Daily Strategy for Investors on November 22, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on November 22, 2019, pointing out some of the must-know events in the equity market as follows:

 

Investment Ideas:

1) There are both positive and negative signals regarding the USChina trade negotiations.

2) The Fed prepares to find tools for dealing with the economy that faces the recession in the future, including the purchase of bonds. However, the Fed does not agree with the interest rate cut to negative levels like ECB and BOJ. AWS sees it will be a positive factor if the Fed stops cutting interest rate which indicates the US economy remains in a “controllable” state.

3) Overall, the global stock market is in the process of finding good growth assets with little risk causing the money to flow into large stock markets of the world, such as the US and Europe, instead of investing in Emerging Market. As a result, the performance of listed companies becomes weak such as in Thailand.

4) The Fed has discussed tools that should be prepared if the economy faces a recession in the future including the purchase of bonds. All Fed committees disagree with the interest rate cut to a negative level just like what the European Central Bank and Japan are currently carrying out.

5) Today’s index range is expected to be 1,585 -1,600 points. Recommended stocks are WHA, PLANB and PTTEP.

 

Stock & Comment
WHA – TP ฿5.20/share
PLANB    – TP ฿10.50/share
PTTEP – TP ฿147.00/share

 

Pick of the day: WHA (BUY; AWS TP Bt5.20)

WHA is projected to post the highest net profit of the year in the 4Q19 of around Bt600mn. It is expected that more than 200 rai of land in industrial estates will be transferred driving land transfers in 2019 to be higher than 1,000 rai with book revenue from assets selling to WHART REIT of around Bt4.9bn and to sign a contract with a major logistics customer with a total area of 2.0-2.65 hundred thousand square meters within the 4Q19 driving revenue to grow by 70% as targeted.

On 14 November 2019, the company signed a contract to sell the first phase of 1.3 billion square meters of land worth around Bt3.0bn to Alibaba. The trading process is expected to be completed and to recognize as revenue within 60 days from the contract signing date.

The share price has dropped by 4%. It is expected that the market is concerned that the transaction will be completed in the middle of January 2020 and the return of revenue will not happen in 2019. However, WHA announced to pay a dividend yield of Bt0.0815 per share XD on 21 November 2019, representing 1.9% of returned dividend.

AWS recommends “BUY” with a target price of Bt5.20 based on the SOTP method as AWS sees that industrial estates still benefit from the prolonged US-China trade war as well as the Thai government’s investment promotion.