Daily Strategy for Investors on August 2, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on August 2, 2019, pointing out some of the must-know events in the equity market as follows:

1) After President Donald Trump tweeted a threatening message to collect an additional 10% import tariff from China worth USD300 billion to become effective on 1 September. The concern on the prolonged trade war between the US and China has pulled down the US stock index in all three markets which are trading in the positive territory to fall in negative territory of around 1% (+/-). 

2) The Fed returned to give hope that it will cut interest rates again next month. ISM and IHS Markit revealed consistent data that US manufacturing index has tumbled in July.

3) Crude oil price dropped by 8% due to concern on the US-China trade negotiation and a record-high supply of US oil production.

4) BDI Freight Index closed on the last business day at 1,812.00 points which were down by 56.00 points or -3.00%.

5) The outstanding issue for this round of investment is interest rate is likely to revise down which benefits electricity, hire-purchase and property businesses.

6) Expect today’s index range to be 1,680-1,710 points and recommended stocks are THANI, ORI, AOT, OSP, and TASCO.

Pick of the day: THANI
AWS recommended “BUY” THANI with the target price of ฿8.30/share. AWS still has a positive view on THANI after THA announced the 2Q19 net profit for the new high of ฿511 million (up 30%YoY and 3%QoQ). Overall in 1H19, THANI has a net profit of ฿1.0 billion or represents 56% of AWS full-year net profit target, driven by loan growth which jumps by 13% YoY. This was a result of higher truck loans and other revenues from new businesses such as RTN Insurance Broker, started in 2019. THANI sets a targets revenue in 2019 from insurance business at ฿100 million which a net profit for the first 6 months is ฿50 million.
NPL ratio is likely to continue to decline. The 2Q19 NPL ratio was 3.58% compared to 3.69% at the end of 2018. This was a result of the credit extension policy focusing on quality and effective debt tracking.
AWS expected loan income to grow further driven by government stimulus and policy continuity, especially the EEC policy. While revenue from new business of RTN Insurance Broker is expected to continue to grow well and can achieve the target set by the company. Recommend “BUY” with a target price of ฿8.30 based on 17.5x PER.
THANI is still very strong from the main trend which is in the uptrend from the occurrence of Daily, Weekly, and Monthly Buy Signal. Giving THANI, as long as it could maintain the closing at least at ฿7.05, it is expected to have a chance to create a new high with a significant target of reaching a New High at ฿10.10. Short-term stop-loss points are at ฿7.15 and set a resistance line at ฿7.35, ฿7.50, and ฿7.65 while setting a support line at ฿7.10, ฿6.95, and ฿6.80.

Foreign Market:
US stock market: Dow was -280.85 points, or -1.05%, while S&P500 was -26.82 points or -0.90%, NASDAQ was -64.30 points or -0.79% after President Donald Trump threatened to impose additional of 10% import tariff from China worth USD300 billion to become effective on 1 September.
The Concern on the prolonged trade war between the US and China has to pull down industry shares, especially stocks that are sensitive to international trade issues. Meanwhile, energy stocks fell after WTI crude oil price fell by almost 8%, although the Federal Reserve (Fed) will cut interest rates again next month.
This was after the US Institute of Supply Management (ISM) and IHS Markit revealed consistent data that the US manufacturing index has fallen in July.