Daily Strategy for Investors on June 19, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on June 18, 2019, stating on the SET  Tuesday sharply gained, driven by buying pressure on PTTEP, CPALL, AOT, and GULF. Selling pressure was spotted on construction stocks led by CK, STEC and banking KBANK and KTB.
The index closed at 1,683.6 points (+16.3 points) with a trading value of THB61 billion (THB49 billion the previous day). Foreign investors switched to net buy Thai shares by THB4.1 billion. Institutional investors net sold by THB1 billion. There were net Long on SET50 index future by 28,680 contracts.

Investment Theme:  Happy problem becomes more apparent
Our key investment theme for 2019 “Happy Problem” is becoming more apparent, following the ECB chairman Draghi statement last night signaling more dovish approach. He said if there is a sign of economic slowdown in Europe, ECB is ready to cut interest rates or raise limit to purchase assets to stimulate the economy.

After his statement, the EUR/USD  has weakened to 1.11. The European stock markets also sharply gained in response to such factor.
But this caused US president Trump discontent, in terms of competitive disadvantage. So he pushed more effort to pressure Fed chairman Powell to cut interest rate as well. On this matter, Maybank expects to see more dovish approach to be announced at the FOMC meeting tonight while the dot-plot should also be adjusted. Meanwhile, Trump has talked with Xi Jinping and announced the preparation for the trade negotiations after the G20 Summit in Japan. This partly helped ease concerns over the trade war.

In conclusion, Maybank has a positive view on the FOMC meeting, FED and ECB and neutral view on the trade negotiation.

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
1) PM Gen Prayut said the lineup of 35 cabinet ministers has been finalised, and the list will be submitted for royal endorsement this month.
2) Facebook announces Libra cryptocurrency.

Stock Pick and Trading Idea
JMT: Target price upgraded to THB20.80 (upside 26%). Maybank expects 2Q19 earnings to set a new record high at THB150 million and continues growing in 2H19. Maybank estimates revenue of THB575 million, (+5%QoQ,+28%YoY) due to cash collection of THB730 million (+3%QoQ,+33%YoY) thanks to new debt purchased late 2018 and those costs clearing. Gross margins improved.
Maybank upgrades target price to THB20.80/share to reflect positive momentum in the next 6-12 months, in terms of net profit in 2H19 from debt with profit recognised of 100% from 2Q19 onwards and those new purchased during this year.
JMT is likely to buy more debt than expected because of the impact from IFRS9 (not included in our projection). Full revenue will be recognised in 1Q-2Q20. It has an upside risk from the insurance business.

Technical View
Bullish engulfing destroyed the red candlestick: The SET index swung sideways in a narrow range in the morning. A significant buying pressure took place in the afternoon on big caps of all sectors. As a result, the index sharply gained and broke out the resistance 1675 ultimately. The bullish engulfing candlestick has been formed up and devoured the previous negative candlestick. So the momentum has shifted to positive. Maybank expects the index may continue gaining to test the resistances 1690 and 1720. Maybank still recommends considering selling pressure at the resistances before making a decision.

Investment Strategy
1) With stocks, keep holding stocks and consider selling pressure at the resistance 1690 and 1720. But if dips below 1675 support, lock profit.
2) Without stocks, if weakens to test the support 1675, accumulate stocks.

Maybank sets a support line at 1660 points and 1675 points while setting a resistance line at 1690 and 1720 points

Keep an Eye On
OPEC meeting June 25-26. G20 Summit June 28-29.