Daily Strategy for Investors on September 17, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 17, 2019, pointing out some of the must-know events in the equity market as follows:

 

Factors needed to be monitored this week:

1) The situation in the Middle East becomes tense and poses negative impacts on global stock markets as markets concern that the attack of Saudi Aramco, the national oil company of Saudi Arabia, on last Saturday may lead to retaliation in the Middle East.

2) “Goldman Sachs” warned that the attack of Saudi oil plants has driven Brent crude oil to jump to USD75 per barrel if oil production of Saudi Arabia has fallen by 4 million barrels/day for more than 3 months.

3) Concerning oil price, affecting the global economy which is already fragile from the impact of the US-China trade war.

4) Keep an eye on the result of the Fed meeting on 19 September 2019 as well as the statement on the likelihood of next round interest rate cut.

 

Investment Ideas:

1) The trade war has not yet been resolved. The Middle East will become another war.

2) Concerns on the global economy will further weaken due to the higher oil price.

3) Keep an eye on the result of the Fed meeting on 19 September. It is expected that the Fed will cut the policy interest rate by 0.25% to 2.00%.

4) Thai baht continues to appreciate at Bt30.50 per USD undermining exports and the Thai economy in the 3Q19.

5) Pick strong stocks with positive factors from (1) higher crude oil price (2) strong baht and (3) lower interest rate. Be cautious of a soft landing in the overall market.

6) Today’s this stock market index is expected to be 1,650-1,680 points. Recommended stocks are BGRIM, PTT, and PTTEP.

 

Stock & Comment

BGRIM    – TP ฿46.00/share

PTT – TP ฿52.00/share

PTTEP – TP ฿148.00/share

 

Pick of the day: BGRIM (BUY; AWS TP Bt46.00)

BGRIM has higher equity capacity in the 2Q19 of 477 MW from two large solar farms in Vietnam and an additional 15 MW from dam in Laos. At the end of last year, BGRIM had a production capacity of 1,217 MW and, in 2019, it is expected to have 52% YoY increase in production capacity to 1,850 MW.

AWS expects revenues and profits of BGRIM to grow YoY in the 2H19, the production capacity will increase significantly again in 202 1 to 2,105 MW and it is expected to increase to 2,260 MW in 2028.

For BGRIM’s strength, in addition to a continuous increase in production capacity in neighboring countries, it is also able to cut debts and financial costs significantly. BGRIM plans to lower loan cost from 4.6% in the previous year to 4.2%-4.4% from 2019 onwards. AWS estimates the target price of BGRIM to be at Bt46.00 based on DCF method with 18% risk-free rate and 4.25% cost of debt.

BGRIM is still in the uptrend from the occurrence of Weekly & Monthly Buy Signal. However, BGRIM is still in a period of short-term base adjustment from the occurrence of Daily Sell Signal. BGRIM will be able to successfully resume a new Daily Buy Signal once it could close above Bt43.50. It will eventually return to a full uptrend from the occurrence of Daily, Weekly, & Monthly Buy Signal. The next target of making a new high is at Bt48.50. (Resistance: 41.75, 42.25, 43.00; Support: 41.00, 40.50, 39.75)