Daily Strategy for Investors on April 24, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on April 24, 2019, stating that SET yesterday swung in a narrow range driven by buying pressure on energy stocks PTT, PTTEP and media BEC and VGI.  However, selling pressure was seen on power plants BGRIM and GULF.

The index closed at 1,671.3 points (-2.1 points) with a trading value of THB 37 billion, (THB 47 billion the previous day). Foreign investors continued buying Thai shares by THB 594 million, institutional investors net bought by THB 291 million. There were net long on SET50 index future by 5,993 contracts.  

 

Investment Theme: SET sees a brief correction, a chance to accumulate stocks
The SET index MTD rose more than 35 points (+2.1%), driven by the energy sector, thanks to some improvements in US and China reflected by better than expected key economic data like PMI and GDP. Especially for China as it started to launch major economic stimulus measures with an aim to maintain its economic growth of 6.0-6.5%. The sector also benefits from strong rebound in crude oil prices after the US lifted Iran sanction by letting 8 countries to import oil from Iran.

Recently, the SET is approaching the monthly resistance levels that Maybank previously assessed. It is likely to correct in a range of 1660-1680 to wait for 1) 1Q19 earnings results of the energy and retail sectors, 2) The results of the trade negotiation between China and US in May. 3) Outcome of the Constitutional Court verdict on the party list MPs seats calculation formula today. If the court refuses to consider the request, the EC must be the one who consider it. But if the court accepts, the official announcement of the MP election results may postpone from May 9.

This will limit the market’s upside in the near term. Maybank divides it into two scenarios: 1) Constitutional court interprets Article 128 (5) no contrast with 91 (2), (4), there may be more than 25 parties to entitle for the MP seats as the EC stated previously, but 2) if it has conflict, the SET may swing in a range to wait for other positive factors.

 

Investment Theme in April
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. HOLD PTTEP, BEM and BJC.

 

Big Issue
1) The Election Commission has accused Future Forward leader Thanathorn Juangroongruangkit of violating MP rules on media shareholding. He has 7 days to clarify.
2) Democrat party to hold a general meeting to vote for new leader and committees.
3) FTI reported auto exports hit 18 months high in March.

 

Stock Pick & Trading Idea
Speculate stocks with 3 characters like BPP with the target price at THB 6.50/share, undemanding valuation, strong earnings, the sector’s laggard. TKN, earnings have bottomed out with attractive valuation, good for accumulation. MINT with target price at THB 42/ share, The core earnings should recover strongly from 2Q19 onwards, share price dips is good for accumulation. (Follow details on full research).

 

Technical View
If slips through 1665, a brief correction at 1655: The index corrects for the fourth day, despite buying pressure on the energy sector remains. Still, it was unable to breakout 1680 and hold above it. In the short term, looking at the 60 minute chart. Maybank finds two support levels; 1665 and 1655. Investors should consider that if it maintains above 1665, it has a chance to go up and breakout 1680 soon. But if it dips below 1665, it is likely to slide and form a base at the support of the uptrend channel at 1655 (EMA 200 Day)

 

Investment strategy
1) Investors with stocks, if it dips below 1665, lock profit or if rebounds to test 1680+/-, partly take profit for the next trading round.
2) Without stocks, for risk takers, gradually buy stocks at support levels 1665 for a rebound trading but if it dips below 1655, halt your trading.

Maybank sets a support line at 1655 points and 1665 points while setting a resistance line at 1680 points and 1690 points.

 

Keep An Eye On
1) US reports GDP on Apr 26.
2) The Constitutional Court to rule on formula to calculate party-list MP on Apr 24.