Daily Strategy for Investors on June 18, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on June 18, 2019, stating that the SET on Monday swung in a narrow range, driven by selling pressure on LH following biglot trading with price below list price. However, buying pressure continued on industrial estate stocks WHA, ROJNA and AMATA.
The index closed at 1,667.2 points (-5.1 points) with a trading value of THB49 billion (THB42 billion the previous day). Foreign investors switched to net sell Thai shares by THB3.1billion. Institutional investors net bought by THB715 million. There were net Short on SET50 index future by 4,917 contracts.

Investment Theme: Thailand politics looks brighter
After General Prayut Chan-ocha was appointed as the 29th Prime Minister, next, he will form his cabinet (35 people). Maybank said it’s time to see the faces of the cabinet within this week before submitting for the Royal approval. Once the cabinet has been completely formed up, the short and medium term economic stimulus through the main ministries such as firstly, Ministry of Labour on the minimum wage increase from THB330 to THB420. Secondly, the Ministry of Finance on the extension of state welfare cards. Thirdly, the Ministry of Transport on Infrastructure projects and lastly, Ministries of Agriculture and Commerce, on measures to take care of agricultural products.
In general, Maybank think that these will be a mild positive for domestic consumption. Maybank believes that the retail sector would benefit from it.
For the foreign factors, Xi Jinping has not yet officially accepted the meeting with Trump. Initially, Maybank has a neutral perspective on the outcome of the negotiations in this round. Maybank expects the United States is likely to postpone the import tariff hike on limit of THB300 billion further in order to avoid the Tech war.
In conclusion, Maybank estimates that the global equity markets and SET should return to swing in a narrow range to wait for the outcome of such negotiations and the FED interest rate direction.

Investment Theme
Maybank estimates the SET index this week to swing in a range of 1,655-1690 points. Maybank still recommends accumulate PTTEP (global plays) and speculate domestic plays stocks led by CPALL, S and TPCH.

Big Issue
LH saw big lot trading of more than 836 million shares, at an average price of THB10.83.

Stock Pick and Trading Idea
S: “BUY”, target price of THB4.20/share. After investing and restructure the business for more than a few years, Maybacnk views that the company is entering a growth stage and this is a good time to gradually accumulate S shares. Maybank expects earnings this year to grow by 160% to THB1.6 billion from delivery of 2 large projects and continue growing by 30% in 2020 due to revenue recognition from JV.
Moreover, in 2H19, the company prepares to spin off over 39 hotels (SHR) to be listed on the stock exchange, which will unlock important value and continue to invest in the future and relax the financial position as D/E decreases to 1.6x.

Technical View
Still struggling at resistance of the triangle upper end, gradually reduce portfolio: The SET index gained and stuck at the resistance of the ascending triangle at 1675 for the fourth day. It failed to breakout. The candlestick closed with a longer red one, meaning there were more selling pressure intraday. This was coupled with the modified stochastic entering the overbought zone, Maybank finds that despite the main trend is the uptrend, the index may briefly correct. So, take profit to reduce portfolio.

Investment strategy
1) With stocks, if dips below 1670, lock profit, However, if rebounds, take profit at resistance 1675-1680.
2) Without stocks, if weakens to test the support 1653, accumulate stocks.

Maybank sets a support line at 1653 points and 1660 points while setting a resistance line at 1675 and 1690 points

Keep an Eye On
1) OPEC meeting June 25-26. G20 Summit June 28-29.
2) Government forming should finalize this week.