Daily Strategy for Investors on April 16, 2020

Asia Wealth Securities (AWS) released an analysis for the trading session on April 16, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

Investment Overview – AWS sees that the Thai stock market is likely to decrease due to internal and external factors. Even the US leaders announced that the situation of COVID-19 has passed the most critical period, the stock market began to reflect the true impact, especially the sales force that started to be evident after announcing the performance of large banks in the US. AWS believes that the Asian stock market and the Thai stock market might experience a decline as well. Moreover, the negative factors from the falling crude oil price including the delay of the budget will be a negative factor for the Thai stock market today.

 

1) Crude oil prices are still pressured by rising production capacity and increased reserves – 4 main points that AWS got from the US Department of Energy Information Administration report (EIA) are a reflection of the weakness of the crude oil market, which are (1) US crude oil reserves increased by 19.2 million barrels (ending 10 (April) (2) EIA expects crude oil demand in 2020 to decrease 9%YoY. (3) US production capacity decreases to just 500,000 barrels per day from the end of 2019. Production has not yet been reduced to reflect Demand reduction in the country and (4) the oil depots of each country are almost full. AWS estimates that during the time each country has not reduced production capacity, it will make oil sellers rush to sell at a reduced price.  

2) US economic reports are still negative signals – Even US leaders announced the situation of COVID-19 has passed the most critical period. The US Department of Commerce revealed that retail sales fell by 8.7% in March (expected to fall 8%) after falling 0.4% in February, while the Fed reported 5.4% lower overall industrial production in the US in March, after increasing of 0.5% in February. Also, the National Association of Home Builders (NAHB) revealed that the homebuilder confidence index dropped 42 points to 30 points in April.

3) Economic stimulus measures which will subsidies to reduce the impact of COVID-19 are not as fast as expected – The Loan Act (Finance Act) is expected to enter the system around the end of May or beginning of June 2020. (Waiting to be published in the Government Gazette within the beginning of May), while the transfer of various bureaus ‘ expenses have to pass through the Cabinet which expected the money to be flown in the system around early June 2020. However, there is a positive factor from the COVID-19 situation in the country after the report of the increase in infection rates decreased by yesterday (15 April) found only 30 new infections, a total of 2,643 (increase rate up 1.2%) and the number of deaths increased by 2 cases, a total of 43 (death rate 1.6%).

 

Tomorrow (17 Apr), it is starting to announce earnings in the banking groups, such as KKP, AWS expects KKP will have a net profit of Bt1.38bn, a decrease of 17.8%QoQ and an increase of 12.4%YoY, due to the decrease in non-interest income. (Additional content in Sector Banking Group analytical review on 9 April)

    

Technical view – AWS expects the SET to move within the range of 1,226 – 1,253 points (with support at 1,226, 1,216 and 1,198 points and resistance at 1,243 1,253 and 1,271 points). Recommended stocks today are PTTGC, TOP, SAWAD, TCAP, and TISCO (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