Daily Strategy for Investors on December 9, 2019

Krungsri Securities (KSS) has made an analysis for the trading session on December 9, 2019, pointing out some of the must-know events in the equity market as follows:

The SET Index fell 6 points (-0.4%) to close at 1,559 in Bt41b turnover. The absence of new catalysts and lingering trade war uncertainties had accelerated fund outflows. There were also fears the BoT might introduce new regulations to control banks’ fee income. Foreign investors were net sellers of Thai shares for an 8th day at Bt1,615m and net short TFEX at 9,937 contracts, but bought net Bt2,208m worth of Thai bonds.

 

KSS has a neutral-to-positive view on the SET today, expecting SET Index to rise to 1,565 but pull back after. The market should recover along with other markets in the region, driven by solid US Non-farm payroll data for November (+260,000) and with unemployment rate at a 50-year low of 3.5%. This created positive sentiment and drove up US 10Y bond yield to 1.84%. Crude oil prices also rebounded after OPEC + Non-OPEC members agreed to cut oil output by another 0.5m bpd to 1.7m bpd.

However, the unresolved US-China trade spat will continue to pressure the market. If the leaders do not agree on a preliminary trade deal before Dec 15, the US would proceed to raise tariffs on US$160b in Chinese goods. China reported exports had dropped 1.1% yoy in November, falling for the 4th consecutive month because of the trade war.

 

Investment Strategy: Selective Buy

Energy and Petrochem counters on recovering crude oil prices: PTTEP, TOP, PTTGC, IVL

Domestic plays: ADVANC, INTUCH, BTS, BEM

Stocks with bright 4Q19 earnings growth outlook: GPSC, CPF, ERW, TASCO, EPG, SAWAD, MTC, JMT, BCH, CHG

Dividend stocks:  KKP, TISCO, TTW

 

Recommended Stocks

IVL (BUY/ TP Bt45) – beneficiary of recovering crude oil prices. Huntsman assets will also support earnings from 1Q20 (Huntsman would lift IVL’s EBITDA by 20% in 2020).

CPF (BUY/TP Bt33.5) the AFS (African Swine Fever) outbreak has been priced-in.  Earnings will recover in 2H19 as average domestic swine price has risen from Bt55/kg to Bt64, and in Vietnam, it has almost doubled from VND33,000 to VND60,000.