Maybank Kim Eng Securities has made an analysis for the trading session on April 23, 2019, stating that SET yesterday moved with high volatility first, and then closed in negative territory. Speculation was seen on energy stocks (PTT, PTTEP, PTTGC) and selling pressure on banking (KKP, SCB) and TELCO (ADVANC and INTUCH).
The index closed at 1,673.5 points (-0.6 points) with a trading value of THB 47 billion, (THB 36 billion the previous day). Foreign investors switched to net buy Thai shares by THB 862 million, institutional investors net bought by THB 380 million. There were net long on SET50 index future by 2,549 contracts.
9 banks’ net profit excluding extra items in line: Yesterday, KTB was the last commercial bank to report a 1Q19 earnings of THB 7.3 billion (+12% above the market forecast), with some revenue recognition from the auction of AQ land of approximately THB 1.9 billion.
Overall, nine banks posted a total net profit of THB 54.8 billion (+ 32% QoQ, + 6% YoY). If excluding extra gain from selling shares of Ngern Tid Lor and others, total core profit is at THB 49 billion, close to the market estimates. Maybank believes that the banking share prices should swing in a range on anticipating on the economic outlook after the election and a chance of interest rate hike for loans, including a recovery of the non-interest income in the next period.
Other factors to follow include the government’s additional economic stimulus measures, focusing on domestic consumption boosting, especially on products and services in 55 secondary provinces, renewal of deduction of service fees, accommodation fees, which ended since December last year, and the expansion of VAT refund service points to tourists. All of these are expected to propose to the cabinet within the next few weeks.
For the investment outlook in the stock market, the SET is approaching the monthly resistance levels that Maybank previously assessed. It is likely to retrace in a range of 1660-1680 to wait for 1) 1Q19 earnings results of the energy and retail sectors, 2) outcome of the Constitutional Court verdict on the party list MPs seats calculation formula on April 24 and 3)the results of the trade negotiation between China and US in May.
Investment Theme in April
The SET in April should swing in the uptrend channel with a range of 1,630-1,680 points. Recommend investors holding cash not less than 40%. HOLD PTTEP, BEM and BJC.
1) The US removes sanction waivers to India, seven other countries importing oil from Iran, positive to global crude oil in the near term.
2) EPPO to reduce NGV subsidy after public transport fares hike, positive to PTT.
Stock Pick & Trading Idea
1) The US removes sanction waivers to India, seven other countries importing oil from Iran, positive to PTT, PTTEP
2) EPPO to reduce NGV subsidy after public transport fares hike, positive to PTT (up by 1.5% of earnings forecast for 2020)
3) Speculate on tourism promotion and consumption boosting measures to propose to the cabinet within 2 weeks, positive to retail (BJC, CPALL) tourism (ERW)
Technical View: If fails to surpass 1680, likely to move sideways in a range of 1655-1680
The buying pressure on the energy sector helped push the index to surpass the neckline resistance at 1680. But the signal gets weakening during the day, resulting in the index was not able to extremely breakout the level. In the near term, the index may move sideways to cool down the indicators that approached the overbought zone. But given the main trend being the uptrend, if the index weakens, it is a chance to accumulate stocks at the supports 1665 and 1655.
1) Investors with stocks, if rebounds but fails to breakout 1680, partly take profit for the next trading round. But if it dips below 1665, lock profit.
2) Without stocks, gradually buy stocks at support levels 1665 for a rebound trading to 1680 but if it breaks 1680, follow buy.
Maybank sets a support line at 1655 points and 1665 points, while setting a resistance line at 1680 points and 1690 points.
Keep An Eye On
1) US reports GDP on Apr 26.
2) The Constitutional Court to rule on the formula to calculate party-list MP on Apr 24.