Daily Strategy for Investors on July 24, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on July 24, 2019, pointing out some of the must-know event in the equity market as follows:

1) It is expected that foreign stock markets recover from supporting factors that the US and Chinese officials will hold trade talks in Beijing next week and the White House news and Congress can reach an agreement to avoid closing government agencies or shutting down.

2) Crude oil price has recovered at a good level . At present, Dubai crude oil price is at USD63.00 per barrel. Although the performance of energy and petrochemicals sectors was weak in 2Q19, it, however, is likely to return to have a good profit in 3Q19 as oil price is well stable. This is because it is a period in which the supply of the refinery declines due to the storm and maintenance shutdown. AWS favors PTTEP.

3) The solar power business is expected to grow well with profit in 2Q19 due to less rain this year and hotter in both Thailand and Japan. AWS likes SSP.

4) BDI: closed on the last business day at 2,165.00 points which was down by 26.00 points or -1.19%. It was the first drop after climbing up for ten consecutive days. However, if the US-Japan trade negotiation next week is well progressing, it is expected to be more orders for agricultural products from the US. It benefits bulk carrier business like PSL and TTA.

5) Today’s index range is expected be 1,718 -1,735 points. Recommended stocks are PTTEP (TP 162.0), SSP (TP 11.0) and ORI (TP 11.50).

 

Pick of the day: PTTEP (BUY; AWS TP Bt162.00)

PTTEP is attractive to invest from (1) performance growth. AWS expects the company to post a 2Q19 net profit of Bt13.0bn or up 3% QoQ due to the increase in sales and the average selling price. It is considered as a company with the most prominent net profit growth in the energy sector with an expectation of continued and outstanding net profit growth in 2H19 from higher average daily petroleum sales (2) long-term sales growth at an average of 7% CAGRs (2019 – 2023). The increase of sales was a result of the acquisition of Murphy Oil and the sales of Bongkot and Erawan projects (new estimates do not include the acquisition of Partex Holding, which is expected to be completed by the end of 2019. This is expected to increase additional sales by 16KBD per year) and (3) concern on lower Life Reserve. After the announcement of 5-year investment plan (2019 – 2023), the total investment  of the entire project and increased in sales with an expectation the Life Reserve of PTT will not be less than seven years (formerly 3 – 4 years). AWS maintains the BUY recommendation with a fair value of Bt165 (18.7% upside).

PTTEP remains strong in the full uptrend from the occurrence of Daily, Weekly, & Monthly Buy Signal. Giving PTTEP, its significant target is a Bt144.50. Short-term stop loss point for PTTEP is at Bt134.00 (Resistance: 137.00, 138.00, 138.50; Support: 136.00, 135.50, 134.50).