Daily Strategy for Investors on April 15, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on April 15, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment overview –  today, AWS sees that Thai stock market still has an opportunity to increase, but with a limited scope. Thai stock market has increased by more than 11% in the past 1 month. AWS believes that there is a chance of short-term profit taking from (1) the share price in the main groups that has recovered in the past, but 1Q20 earnings are not good. (2) Economic statistics that still indicate weakness in the 6M20 period. (3) The  COVID-19 situation that still needs to be closely monitored and (4) declining crude oil prices negatively affects the energy group, but positive for TASCO and EPG.

 

1) Crude oil prices declined before the measure to cut production capacity in May – The latest crude oil prices were still in a downtrend. AWS still has the same view and believe that the price war is not yet ended, despite the conclusion of the reduction of crude oil production producing countries around the world. In the short-term, each country still produces oil at a high rate before the measure to reduce production capacity, while Saudi Arabia has an aggressive plan to compete for market share from the announcement of a reduction in the export price of crude oil in May, reflecting the image of the crude oil market is still exposed to risks from the price war that will be a factor to pressure stocks in the energy sector today.

2) IMF expects the year 2020 to be negative 3% – IMF expects the World GDP in 2020 – 2021 to be at -3% and 5.8% respectively, compared with the previous forecast that FY2020 will grow by 3.3% and FY2021 grow by 3.4%. Negative factors come from the COVID-19 pandemic, resulting in the most severe financial crisis since the Great Depression in the 1930s, while the year 2021 will return to expand more than previously anticipated due to the low base in 2020.

3) US economic data are still negative – The US Department of Labor reported the March import price index fell by 2.3% and continued to decline from 0.73% in February 2020. The export price index for March decreased by 1.6% and continued to decrease from February 2020 which decreased by 1.1%. The import price index and exports in March 2020 were the largest decrease since January 2015.

4) China reported better-than-expected export numbers – The China’s export report in March dropped by 6.6%YoY (Consensus estimated -14%YoY), while imports decreased by 0.9% (Consensus estimated -9.5%YoY. ). This made China still have a trade surplus of 19.9 billion yuan. The economic issues of China that must be monitored this week are the GDP figures during 1Q20 (expected to be reported on Friday), which the market is estimated to be at  -6.5%YoY and -9.9%QoQ.

5) Telecom shares have declined in contrast to the SET after the NBTC requests cooperation in reducing service fees. AWS sees it might not have much impact on revenue from the case of the NBTC calling mobile operators to ask for cooperation to help reduce service fees by 10% – 30%. AWS estimates that the said service fee reduction measures have no clear details, especially the subject of the time frame. Preliminarily, AWS has estimates that if there is a 15% reduction in service fees for 1 month, it would affect only 1% – 2% of FY2020 revenue.

6) Request to cut electricity tariffs by IU customers by 3%, not only affecting the net profit in 2020, but the share prices of some power producers have also decreased which negative response to the case that some industrial customers submitted a request to reduce electricity bills by 3% (up from the original Energy Regulatory Commission ordered to reduce 3% during April – June). If AWS considers according to the framework that the operators of 3% increase electricity tariffs during this period, it will affect GPSC BGRIM and GULF’s 2020 net profit by 3%, 2% and 1% respectively. However, each company is still considering the said matter.

 

Technical view – Today, AWS expects the SET to move within the range of 1,243 – 1,268 points (with support at 1,255, 1,243 and 1,229 points and resistance at 1,268 1,281 and 1,295 points). Recommended stocks today are CPALL, SCB, STA, KBANK, and KCE (follow in the Technical Express report).

 

Theme Investment: 

1) Slightly affected stocks from COVID-19, AWS chooses TU, GFPT, CPF, TFG, BJC, CPALL, and TQM. 

2) Down side limiting and strong cash flow, AWS chooses BGRIM, EGCO, GULF, GPSC, and RATCH. 

3) Stocks which obtained the benefit from work from home measure, AWS chooses ADVANC, INTUCH, DTAC, TRUE, DIF, and COM7. 

4) Stocks for long term investment (DCA), AWS chooses ADVANC, AOT, BDMS, and DIF. 

5) Economic stimulus measures and the accelerated disbursement of the government budget for the year 2020, AWS chooses CK, SEAFCO, WHA, KKP, AOT, CPALL, BEM, and HMPRO. 

6) SSFx target stock, AWS chooses PTT, PTTEP, BJC, CPALL, AOT, EGCO, INTUCH, ADVANC, BAM and BDMS.

7) Defensive and high dividend, AWS chooses KKP (Div.Yld. 15.9%) QH (Div.Yld. 9.3%) DIF*(Div.Yld 8.2%) TISCO (Div.Yld. 8.7%) INTUCH*(Div.Yld. 6.2%) TTW*(Div.Yld. 4.8%) and RATCH*(Div.Yld. 4.2%) *IAA Consensus