Daily Strategy for Investors on September 11, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 11, 2019, pointing out some of the must-know events in the equity market as follows:

 

Thai Stock Market Today

1) China has submitted proposals to buy more agricultural products from the US. It is expected to have a positive effect on US-China trade negotiation which is expected to have already passed the most tension point.

2) President Donald Trump orders to oust John Bolton as National Security Adviser. This may lessen the tension between the US and Iran and enable Iran to begin exporting crude oil. Crude oil price may revise down.

3) Saudi Aramco is expected to offer an IPO around 2020-2021, resulting in an extended support on the crude oil price.

4) The new sugar tax will come into effect on 1 October, the market is concerned that entrepreneurs will be affected as before. However, large entrepreneurs informed that they have already prepared to cut the amount of sugar content in their drinks to not exceed the specified level. Therefore, it is expected to not have much impact.

 

Investment Ideas:

1) Seeing a higher oil price as a short-term positive factor. The futures price of major plastic pallets such as HDPE and PP started to revise up.

2) Sugar tax affecting the stock price to revise down which is considered as a good opportunity to gradually buy CPALL, BJC, OSP and ICHI.

3) Index range is expected to be 1,652-1,680 points. Recommended stocks are M, BDMS, CPALL, BJC and ORI.

 

Stock & Comment

M – TP ฿82.69/share

BDMS    – TP ฿29.00/share as the hospital business approaches to a high season in this 3Q19.

CPALL – TP ฿94.00/share due to the concern on sugar tax is expected to not affect beverage and convenience stores business.

BJC – IAA Consensus ฿59.00/share

ORI – TP ฿11.50/share.

 

Pick of the day: M (IAA Consensus Bt82.69)

M announced a 65% investment in Laem Chareon Seafood Company Limited (LCS) with an investment of Bt2.06bn. M expects this investment to be completed in December 2019.

AWS has a positive view on the acquisition, especially Synergy, which will make marketing combined with operating costs per unit which have been reduced from (1) Share facilities, especially the strengths of M with strong logistic systems and shared kitchen facilities are a reduction in operating costs. (2) Increasing marketing potential Sales promotion such as cross-promotion (Product matching and promotion at a special price) (3) create a competitive advantage. (4) New product development and new food brands based on the customer base that has the loyalty of both companies, this investment is expected to use cash on hand of the company. At the end of 2Q19, the company had cash on hand about Bt9.7bn.

M is very strong in the main uptrend, due to the occurrence of both Daily, Weekly, & Monthly Buy Signal. When considering M, the next target is Bt78.50 and the main target is Bt81.00, respectively. The short-term stop-loss point for M is Bt71.75. (Resistance: 76.50 , 77.25 , 78.25 ; Support: 75.50 , 74.75 , 73.75)