Daily Strategy for Investors on December 25, 2019

Asia Wealth Securities (AWS) has made an analysis for the trading session on December 25, 2019, pointing out some of the must-know events in the equity market as follows:

 

1) The US stock market slightly revised down after being positive continuously in the uptrend since 3 December 2019 and for 8 consecutive days to greet the Santa Rally Festival. However, there is no such event for the Thai stock market.

2) Today’s investment theme: Pick stocks that have an opportunity to turnaround as the price has dropped heavily but the fundamentals are still acceptable. In addition, pick stocks that is exclusively positive.

3) BGRIM sold a 25% stake in GLOW SPP1 worth Bt825mn to Asia Industrial Estate from 100% of the purchase value of Bt3.30bn. However, profit had not been recorded.

4) TCAP is scheduled to pay a special dividend of Bt4.00 per share and to post XD on 27 December 2019. AWS recommends BUY for dividend payment.

5) Today’s index range is expected to be 1,560 -1,578 points. Recommend stocks are TU, BGRIM, TCAP and BDMS.

 

Stock & Comment
TU – TP ฿18.40/share
BGRIM – TP ฿59.00/share
TCAP – TP ฿61.00/share
BDMS – TP ฿27.50/share

 

Pick of the day: TU (BUY; AWS TP Bt18.40)

Tuna raw material prices were stable in November and December at US900 per tonne, the lowest in 10 years. The white shrimp in November was Bt150/kg (size 60 shrimps/kg) or up by 12% MoM. The price has started to recover from the low of Bt134/kg in October 2019.

The TU’s gross profit margin in 9M19 was at 15.9%, higher than 13.7% in 9M18. AWS anticipates that the margin might remain close to 16% like 3Q19 of 15.9%.

The company returns to focus on domestic sales and focuses on Emerging Markets and Asian countries as well as to lower the export proportion to the US to minimize the risk from the appreciation of the baht.

Previously, TU price has dropped by more than 30% in 2H19, reflecting negative news from Baht appreciation. Meanwhile, the wage in Samut Sakhorn province is prepared to increase by Bt6.00 or about 1.8% in 2020, resulting in GPM to drop by 1% in 2020. AWS lowers the FY2020 GPM from 15.9% to 15.0% in 2020. AWS recommends BUY with a target price of Bt18.40 based on a 16x PER (the average PER of food industry)

TU is likely to be in the downtrend from the occurrence of Weekly and Monthly Sell Signal. However, TU starts to resume a new Daily Buy Signal with the first target of Bt15.40 and the initial target of Bt17.00, respectively. TU has a short-term stop-loss point at Bt13.10. (Resistance: 13.40, 13.50, 13.60; Support: 13.20, 13.10, 13.00)