AWS Guides to Strategic Plays on Stocks with Positive Factors from Domestic Development

Asia Wealth Securities (AWS) gives recommendations for investment on the recent development on beverage taxes, tourism stimulus and EPPO’s price adjustment.

 

AWS expected the SET to recover in a technical rebound pattern after yesterday falling almost 3% on concerns over the situation of COVID-19 in China and the U.S., causing us to see that this recovery cycle is still very fragile, while it still needs to closely monitor the situation of COVID-19 in China and the U.S. Meanwhile, positive factors in the country are still supporting the short-term market from:

 

1) Measures to reduce beverage taxes

The cabinet resolves to reduce beverage taxes to 3% – Excise tax reduction measures for beverages that contain at least 10% fruit and vegetable ingredients, there will be 3% collected (formerly 10%). AWS was optimistic about the beverage groups, especially SAPPE.

 

2) Tourism stimulus measures

Tourism stimulus measures (cabinet’s meeting today) – Today’s cabinet meeting (16 June) has important agenda to follow: 3 packages measures to stimulate Thai tourism consisting of “Teaw Pansuk – Rao Pai Teaw Kan – Kamlungjai” in the amount of Bt22bn to encourage Thai people to travel within the country and help tourism operators affected by COVID-19, it will be  4-month operating period (July-Oct 2020). AWS saw positive for the group involved with aviation and hotel businesses (AOT, AAV, MINT, CENTEL and ERW).

 

3) Short-term speculation on stocks in PTT and refineries

The EPPO has adjusted the price of the refinery and extended the time to reduce the price of LPG and NGV – The Energy Policy and Planning Office (EPPO) has considered (1) revised the rules for calculating the price in front of the new refinery (beginning 17 June). AWS predicted that this will not much affect refineries’ performance since the current refinery price is based on Singapore prices (MOPS prices are global benchmark prices), plus premium from (1) product quality (2) shipping and (3) insurance. It is in accordance with the import parity criteria, which is the reference price not a requirement. Moreover, the refinery does not currently sell at the said price, and (2) the extension of the time to reduce the LPG and NGV price. This is not significant to PTT’s performance (affecting the FY2020 earnings forecast of less than 1%).