Daily Strategy for Investors on December 24, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on December 24, 2019, pointing out some of the must-know events in the equity market as follows:

 

1) Ministry of Commerce announced Thailand’s international trade numbers in November 2019, with exports continuing to contract at -7.39%YoY, while imports contracted -13.78%YoY. The trade balance is surplus of USD548.8mn. As a result, during 11 months of the year 2019 (Jan-Nov), exports contracted -2.77%YoY, while imports contracted -5.22%, worth USD218bn. The trade balance is surplus of USD9bn.

2) Keep an eye on the extension of BEM’s expressway concession into the cabinet today, the concession renewal is expected to be 15 years in line with our expectations, not affecting the fair value of BEM shares.

3) The trade balance is still good. The current account balance is very good. As a result, Thai baht continuously appreciates, but weak economic growth, especially in the SME sector, while household incomes and expenses declined.

4) The SET in the last five trading days, AWS anticipates the index will be closed at the level of 1,632 points. The EPS growth in 2019 might experience a negative territory of 6% to Bt90.7 EPS. AWS hopes window dressing, LTF, and RMF to flow to the market.

5) The FY2020 SET index is forecast to stand at 1,560-1,750 points, hoping the FY2020 EPS growth to be positive to 7.0% at Bt97.0 and expect PER benchmark at 18.0x. Recommended stocks in the 1Q20 are ADVANC, BBL, BCH, and KTC.

6) Today’s index range is expected to be 1,565 -1,585 points. Recommended stocks are TOP, HMPRO, and ADVANC.

 

Stock & Comment
TOP – TP ฿73.00/share
HMPRO – TP ฿19.00/share
ADVANC – TP ฿250.00/share

 

Pick of the day: TOP (BUY; AWS TP Bt73.00)

AWS believes that the downside of current GRM is limited, waiting for the supply side to ease after speculation in the oil market, as a result of the IMO, it is believed that the situation will return early 2020.

Risks to 4Q20 earnings were the base GRM decreased from US$6.2  from 3Q20 to US$3.0-3.5 a barrel in 4Q20 due to the impact of oversupply of fuel oil products including increased crude premium.

TOP has a production plan to support fluctuating margins, especially the significantly reduced spread. The company has a plan to sell the raw material of PX production to be a higher value petroleum product including operations to increase the proportion of VLSFO, which is priced higher than low-quality fuel oil. In the 4Q19, AWS expects the company to have a refining utilization rate of 108% – 110% because there is no plan to stop the Maintenance as in the past 3Q19.

Crude oil prices in the world market recover average 4Q19QTD crude oil price was US$62.1  per barrel, up 1.1%YoY, reducing the risk of recognizing Stock Loss as in the previous 3Q19.

The gradual recovery of GRM causing the refinery group to become attractive for investment.

TOP is still very strong in the main uptrend due to the occurrence of both Daily, Weekly, & Monthly Buy Signal. When considering TOP, the first target is Bt 70.75  and the initial target is Bt 78.00 respectively. TOP has short-term stop-loss points at Bt 67.75. (Resistance: 70.50, 71.25, 72.50 ; Support: 69.50, 68.75 , 67.50)