Daily Strategy for Investors on September 18, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 18, 2019, pointing out some of the must-know events in the equity market as follows:

 

Factors needed to be monitored:

1) The BOT together with commercial banks discussed bringing excess reserve back into profit after IFRS9 will come into effect on 1 January 2020. All excess reserves must be completely reversed in five years.

2) Swine fever has started to spread to the North of Thailand in Chiang Rai and Chiang Mai. However, it does not pose a widespread impact even though it has a negative impact on CPF and TFG, it still benefits the chicken export business. GFPT is benefitted and it is expected that CPF, chicken business, will also benefit from being a substitute product. We recommend waiting to buy CPF (AWS TP Bt31.00) once the price has passed the lowest level as the epidemic will decrease the supply. When the epidemic is controllable, the pig price will recover strongly.

3) The attack on Saudi oil facilities has been resolved after the Saudi Energy Minister expressed confidence that crude oil production will recover by the end of this month and it is also expected that the production capacity of Saudi Arabia will increase to 12 million barrels per day from the current capacity of 9.7 million barrels per day.

4)  Keep an eye on the results of Fed meeting on 19 September (Thai time). Investors expect the Fed will cut interest rate which poses a negative sentiment to big commercial banking group. However, it is expected to be cut back.

5)  Trump revealed that the US-China may soon reach an agreement. China announced not to hike soybean import from the US.

6) Thai Banking Association prepares for a credit control especially promotion that incurs more debt than necessary such as travel first and pays later for 0% or 0% mobile installment, while it will maintain 0% interest rate for the loan on medical treatment. It is expected to have a negative impact on KTC, AEONT, BIG, COM7, JMART, HMPRO, ILM, CENTEL, ERW and the entire airline sector. For ICT sector, it will be slightly affected by ADVANC, TRUE and DTAC as the revenue proportion of mobile sales is minimal compared to total revenue.

 

Investment Ideas:

1) The BOT paved the way to bring back the excess reserves to be recognized as profit. It is expected that BBL, KTB (AWS TP Bt20.10; HOLD), KBANK (AWS TP Bt240; BUY) and SCB will benefit the most from setting excess reserves, respectively.

2) Speculate CPF (AWS TP Bt31.00) after the stock price plunged from swine fever in Thailand in many provinces in the North. The supply disappeared. Pig price is expected to revise up once it is controllable; while during the outbreak, CPF still benefits from consuming chicken instead of pork.

3) Oil prices fell by 5% -6% after the attack on the Saudi oil facilities has resolved. Take Profit on PTT, PTTEP, and PTTGC energy sectors as previously recommended to “BUY”.

 

Stock & Comment

BEM – TP ฿12.50/share

BBL – TP ฿225.00/share

SCB – TP ฿159.00/share

 

Pick of the day: BEM (BUY; AWS TP Bt12.50)

Traffic Volume in Expressway business and ridership in Metro business in August 2019 has continued to grow. The expressway business has average traffic volume per day at 1.26 million trips, up 3%MoM, and the average toll revenue per day about 28.8 million baht (+3.2%MoM / +1.6%YoY) and Metro business have average ridership per day is 3.25 hundred thousand people, up 2.1%MoM, and the average farebox revenue per day about 8.6 Million baht (+7.9%MoM / +3.1%YoY).

Business is still likely to grow continuously, especially the Metro business that benefits from the opening of the Blue Line Extension (experimental operation). Currently, there are six stations (Wat Mangkon Station – Bang Wa Station), with the remaining four stations to operate. (Petchkasem Station 48 – Lak Song Station) on 21 Sep and is a commercial operation with 11 stations on 29 Sep 2019. AWS still maintain a positive view.

BEM is still very strong in the uptrend, due to the occurrence of both Daily, Weekly, & Monthly Buy Signal. When considering BEM, the main target is Bt11.60. If BEM is strong enough by the successful closing of the market above Bt11.60, there will be an important target of making a new high at Bt14.80. The short-term stop-loss point of BEM is Bt10.90. (Resistance: 11.20, 11.30, 11.40; Support: 11.00, 10.90, 10.80)