Daily Strategy for Investors on October 18, 2019

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

 

Investment Ideas:
1) British-EU leaders announce the reaching of Brexit Agreement.

2) Investment is free from the Inverted Yield Curve as the long-term US bond yield is 15 bps higher than the short-term one which is an appropriate level.

3) US-China trade war begins to be able to unravel.

4) Crude oil-gold prices rebound.

5) The 3Q19 performance of the real estate sector that is expected to come out not as bad as expected.  Expect a better performance QoQ including QH, ORI, NOBLE and SPALI, while ORI is expected to improve both QoQ and YoY.

6) Performance of the banking sector remains worrisome including TMB (flat QoQ), KTC (worse than expected) and SCB (worse than expected) from higher provision expenses than expected.

7) Retail sector returns to be attractive including CPALL, HMPRO and OSP as their profits are expected to improve both QoQ and YoY.

8) The stock of large-scale power sector is overvalued, but we believe that fund flows from Thai and foreign funds will overweight stocks in this sector instead of energy and petrochemical sectors which have fully fallen down since the middle of 3Q19.

9) Today’s index range is expected to be 1,625-1,645 points. Recommended stocks are ORI, CPALL, HMPRO and QH.

 

Stock & Comment
ORI – TP ฿11.50/share
CPALL – TP ฿94.00/share
HMPRO – TP ฿19.00/share
QH – TP ฿3.70/share

 

Pick of the day: ORI (BUY; AWS TP Bt11.50)
AWS expects the 3Q19 operating performance to highly revise up from the 2Q19 due to the transfer of 4 new completed projects worth Bt8.30bn. ORI would benefit from a Bt200,000 tax deduction measure as the company has projects in stock that are ready to be transferred according to the condition (Under Bt5mn) of approximately Bt5bn.

ORI has an average take-up rate of 80% of the initial launch project which is considered to be the most outstanding in the industry group (average take-up rate of the industry group is 15-30%) from the plan to avoid launching the middle-level project ( Bt4-6mn). As a result, the 9M19 presales have achieved Bt23.10bn representing 83% of the 2019 target.

Moreover, the company is preparing to launch seven new projects in the 4Q19 including both low rise and Smart City (The Origin Ramindra 83 Station) which will help accelerate presales and transfers for the remaining of the year.

Thus, AWS recommends “BUY” with a target price of Bt11.50 and expect the 2019 dividend to be at Bt0.58 per share or equivalent to 7.7%.

ORI remains strong in the uptrend from the occurrence of Daily & Monthly Buy Signal. When considering ORI, the first target is Bt8.45 and the next target is Bt9.75, respectively. ORI has short-term stop-los point at Bt7.20 (Resistance: 7.65, 7.75, 7.90; Support: 7.50, 7.40, 7.25).