Daily Strategy for Investors on August 1, 2019

 

Asia Wealth Securities (AWS) has made an analysis for the trading session on August 1, 2019, pointing out some of the must-know events in the equity market as follows:

1) The Fed cut policy interest rate by 0.25% as expected, but investors in the US market are still not satisfied as the Fed has not pledged to cut interest rate again in the future. However, we view it as an important positive factor as if the Fed continues to cut the interest rate further, it would be a sign of a heavy economic slowdown and result in a heavy fall of the stock market for a long period of time.

2) Waiting for the conclusion of the US-China trade negotiation of which the progress is expected to come out today.

3) The selling force of outstanding stocks reveals periodically yesterday. There was a heavy selling force of ORI, but the company has revealed that there is no plan to increase capital.

4) Today’s investment strategy: Focus on a short playing, lock profit periodically and continue to pick stocks with a good future.

5) The investment strategy for August 2019: “Waiting for change” Expected index range to be 1,680-1,750 points. Top pick: AOT, ORI and THANI.

6) Expect today’s index range to be 1,700-1,725 points. Recommend stocks: AOT (TP 84.0), ORI (buy the Dips for Better 2H performance TP 11.50) and KKP (expect a good performance in 3Q TP 80.0).

 

Pick of the Day: AOT (Recommend “BUY” at the target price of ฿84.00/share)

AWS maintains its 2019 net profit estimate of Bt 27 bn or up 9%YoY while still maintaining a positive view on AOT in a long-term from the opening of Suvarnabhumi Airport Project Phase 2 and the investment in two new regional airports projects (Chiang Mai Airport and Phuket Airport) to accommodate foreign tourists.

These are driving factors for revenue growth related to aero-business which is core revenue and revenue from concession which has increased significantly. In addition, in 2021, the concession agreement of Duty-Free and retails area at Suvarnabhumi Airport will begin. This has made AWS believe that AOT will be a company with net profit growth of 12% CAGRs over the next five years and will be the most prominent in the aviation business.

Moreover, AOT also has an upside from the launch of new concessions of Duty-Free and retails area at Don Mueang Airport in order to replace the original contract that will be expired in 2022.

AWS expects the new round of bidding to take place at the end of 2020 or no later than the beginning of 2022. We still have a long-term positive outlook from a better development of all AOT’s businesses. Recommend “BUY.”

AOT’s main trend is in the uptrend from the occurrence of Monthly Buy Signal. However, AOT remains weak in both short and medium terms due to Daily & Weekly Selling Signals. Giving AOT, as long as it can at least close above Bt71.50, AWS expects a short-term rebound to test the first target at Bt 74.25. If AOT is strong enough by successfully closing above Bt74.25, the first target of the new high would be Bt77.75. AOT’s short -term stop-loss point for this round is at the closing price below Bt71.50. (Resistance: 72.25 ,72.50 ,73.00; Support: 71.75, 71.25, 71.00)