Daily Strategy for Investors on September 23, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on September 23, 2019, pointing out some of the must-know events in the equity market as follows:

 

Factors needed to be monitored:

1) Investors concern that trade negotiation between the US and China this week indicates a failure after Chinese officials returned to the country prematurely.

2) On 25 September 2019, it is expected the MPC meeting to have a resolution to maintain policy interest rate by 1.5% with the expectation of an interest rate cut by the end of 2019.

3) The OECD lowered its global economic growth estimate this year to 2.9% which is the lowest level since the financial crisis in 2008-2009 from 3.6% last year.

4) Thai export figures in August 2019 were -4% YoY and contracted by 2.2% in the 8M19. Thai baht continues to appreciate against major currencies such as USD and Yuan as well as Vietnamese dong which has depreciated against the USD in contrary with Thai baht.

 

Investment Ideas:

1) Keep an eye on the FED interest direction and Thai interest rate (The meeting will be held on 25 Sep 19). The rate is expected to remain stable.

2) Trade negotiation between the US and China this week indicates a failure which is expected to affect the global stock market.

3) Thai export figures in August 2019 are -4% YoY and contracted by 2.2 YoY in the 8M19. The appreciation of the baht remains an obstacle to export.

4) Hope to rely on government stimulus measures as well as Thailand Plus policy to pull investment funds from foreign countries.

5) Investment strategy is to look for high-dividend stocks. Pick TCAP and KKP.

6) This week’s index range is expected to be 1,605 -1,660 points. Recommended stocks are SCB and TCAP.

7) Today’s index range is expected to be 1,625-1,645 points. Recommended stocks are TCAP, KKP and CPF

 

Stock & Comment

TCAP – TP ฿61.00/share

KKP – TP ฿80.00/share

CPF – TP ฿31.00/share (a time to bet. Swine fever is expected to be under control but it causes the supply of small pig farmers to disappear. Pork price is likely to improve shortly.)

 

Pick of the day: TCAP (BUY; AWS TP Bt61.00)

TCAP announced to pay an interim dividend of Bt1.20 per XD on 3 October, 2019 representing a 2.1% dividend yield. It is not that all, the company also wait to receive a special dividend after the merger of TMB and TBANK will be completed in December 2019 of Bt4.00. The total dividend yield will be 9.2%.

After the merger, TCAP will benefit from holding 20% stake in the new bank. We estimate loans of the new bank to be Bt1.6tn compared to the previous Bt700bn loans of Thanachart Bank or up by 128%.

TCAP is expected to benefit from lower borrowing costs in line with the downtrend interest rate. We expect the Monetary Policy Committee (MPC) to cut interest rate by 0.25% for another round within the remaining of 2019.

TCAP remains very strong in a full uptrend from the occurrence of Daily, Weekly, and Monthly Buy Signal with an initial target of Bt63.75. The short-term stop loss point is at Bt55.50. (Resistance: 57.00, 57.25, 57.75; Support: 56.50, 56.25, 55.75)