Daily Strategy for Investors on January 17, 2020

Asia Wealth Securities (AWS) released analysis for the trading session on January 17, 2020, indicating the essential events in the stock market as follows:

 

Investment Ideas:

1) The world trade continues to support the market. Recently, the US Senate approved the US-Mexico-Canada Agreement (USMCA) before submitting it to US leaders to sign as law. This may well boost confidence in the economy.

2) The depreciation of Thai Baht supports stocks in the theme investment that AWS recommends.

3) For the change of DTAC senior management, AWS does not see the impact of the 5G bidding. It depends on the license price conditions, especially the 2600MHz wave that the operator has given attention to.

4) Positive factors in the country are the acceleration of budget disbursement in 2020 is faster than expected after the Deputy Prime Minister stated that the acceleration of budget disbursement in 2020 will disburse 54% in the first half and at the end of 3Q20 (Jun 20) will disburse 70%.

5) The state has accelerated spending. Benefitted stocks are the Construction sector (CK, ITD, SEAFCO and TASCO), Retail sector (CPALL, HMPRO and BJC) and banking sector (BBL and KKP)

6) KKP Theme Investment – (1) Due to Baht depreciation and world trade was unwound, AWS chooses HANA (AWS TP Bt39.00), TU (AWS TP Bt18.40), and CPF (AWS TP Bt31.00). (2) Relaxing LTV measures. AWS chooses AP (AWS TP Bt8.20) and ORI (AWS TP Bt10.00). (3) Dividend stock, select power plant stocks (GPSC AWS TP Bt97.00), KKP (AWS TP Bt80.00) and (4) Government stimulus measures AOT (AWS TP Bt84.00), CPALL (AWS TP Bt94.00) and HMPRO (AWS TP Bt19.00).

7) AWS expects the SET to move within the range of 1,586 – 1,608 points (Support: 1,592, 1,586, and 1,576 points / Resistance: 1,602, 1,608, and 1,618 points).

8)  Recommended stocks today are CPF, PTTEP, SEAFCO, and CPALL.

 

Stock & Comment
CPF – TP ฿31.00/share
PTTEP – TP ฿3147.00/share
SEAFCO – TP ฿37.30/share
CPALL – TP ฿394.00/share

 

Pick of the day: CPF (BUY; AWS TP Bt31.00)

Data from the Office of Thai Agricultural Economics shows that pork price is continuously recovering. The price in January 2020 (MTD) is at Bt76.00 per kilogram or up by 10%MoM and up by 9%YoY. Broiler price in January 2020 (MTD) is at Bt35.00 per kilogram or up by 9%YoY.

Latest pork price in Vietnam in November 2019 (data from CPF) stood at 64,650 dong per kilogram or up by 19%MoM and up by 33%YoY. The latest situation, pork price in Vietnam (data from Asian Agribiz data) is around 74,000 dong per kilogram. Pork price in China (data from China Swine) is at 50 yuan per kilogram or up from August and September at 33 yuan per kilogram and 38 yuan per kilogram, respectively. The latest price situation is positive to CPF because data from the Ministry of Agriculture and Rural Affairs of China revealed the average wholesale pork prices in January stood at 45.21 yuan per kilogram or up by 4%MoM and up by 145%YoY as a result of supply shortages from the pandemic of African Swine Flu (ASF).

CPF received positive factors from the depreciation of baht. At present (16 Jan 63), the baht has depreciated by 0.27%YoY to be at Bt30.45 per USD. (CPF has 6% sales proportion from export)

AWS expects the Chinese New Year will result in higher pork and broiler prices. It is also a short-term positive factor for CPF. Recommend BUY with a target price of 2020 at Bt31.00 based on 16x PER.

Weekly outlook: the price is testing key resistance at Bt30.50. If it is able to pass and stand, it is expected to test the next resistance at Bt33.25 inconsistent with daily outlook. The price forms itself to Inverted Head and Shoulder to make 52 Week High. AWS sees the price to climb the average line by 5 days. Stop-loss point is at Bt27.50 (Resistance: 36.25, 33.25; Support: 29.50, 28.50).