Daily Strategy for Investors on September 20, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 20, 2019, pointing out some of the must-know events in the equity market as follows:

 

Factors needed to be monitored:

1) The US revealed a fluctuated economic data including second-hand home sales and the number of unemployed applicants enrolled for benefit.

2)  Investors expect Britain to a Brexit with an agreement with leaders of the EU. However, AWS still sees Brexit as a risk factor to the stock market.

3) Today, there will be an announcement of Thai exporting figures in August 2019. The market is expected for -2% YoY, while the 7M19 is expected to be -1.9% YoY.

4) The strong appreciation of the baht (Bt30.50 per USD) is an obstacle for export.

5) TCAP (AWS TP Bt61.00) announced to pay the 1H19 dividend of Bt1.20/share and XD on 3 October. In addition, there will be a special dividend of Bt4.00 per share and a repurchase of 97 million shares, representing 8% of all shares. The XD date has not yet determined which an awaited positive factor is.

 

Investment Ideas:

1) To be a bargain Hunter is to be a good stock bargainer to get a good price.

2)  Keep an eye on the announcement of Thai export figures today.

3)  As the baht is appreciated, it is better to avoid the export sector. Pick domestic play and bank shares which are remain laggard.

4) The Fed interest rate cut begins to not create any positive results for the Thai stock market as it is an expectation that interest rate will be cut for many more times after the latest cut on 19 September.

5) Today, stocks may bounce back in line with the region as there are no temporary negative pressuring factors.

6) Today’s index range is expected to be 1, 630-1,650 points. Recommended stocks are BBL, TCAP, SCB and BDMS.

 

Stock & Comment

BBL – TP ฿225.0/share

TCAP – TP ฿61.00/share (buy to receive normal and special dividends. There is up to 8% of a stock buyback.)

SCB – TP ฿159.00/share

BDMS – TP ฿29.00/share ( In the 3Q19, the ratio of surveillance disease patients (influenza, dengue, pneumonia) is significantly higher.)

 

Pick of the day: BBL (BUY; AWS TP Bt 225 .00)

BBL benefitted the most after the implementation of IFRS 9 in early 2020 as the classification of underperform customer will be changed, from previously a provision of 2% to a full provision (expected loss). Under the new accounting standard, as a result, banks need to set aside more reserves. However, BBL itself has high excess reserves of Bt9.4bn which is enough for underperform debtors. In addition, banks may have enough excess reserves to reverse as their future revenue.

Currently, loans are down by 3.7% YTD. However, AWS estimates the FY2019 loan growth at 3%. In addition, the quality of the bank’s asset remains strong with a high coverage ratio of 186%, which is the highest compared to the industrial average of 145%.

The share price has attractively revised down with a 0.81 x PBV which is lower than the 11-year PBV average at 1 .09 x.

BBL is in the downtrend from the occurrence of Weekly & Monthly Sell Signal. However, AWS starts to see a short-term recovery of price from the occurrence of Daily Buy Signal. If it can successfully break by closing above Bt177, the next target would be Bt188 and Bt198.50, respectively. The short-term stop-loss points are at Bt172. (Resistance: 181.00 , 182.50 , 185.00 ; Support: 179.00 , 177.50 , 175.00

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