Daily Strategy for Investors on November 7, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on November 7, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) The negotiation between the US and China; the signing is expected to be postponed from the last schedule from Nov to Dec. This sends a negative sentiment to the global market.

2) The BOT cut the policy interest rate by 0.25% to 1.25% as we expected. This will benefit electricity, finance, property, CP group and Thaibev group, while it will post a drawback to banking sector.

3) Finance sectors that posted an impressive turnover in the 3Q19 and may well continue a high revenues in 4Q19 are MTC and SAWAD.

4) For the electricity sector, we choose GPSC and CKP. Even if those have high liabilities, they plan to issue a new bond, resulting in a lower cost of funds, and it will lead to high profit.

5) For finance sector, we favor MTC, SAWAD, KTC, TCAP, TISCO, KKP.

6) For industrial estate, the government is confident that the US and China might move their production base to Thailand continuously. We prefer AMATA, WHA, and WHAUP.

7) The oil price has dropped together with plastic pellets. This sent a positive sentiment to TASCO, TIPCO, and EPG.

8) Thai Baht has depreciated to Bt30.30 per US$, which might benefit slightly to exporters. We recommend trading on the electronic sector, such as KCE and HANA, but it needs to be monitored closely since the issue of the trade war between the US and China does not finalize.

9) The SET range today is forecast to be around 1,615-1,635 points with recommend stocks of MTC, GPSC, AMATA.

 

Stock & Comment
MTC – TP ฿75.00/share
GPSC – TP ฿97.00/share
AMATA – TP ฿30.50/share

 

Pick of the day: MTC (BUY; AWS TP Bt75.00)

AWS stated that it is projected that MTC will reap a positive sentiment from the Thai policy interest rate cut by 0.25%to 1.25% in the meeting on 6 Nov 19.

MTC reported its strong 3Q19 performance of Bt1.08bn, up by 12%YoY and 6%QoQ, following branch expansion strategy. At present, the number of branches has reached the company’s target of 3,900 branches to be at 3,961 branches.

At the end of 3Q19, the net interest margin (NIM) remains stable at the same level of 18%. It is expected the NIM to increase by early 2020 due to issuance of new debenture, resulting in a lower cost of the fund from 3.9% to 3.7%.

In this regard, AWS emphasizes its FY2020 earnings estimate of Bt4.5bn, up 22.7%YoY, with an expectation that the 4Q19 net income would continue a new high.  Thus, AWS reiterates its BUY call with a target price of Bt75.00 based on a 7.3x PBV.

MTC remains in the uptrend from weekly and monthly buy signals even there is daily sell signals. If the price is strong enough to successfully close above Bt61.00, the next target might be Bt66.50. (Resistance: 61.25, 62.75, 65.00; Support: 59.00, 57.50, 55.25)