Daily Strategy for Investors on September 16, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 16, 2019, pointing out some of the must-know events in the equity market as follows:

 

Factors that need to be monitored this week are:

1) The oil price has surged more than 11% this morning after the drone attacked on two refineries in the Abqaiq and Khurais areas in Saudi Arabia on last Saturday. NYMEX jumped USD6.12 or 11.16% to USD60.60/barrel. The two refineries belong to Saudi Aramco which is the national oil company in Saudi Arabia.

2) The said attack affected oil and gas production by 5.7 million barrels per day, accounting for 5% of the global oil supply.

3) The recent report indicates that the US President Donald Trump ordered to release oil from the US strategic reserve (SPR) after the attack.

 

Investment Ideas:

1) The soaring oil price posts a short-term positive impact on energy and petrochemical stocks.

2) In the Fed meeting on 19 September 2019, it is expected that the Fed will cut the policy interest rate by 0.25% to 2.00%, which will benefit electricity, real estate and hire purchase businesses.

3) The appreciation of the baht to Bt30.40 per USD. Keep an eye on the MPC meeting on 25 September as there is a high possibility of a domestic interest rate cut.

4) This week’s index range is expected to be 1,640-1,700 points. Energy stock is expected to recover. Recommend buying PTTGC, PTTEP and PTT.

5) Today’s index range is expected to be 1,650 -1,680 points. Recommended stocks are PTTGC, PTTEP and BGRIM.

 

Stock & Comment

PTTGC – TP ฿58.00/share

PTTEP – TP ฿148/share

BGRIM – TP ฿46.00/share(revised the target price up from Bt35.00.)

 

Pick of the day: PTTGC (HOLD; AWS TP Bt58.00)

PTTGC is more attractive due to (1) the recovery of crude oil prices from unrest in the Middle East, which the latest events in Saudi Arabia resulting in the production of oil in the country up to 5.7 million barrels per day, accounting for 60% of the total production capacity.

AWS expects to see a recovery in HDPE prices, which are the main products of the Olefins business group (2) expectation of a strong 3Q19 net profit forecast from the refinery business and the recovering olefins business. Meanwhile, the recovering crude oil price will reduce the pressure on the stock loss (3) laggard’s share price compared to the group. In the year 2019, the share price dropped more than 22%. However, the positive factors above will cause PTTGC to become attractive in the short-term.

PTTGC still has a downtrend from both the Weekly & Monthly Sell Signal. PTTGC currently only has a short-term strength from the Daily Buy Signal, which indicates a recovery in prices during the period. First, when considering PTTGC with the first target of Bt63.25 and a primary target of Bt71.00, respectively. The short-term stop-loss point for PTTGC is Bt51.25. (Resistance: 55.00, 55.50, 56.00; Support: 54.25, 53.75, 53.25)