Daily Strategy for Investors on November 5, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on November 5, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) Yesterday, Thai funds were net buyers of as much as Bt4.6bn, while foreign net sellers were Bt350mn.

2) Good news for stock markets around the world occurs when the US Secretary of Commerce stated during the ASEAN summit held in Bangkok that the US and China will reach the first phase of trade agreement this month and expect that US companies will receive a license to sell products to Huawei Technology of China shortly. This has driven 3) Oil price remains stable in response to the news that Saudi Aramco, a giant oil company of the Saudi Arabian government, has announced the initial public offering (IPO). It will offer IPO shares on 3 November and will offer the IPO price on 17 November, then will announce the final price on 4 December before trading in Riyadh Stock Exchange on 11 December.

4) Listed Companies gradually announce the 3Q19 performance. GPSC will announce at the night time of 5 November 2019. We believe that after consolidating with GLOW, profit will increase. However, if market cap is included, fair value excluding synergy would be at Bt86-88 per share.

5) The performance of energy-petrochemical stocks was announced quite disappointed as expected. IRPC experienced loss as expected. We still like electricity stocks. We favor small-cap stocks such as SSP, CKP, and WHAUP.

6) Expect today’s index range to be 1,615 -1,635 points. Recommended stocks are KTC, ADVANC, SYNEX, and PTTEP.

 

Stock & Comment
KTC – TP ฿53.00/share
ADVANC – TP ฿250.00/share due to fierce competition in broadband business does not adversely affect ADVANC. It is believed that in 2020, ADVANC will quickly increase its market share.
SYNEX – IAA Consensus ฿8.35/share from unlocking Huawei.
PTTEP – TP ฿148.00/share

 

Pick of the day: KTC (BUY; AWS TP Bt53.00)

The 4Q19 net profit is projected to grow YoY and QoQ driven by growth in both personal loan portfolio and credit card receivables. This is because the 4th quarter is a high season for spending and KTC has launched a marketing campaign to stimulate spending. The total loan portfolio in 2019 is expected to grow at Bt85bn or up by 8% which is close to our target.

KTC’s NPL ratio may revise slightly to 1.10% at 3Q19 from 1.07% at 2Q19 due to the weak economy. However, the NPL ratio of KTC remains low at only 1.07% compared to the industry average of 3.0%.

Moreover, KTC will benefit from the downtrend of interest rate driven NIM up. We expect NIM at the end of 2019 to be 9.5% before increasing to 10.0% in 2020.

 

In addition, AWS recommends BUY with a target price of Bt53.00 based on a 5.6x Prospective PBV method. The current price has 24.7% upside.

KTC is likely to be in the uptrend from the occurrence of both Daily and Monthly Buy Signal. It is waiting for the return of new Weekly Buy Signal once it could close above Bt45.75 at weekly market, then it will resume a full uptrend. Significant targets is at Bt47.00. Short-term stop loss point is at Bt40.00. (Resistance: 42.75, 43.25, 43.75; Support: 42.00, 41.50, 41.00)