Daily Strategy for Investors on October 17, 2019

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

 

Investment Ideas:

1) The US House of Representatives gives support to democracy protesters in Hong Kong by passing the Hong Kong Human Rights and Democracy Bill.

2) Tense situation between the US and China on Hong Kong issues also put a pressure on the investment atmosphere in the market and may affect trade talks between the United States and China.

3) Brexit: EU and UK negotiators began negotiating a new round of Brexit negotiation on Tuesday amid the hope that both parties could reach an agreement to send to EU leaders to sign during the Summit on 17-18 October.

4) The interest rate is in the downtrend which benefits electricity and hire-purchase stocks.

5) HDPE prices revised down which is negative for SCC, PTTGC but positive for EPG.

6) Aromatics petrochemical spreads in September fell to the lowest level in 10 months and continued in the downtrend which is negative for IVL.

7) Expect today’s index rang e to be 1,620-1,645 points. Recommended stocks are MTC, KTC and EPG.

 

Stock & Comment
MTC – TP ฿75.00/share
KTC – TP ฿53.00/share, expected to benefit from the downtrend interest rate.
EPG – TP ฿9.20/share, expected the 2Q18/19 performance to recover as expected to Bt250mn or more from Bt215mn in the previous quarter. EPG also benefits from a heavy falling price of plastic pellets.

 

Pick of the day: MTC (BUY; AWS TP Bt 75.00)
AWS expects the 3Q19 net profit to make a new high again at Bt1.1bn or up by 15.8%YoY and by 9.5%QoQ according to branch expansion strategy. In 3Q19, AWS estimates loans to be around Bt58bn or up by 7%QoQ. For expenses, cost-to-income is expected to revise up by around 7.1%QoQ as a result of higher staff expenses according to branch expansion.

NPL ratio is expected to be stable at low level of 1.1% in line with debt quality management plan and more stringent controls in granting loans.

Thus, AWS recommends BUY, revised its FY2020 target price up from Bt64.00 to Bt75.00 based on a 7.3x PBV. MTC remains very strong in the uptrend from the occurrence of Daily, Weekly, and Monthly Buy Signal with the next target of making a New High at Bt66.50. MTC’s short -term stop loss is at Bt55.50 (Resistance: 60.75, 61.50, 62.00; Support: 59.75, 59.25, 58.50).