Daily Strategy for Investors on March 24, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on March 24, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) Dow Jones dropped 582.05 points (-3.04%), while WTI crude oil price was up 73 cents (+3.2%) and gold price increased USD83 (+5.59%).  

AWS recommends selective stocks that might benefit from the COVID-19 (antivirus stock..COVID -19), as well as stocks in High Dividend according to our theme investment.

2) Concerns about the global economy are a factor to pressure the investment after Reuters reported the IMF’s estimates that the spread of t he COVID-19 might cause the global economy to recession in 2020 and will affect the economic overview more than in the past, the hamburger crisis in the years 2008 – 2009. However, the IMF still believes that the global economy will recover in 2021.  

Those are in line with important economic numbers, already reflecting the impact from the COVID-19. This week, AWS needs to keep an eye on the US 4Q20 GDP report which might come out lower than expected at 2.1%QoQ, including the disclosure of the weekly number of welfare applicants in the US that is expected to increase significantly.

3) The Federal Reserve (Fed) adds stimulus measures by announcing the purchase of bonds according to quantitative easing (QE) with unlimited amounts of money to cope with the situation of COVID-19 which was the largest market intervention that the Fed has ever undertaken. These factors increased the price of gold and government bond yields decreased.

4) Local factors today (24 March) follow up on the Cabinet meeting on measures to help citizens and businesses affected by COVID-19.

 

Today’s Analysis: 

1) HANA (HOLD, TP Bt22.00) – The 2020 overview of the semiconductor market was also affected by the slowing purchase orders while the automotive industry continued to shrink according to economic conditions. AWS revises down FY2020 net profit by 27% from the previous estimate, which makes AWS expect the FY2020 net profit to decline by 7.2%YoY.

2) AMATA (BUY; TP Bt16.60) still not seeing the impact from COVID-19 after the company reported the presales in 2M20 at 60 rai, which has not been directly affected by COVID-19, but AWS believes that the year 2020 will still have an impact so AWS reduces our land transfer projections to 575 rai to reflect the increased business risk. From this point, the net profit in 2020 will drop 9% from previous estimate and drop 14.2%YoY. Also, the firm announced an additional dividend of 2019 for Bt0.25 per share (XD 22 April) and AWS expects FY2020 dividends at Bt0.39 per share (Div.Yld. 4.2%).

3) AWS expects the SET to be within the range of 995 – 1,037 points (with support at 1,010 995 and 967 points and resistance levels at 1,037 1,052 and 1,080 points).  

 

Theme Investment:

1) Antiviral stocks . COVID -19, AWS chooses TU (TP Bt18.40) GFPT (TP Bt12.00) CPF (TP Bt33.00) TFG*(TP Bt5.35) BJC*(TP Bt48.00) CPALL (TP Bt85.00) and TQM*(TP Bt69.00). 2) Accelerate the disbursement of the government budget in 2020. AWS chooses CK (TP Bt22.00), SEAFCO (TP Bt7.30), WHA (TP Bt4.20), and KKP (TP Bt80.00). 

3) Government stimulus measures, AWS chooses AOT (TP Bt79.00) CPALL (TP Bt85.00) BEM (TP Bt12.50) and HMPRO (TP Bt19.00). 

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.11.3%), QH (Div.Yld. 8.7%), and DIF (Div.Yld 8.2%),