give a neutral weight to our investment by assessing the bank’s target price with reference to PBV at -2 S.D. but the price has dropped a lot. AWS chooses KKP as a Top Picks, recommend “BUY” with target price at Bt80.00

 

TK – AWS still recommends “BUY”. AWS has revised up our net profit forecast for 2020 by 19%, causing the EPS in 2020 will grow by 4.4%. Although our overall credit is expected to be reduced by 10%, the company has good control over costs with cost-to-income decreased to 52.1% and credit cost dropped to 11.4%, so the firm still attractive for investment.

 

Theme Investment: 

1) Accelerate the disbursement of government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.40), and KKP (TP Bt80.00). 

2) Government stimulus measure, AWS favours AOT (TP Bt79.00), CPALL (TP Bt85.00), BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

3) Global trade has eased, AWS chooses CPF (TP Bt33.00). 

4) Interest rates cut. AWS chooses ORI (TP Bt9.00), SPALI (TP Bt20.00), MTC (TP Bt73.00), KKP (TP Bt80.00), and TISCO (TP Bt112.00). 

5) High Dividend, AWS chooses KKP (Div.Yld.8.9%), QH (Div.Yld. 7.5%) TISCO (Div.Yld. 6.1%) BAFS (Div.Yld. 4.1%) and RATCH (Div.Yld. 4.1%).