Daily Strategy for Investors on May 28, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on May 28, 2019, stating on the SET on Monday technically rebound driven by strong buying pressure on domestic play stocks led by CPALL, MTC, KTC, AEONTS and AMATA.
The index closed at 1,624.8 points (+10.7 points) with a trading value of THB 51 billion, (THB 55 billion the previous day). Foreign investors switched to net sell Thai shares by THB 321 million, institutional investors net bought by THB 1.8 billion. There were net long on SET50 index future by 18,965 contracts.

Investment Theme: Eyes on domestic play stocks (retailers/finance)
Maybank doesn’t have a positive view on domestic political issue, the concerns about the deadlock are likely to decline a bit after the parliament has elected former PM Chuan Leekpai (Democrat) as the speaker of the house with 258:235 vote, with Suchart Tancharoen (PPRP) and Supachai Phosu (Bhumjaithai) as deputy speakers of the house.
Yesterday, PPRP leader Uttama Savanayana has officially invited Democrat and Bhumjaitahi parties to join the coalition. What to follow next is the vote for Prime Minister in the next few weeks.
Initially, Maybank forecasts the vote of the PPRP side should be around 255+/-, which is enough to vote to pass the law. However, in the long term administration, this is still a risk that investors should keep an eye on.

In the short term, Maybank sees this issue as a mild positive to investment sentiment focusing on domestic play sectors. Fundamentally, Maybank expects the 2Q19 earnings of retailers, finance and construction stocks may see an average growth of about 10-20% while the energy, petchem, and refineries (excluding PTTEP) may see a decline YoY, due to trade war impact through lower spreads, GRM (high base in 2Q18 such as IVL, PTTGC and IRPC.)

Investment Theme
Maybank estimates the SET index to swing in a range of 1,630 +/- points (unclear on trade war issue). Maybank recommends domestic play stocks.

Big Issue
1) China’s industrial profits fall in first 4 months to 3.4%. China’s Commerce Ministry set to raise tariffs on imported Phenol from US, EU and other countries including Thailand, effective from May 27.
2) PTTGC to buy back shares, no more than THB 3 billion worth, starting June 11 – Dec 9. BTSGIF suspends dividend payout.

Stock Pick and Trading Idea
For high-risk takers, recommends trading buy domestic play stocks. Recommend SAWAD (target price Consensus THB 55). The share is trading at PER19 of 18x (MTC 23x). The market expects earnings to grow  28% this year. It is waiting for BFIT to increase capital and it is likely to tender offer (if BFIT shareholders would not increase their rights, making SAWAD to hold more than 50% of shares). Details should be clear in June.  

Technical View
SET manages to hold above 1620, trend switched to sideways: The SET index continued to technically rebound driven by buying pressure on big caps in several sectors such as energy, retailers, property, and transports. The index, therefore, managed to close above the neckline 1620. This is the first day of the month that rebound continues from the previous days. Currently, the index has switched from downtrend to swing sideways in a range of 1620-1655 (EMA200 Day). Investors are recommended to trade in this range

Investment strategy
1) Investors with stocks, if rebounds intraday, take profit at resistances to reduce portfolio. But if dips below 1615, lock the profit.
2) Without stocks, if weakens, accumulate buy stocks at support 1615 for trading.

Maybank sets a support line at 1600 points and 1615 points while setting a resistance line at 1640 points and 1655 points

Keep an Eye On
1) US to report 1Q19 GDP on May 30 and China reports PMI Manufacturing.
2) Domestic factors:  Parliament to vote for Prime Minister during May 31-June 9.