Daily Strategy for Investors on October 4, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on October 4, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) FedWatch Tool states that investors expect a 90% chance that the Fed will cut interest rate by 0.25% at the Monetary Policy Meeting on 30-31 October and a 50% chance that the Fed will cut interest rate again in December. AWS sees that the global economy will reach an uncontrollable state but the US official is still seeing that interest rate cut aims to stimulate the economy.

2) It is highly expected that in the BOT’s Monetary Policy Meeting on 6 November 2019, the interest rate will be revised down from 1.50% to 1.25%.

3) The overall Thai economic growth in the 2H19 has clearly slowed down and begins to be severer in September.

4) Petrochemical business heavily weakens in both Olefins and Aromatics. AWS gives investment weight as Underweight for this business sector and stocks, including IVL, SCC and PTTGC.

5) Expect the index range to be 1,600-1,630 points. Recommended stocks are CPALL, PTT and ADVANC.

 

Stock & Comment

CPALL – TP ฿94.00/share

PTT – TP ฿50.00/share

ADVANC – TP ฿250.00/share

 

Pick of the day: CPALL: (BUY AWS TP Bt94.00)

Expect the 3Q19 net profit to grow YoY and QoQ benefitting by 1.Doraemon stamp campaign receiving a moderate response. 2. Banking Agent has higher transaction significantly and 3. MAKRO’s sales are expected to grow well in the 3Q19 due to good pork-chicken price.

However, MAKRO sales may soften in the 4Q19. AWS expects CPALL to accelerate its growth by expanding branches continuously, adding both food and nonfood items. For food items, the company can add items through CPRAM, which is expected to begin pushing sales of Japanese-style cold bakery.

For non-food items, personal care products will grow well. The bad economic condition in the 2H19 has a little impact on CPALL compared to other consumer products. Recommend BUY with a target price of Bt94.00.

CPALL is likely to be in the uptrend from the occurrence of Monthly Buy Signal. It is still in a short-term and medium-term base adjustment period from Daily and Weekly Sell Signal. CPALL will resume its short-term strength from the occurrence of a new Daily Buy Signal if it could close at least above Bt81.50.

The main target is Bt84.00 and the next target to test the original high is at Bt90.00 and Bt97.25 (Resistance: 82.00, 82.50, 83.50; Support:81.00, 80.50, 79.50).