Daily Strategy for Investors on November 21, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on November 21, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) Investors concern on trade direction between the US and China that may not be able to reach the conclusion on the first phase of trade agreement this year.

2) US Senate and House of Representatives have passed a law supporting democracy protesters in Hong Kong, which may affect the progress in trade negotiations between the US and China.

3) The Fed will disclose the minutes of the 29-30 Oct meeting to find any signals on the direction of the US interest rate. If there is a further decrease, it implies the “uncontrollable” recession. Recommend investors to sell their shares. However, we believe that the current interest rate in the US is at an appropriate level. It is expected not to revise down further.

4) The Constitutional Court ruled “Thanathorn” to disqualify as MP for having shares in a media company which will be effective from 23 May 2019 onwards. This has caused political concern.

5) Today’s index range is expected to be 1,585 -1,605 points. Recommended stocks are PTTEP and ADVANC.

 

Stock & Comment
PTTEP – TB ฿147.00/share
ADVANC – TB ฿250.00/share

 

Pick of the day: PTTEP (BUY; AWS TP Bt147.00)

The Partex deal closed before the end of the year 2019. By 2020, sales are expected to increase to 3.8 hundred thousand barrels per day, up 9.8%YoY.

Meanwhile, world oil prices fluctuated due to the uncertainty of the OPEC regarding the policy to reduce production. This will be clear after the OPEC meeting on 5 – 6 December. AWS expects the OPEC to continue to reduce production at 1.2 million barrels per day but there will be an extension from the end of Mar 20 to at least the end of Dec 20. AWS still believes that it is within the assumptions of US$63  per barrel while FY 2020 will be close to the end of 2019 at US$60 per barrel.

In this regard, AWS has reduced the case concerns. Fuel oil prices (HSFO) have dropped a lot. AWS has already estimated that PTTEP’s gas price structure will not be affected significantly. It is expected that FY 2020 net profit will remain at a high level of Bt 48 bn.