Daily Strategy for Investors on June 4, 2020

Krungsri Securities (KSS) released an analysis for the trading session on June 4, 2020, indicating the essential events in the stock market as follows:

 

Market Recap

The SET Index soared 22 points (+1.6%) to close at 1,374 (3-month high) in Bt70b turnover, inline with global rallies. The rally was driven by economic recovery hopes as the world gradually exited from lockdown, and improving China, US and EU PMI in May. Gains were led by Energy counters. Foreign investors were net buyers of Thai shares at Bt2,090m and bonds at Bt5,893m, and Net Long TFEX SET50 at 3,186 contracts.

 

Market Outlook

KSS is positive on the market today, expecting the SET Index to rise to test 1,390 1,400 as investors believe the economy has bottomed-out and will continue to recover from here, supported by the easing of lockdown measures and government stimulus packages. Moreover, improved China Services PMI data in May (55.0) and better-than-expected US ADP employment change (-2.76m positions) will attract more funds into the market (Net Buy position Bt3.5b MTD).  

 

KSS suggests to keep eyes on OPEC+ meeting on decision to extend supply cut.

 

Investment Strategy: Selective Buy

1) AMATA and WHA – Ministry of Transport will conclude the EEC Phase 2 project in one month.

2) Energy (PTT, PTTEP, TOP, PTTGC, IRPC, SPRC, IVL) – oil price is firmly above US$36/Barrel

3) Stocks projected to report earnings growth in 2Q20 – CKP, TASCO, STA, RS

4) Stocks that might be added to SET50 ( BPP, TTW ) and SET100 (ACE, DOHOME,  RBF, SIRI , SISB, TVO, WHAUP)

 

Recommended Stocks

1) PTTGC (BUY/ TP Bt50 vs Bt46.5 close) – earnings have bottomed-out and easing lockdown measures would boost demand for petrochem and refinery products. PTTGC is cost-competitive because it is a gas-based producer and its costs will rise slower than peers.

2) HMPRO (BUY/IAA Consensus TP Bt16.5 vs Bt15.1 close) – reopening of shopping malls and construction material stores will boost revenue. 2Q20 earnings could beat the expectation, as KSS currently projects a recovery starting from 3Q20.