Daily Strategy for Investors on December 18, 2019

Investment Ideas:

1) There will be the MPC meeting today even though most bankers predict that the MPC will hold a policy interest rate at 1.25%.

2) AWS still hopes for an opportunity to announce the interest rate cut to fight with a weak domestic economy. In addition, Thai inflation remains low. BOT plans to help good debtors in credit card loans group and cash card through refinancing project. Such debtors will receive a special interest rate of 7-12% from the normal rate of 18-28%.

3) The Bank of Korea meeting on 31 December 2019, the policy interest rate will be at the same level as Thailand at 1.25%.

4) The prime minister gave a keynote “Vision of Thailand 2020” at the Nation Dinner Talk yesterday evening.

5) Today’s index range is expected to be 1,542 -1,555 points. Recommended stocks are AP, EPG and SC.

 

Stock & Comment
AP – TP ฿8.20/share
EPG – TP ฿9.20/share
SC – TP ฿3.10/share

 

Pick of the day: AP (BUY; AWS Bt8.20)

AP has benefitted from government measures, including fee reductions and the Ban Dee Mee Down Project, as the company has projects under development of over Bt50bn of which around 50% are projects under Bt3mn. Those measures are expected to help accelerate the transfer of low-rise projects in the 4Q19-1Q20 to Bt4.50-5.50bn per quarter from the original level of Bt4.00bn per quarter.

The 4Q19 is expected to be the quarter that AP will have the highest transfer of the year driven by Life 1 Wireless and Life Sukhumvit which are expected to be transferred over Bt4.00bn from the total project value of Bt10.00bn.

The sentiment of real estate stocks revised down as a result of a weak domestic economy. However, low-rise projects for property developers, including AP, still have good sales due to actual demand. In addition, AP also has revenue coming in the 4Q19 and the 1Q20 from large high-rise projects that is in the process of being transferred.

As a result, AP’s performance remains stable, while AP’s fundamental does not subside according to the share price of AP. In the past 6 months, the share price has revised down by over 17%, while in 2020, AWS expects the net profit of AP to revise up by 12%YoY driven by low-rise projects that remain growing as well as by backlog from JVs which will be transferred with the value of over Bt12.00bn or up by 50%YoY. In addition, the dividend payment rate in 2020 is expected to be higher at 5.6%. AWS sees it as an opportunity to invest.

AP is likely to be in the downtrend from the occurrence of Monthly Sell Signal. However, it will resume short-term and medium-term strength from the occurrence of the new Daily & Weekly Buy Signal. AP has a primary target of Bt7.30 and a short-term stop loss at Bt6.50 (Resistance: 6.95, 7.00, 7.15; Support: 6.85, 6.80, 6.65).