Daily Strategy for Investors on August 5, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on August 5, 2019, pointing out some of the must-know events in the equity market as follows:

1) Expect Thai stock market to remain fluctuate this week after facing negative factors on the trade war, the unclear direction of the US interest policy whether or not it will be cut again, and bombs rattled Bangkok affected investors’ confidence.

2) The 10-year US bond yield interest rate dropped to 1.854%, resulting in expected earnings yield at 4% or higher. There is a chance that the stock will rebound. However, it needs to be cautious of concern on the inverted yield curve in the case that the short-term 3-month bond yield is higher than the 10-year long-term bond yield. There is a risk of a financial crisis.

3) On 7 August, there will be an MPC meeting of the Bank of Thailand. It is expected to be a review on the Thai policy interest rate which is now at 1.75%.

4) Investment strategy at the index level of 1,680 points is +/-. We look at as a buying opportunity.

5) This week’s index range is expected to be 1,660-1,710 points. We recommend CPALL, HMPRO, OSP, WHA and AMATA.

6) Today’s index range is expected at 1,680-1,700 points. Recommended stocks are WHA, HMPRO (TP ฿19.00) and OSP (IAA Consensus ฿37.00-40.00).

 

Pick of the day: WHA (BUY at a target price of ฿5.00/share)

AWS estimates 2Q19 net profit of ฿782mn or up by 158% YoY and 92% QoQ driven by (1) Projected higher revenue from land sales by 39% YoY and 169% QoQ with expected transfer of land in 2Q19 at 290 rai compared to the 1Q19 at 100 rai and 2Q19 at 250 rai. (2) Projected gross profit margin to return to normal at 46.5% from 1Q19 at 22.3% and (3) Expected profit-sharing from the power plant business to improve significantly. This is because all power plants can be normally operated.

It is also driven by the appreciation of the bath which results in not much high cost to import machinery for investment. Recommend “BUY” with a target price of ฿5.00/share based on Sum-of-the-parts method.

WHA still has the main trend in the uptrend from Daily and Monthly Buy Signal. However, WHA still has Weekly Sell Signal from the dull close of the weekly market. WHA’s significant target for new high is at ฿4.98 and short-term stop loss point is at ฿4.58 (Resistance: 4.68, 4.72, 4.78; Support: 4.62, 4.58, 4.52).