Daily Strategy for Investors on July 3, 2019

Maybank Kim Eng Securities has made an analysis for the trading session on July 3, 2019, stating that the SET on Tuesday swung in a range driven by selling pressure on the energy stocks PTT, PTTEP. However, strong buying pressure was spotted on GPSC and GULF.
The index closed at 1,732.3 points (-8.6 points) with a trading value of THB66 billion (THB68 billion the previous day). Foreign investors continued to net buy Thai shares by THB2.195 billion. Institutional investors net sold by THB3.222 billion. There were net Long on SET50 index future by 1,341 contracts.

Investment Theme: SET index gaining partly priced in positive factors
Since the beginning of June, the SET index gained more than 7% or 120 points. As a result, the market trades at PER19 over +1SD, reflecting the positive momentum from the FED monetary policy that increased a chance to cut policy interest rate, coupled with the trade war has not escalated as the market worried, following the G20 summit results.

From now on, Maybank forecasts that the SET index should return to swing sideways in a wide range of 1690-1750 points, prior to the 2Q19 earnings results announcement, awaiting the EPS19 and two domestic and foreign factors. That includes
1) Maybank expects to see the list of the 36 new cabinets in the middle of July. Keep updated on the short term economic stimulus measures.
2) The FOMC meeting.
Maybank recommends investing in the retail stocks, banking on strong 2Q19 earnings growth at about 10-15% YoY and benefit from the short term economic stimulus measures.

Investment Theme
Maybank believes the SET should swing in a range of 1730-1750 points this week. Maybank still recommends investing in domestic plays stocks over global plays. Accumulate CPALL, BEM, TRUE, S and SINGER. For global plays, Maybank chose PTTEP as a top pick as its 2Q19 earnings should outperform the sector.

Big Issue
OPEC extends production cuts of 1.2m bbl for 9 Months, to shore up oil prices.

Stock Pick and Trading Idea
SPALI: “BUY”, target price at THB27.60. (upside 27%). Maybank expects 2Q19 presale to continue growing thanks to ICON Sathorn condo project. As a result, sales should reach THB35 billion in 1H19. Maybank forecasts 2Q19 earnings should increase YoY, QoQ due to delivery of two condo projects namely Elite Surawong and City Resort Rama 8. Profit forecast for this year is unchanged at THB6.4 billion (+11% YoY).

Technical View
If dips below 1730, lock the profit: A strong selling pressure on the energy, ICT and petchem sectors has caused the SET index to decline and close the gap at 1735. In the near term, if it slips through 1730 (the upper end of the uptrend channel), this is an opportunity to lock the profit. But if it holds above 1730, Maybank sees that it is only a brief correction. Investors may buy stocks at 1730 for trading, with resistance levels being at 1740 and 1750.

Investment Strategy
1) With stocks, if dips below 1730, lock the profit. But if holds, wait for a rebound and take profit at 1740 and 1750.
2) Without stocks, if weakens but holds above 1730, accumulate stocks for rebound trading. But if it dips, wait and see.

Maybank sets a support line at 1715 points and 1730 points while setting a resistance line at 1750 and 1770 points

 

Keep An Eye On
1) Trump may intensify sanctions on Iran.
2) Fed chair Powell to testify before Congress on July 10-11.
3) The U.S. to consider Huawei blacklist details this week.