Daily Strategy for Investors on December 16, 2019

Kasikorn Securities (KS) has made an analysis for the trading session on December 16, 2019, pointing out some of the must-know events in the equity market as follows:

Kasikorn Securities (KS) takes a mildly positive view toward the phase-one U.S.-China trade deal while domestic political uncertainty will pressure sentiment. The SET is expected to trade in a range of 1,565-1,585 today.

Under the first phase of the U.S.-China trade deal: 1) the U.S. has agreed to call off planned tariffs on USD160bn of goods; 2) the U.S. has agreed to cut the tariff on USD110bn of goods to 7.5% (from 15% previously) while keeping the rest; and 3) China will order more agricultural products from the U.S. Both parties are ready to start negotiations on a second phase. The signing of the first-phase deal will be postponed until January next year.

Thai electronics parts producers will benefit from the tariff cancellation on USD160bn of goods and the tariff cut on USD110bn of goods to 7.5% as most are electrical appliances and electronics products.

KS believes the SET has partially priced in the deal while investors will keep an eye on the actual signing and second-phase agreement in January. KS takes a mostly positive view of the details of the initial-phase trade deal. Foreign investors have turned their attention to domestic political uncertainty.

In this regard, KS expects the SET to be range-bound between 1,565-1,585 points today, and recommend taking profit in KCE, IVL and holding PTTEP and BEM while starting to accumulate OSP.

 

Investment strategy: Risk-averse investors should wait for the signing of the initial phase trade deal and second-phase agreement in January. Investors with risk appetite should accumulate BEM, PTTEP and OSP. We also recommend:

1) Stocks that will benefit from government measures: CPALL, BTS, ORI, TFFIF, STEC and CK.

2) Dividend plays: JASIF, TISCO, LH, TCAP.

3) ICT plays that will benefit from less competition (more revenues, lower costs): TRUE, DTAC, ADVANC and INTUCH.

4) Stocks that will benefit from IMO 2020: TOP, PRM, BGC and TASCO.

5) Stocks that will benefit from a recovery in Chinese tourist arrivals: AOT, ERW, MINT, CENTEL.

6) Stocks with specific catalysts: CPF, GUNKUL, TPCH, JAS, OSP, TKN, MEGA, TU, GFPT, BDMS, IVL, RBF, MAJOR, PTT, PTTEP, BLA and JMT.

 

Top Pick: PRM (TP Bt11.40) 4Q19 earnings will likely show further growth on full-quarter recognition of revenues from two newly acquired FSU vessels while 2020E growth is estimated at 31% YoY. FSU demand appears to have remained solid, backing the company’s plan to acquire eight additional vessels next year to expand its tanker and FSU businesses.