Stocks in Focus on November 15, 2019: EPG and TFG

Kaohoon Online has selected stocks with a potential of high growth for investors to consider on November 15, 2019.

 

Asia Wealth Securities (AWS) has given a “BUY” recommendation on Eastern Polymer Group Public Company Limited (EPG) with a target price at ฿9.20/share.

EPG has reported 2Q19/20 net profit (Jun-Sep 19) at Bt327mn +25%YoY +52%%QoQ which was better than expectation of 50%. GPM of this quarter was high at 30.5%. In addition, revenue of business grew by 3% due to the appreciation of Thai Baht.

The company signaled positive from having production base and marketing in the US which has been benefited from the growing US economy. In addition, it can reduce production cost due to the decrease of plastic pellets prices, especially HDPE which mostly used in automotive parts business and PP which mostly used in packaging business.

It is expected that plastic pellets prices will weaken to the low level at least 2 years which benefits to EPG business. It has improved internal production efficiency which can control all costs. EPG is a good stock in the period of commodity meltdown due to main consumers of pellets products.

EPG is still in the uptrend due to monthly buy signal, but it is still weak in the short term and medium term due to daily & weekly sell signal. EPG will return to strength with a new daily buy signal when the price can close above Bt7.60 and a new weekly buy signal when the price can close above Bt7.85, considering EPG, the main target price is Bt9.00. (Resistance: 7.55, 7.60, 7.70; Support: 7.45, 7.35, 7.30)

 

KGI Securities (KGI) has given an “Outperform” rating on Thaifoods Group Public Company Limited (TFG) with a target price at ฿5.10/share.

KGI states that TFG had achieved a 3Q19 core profit of Bt623mn (+53.0% YoY, 28.4% QoQ), beating the estimation by KGI by 31.0%, thanks to higher-than-expected swine revenue.

KGI revises up its 2019-2021 earnings estimates by 3.6%-14.8% in order to take into account the solid 3Q19 earnings result as well as to reflect benefits from low feed cost in the long term. Moreover, KGI also cuts its corn price and soybean price assumptions by 1.1%-3.0% and 1.2%-1.5%, respectively, in 2019-2021. As such, KGI now expects GPM to stay in a higher range of 12.5%-13.3%, up from 11.8%-13.3%.

Thus, KGI derives a new PER-based target price of Bt5.10 and maintains a rating of Outperform on the counter.