Daily Strategy for Investors on May 19, 2020

Krungsri Securities (KSS) released an analysis for the trading session on May 19, 2020, indicating the essential events in the stock market as follows:

 

Market Recap

The SET Index gained 6 points (+0.4%) to close at 1,286 in Bt56b turnover, in-line with rallies in regional markets. The SET was supported by better-than-expected US Fed economic outlook, speculation in ENERG sector after oil prices jumped (on hopes of recovering demand as the world starts to exit from lockdown) and in COMM sector after Thailand continued to ease lockdown restrictions. Foreign investors were net sellers of Thai shares at Bt2,075m and bonds at Bt2,652m, and Net Short TFEX SET50 at 2,258 contracts.

 

Market Outlook

KSS has a positive view on the market today, expecting the SET Index to rise to 1,300 – 1,310 driven by Covid-19 vaccine hopes. Moderna claimed the initial vaccine trials were positive with vaccine candidates producing Covid-19 antibodies. Meanwhile, Jerome Powell assured the US that he has sufficient ammunition to support the US economy, if needed. Crude price jumped again to above US$32/Barrel amid hopes of recovering oil demand and Saudi Arabia cutting oil supply by additional of 1m bpd in June. However, SET valuation is stretched at 17x forward P/E (highest in TIP markets).

 

Investment Strategy: Selective Buy

1) Energy (PTT, PTTEP, TOP, PTTGC, SPRC) – benefit from recovering crude prices after Saudi Arabia agreed to cut oil production further 

2) Retailers (CRC, CPN, HMPRO, GLOBAL, COM7, DOHOME) – benefit from easing lockdown measures

Stocks to report better earnings in 2Q20: CKP, TASCO, EPG

 

Recommended Stocks

1) PTTEP (Trading/ IAA Consensus TP Bt100 vs Bt85.5 close) – benefit from recovering crude oil prices. PTTEP is the only stock in PTT Group that has not closed the gap (before the price war) yet (gap on Mar 8)

2) TOP (BUY/ TP Bt44 vs Bt48) – earnings have bottomed out. With oil prices now at above $25/bbl, it should book a stock gain in 2Q20 (vs stock loss in 1Q20). Easing lockdown measures will support a recovery in demand and GRM in the next phase.