Maybank Kim Eng Securities has made an analysis for the trading session on June 21, 2019, stating on the SET Thursday was back to swing in a narrow range, driven by strong buying pressure on GPSC, GLOW and media VGI, WORK and PLANB. However, profit was taken on BEM.
The index closed at 1,717.8 points (+11.9 points) with a trading value of THB75 billion (THB100 billion the previous day). Foreign investors continued to net buy Thai shares by THB4.5 billion. Institutional investors net bought by THB1.5 billion. There were net Long on SET50 index future by 4,188 contracts.
Investment Theme: SET to swing, anticipating on the results of G20 Summit
Following the FED meeting, interest rates were kept unchanged at 2.25-2.50% and there was more dovish signal that paved the way to an opportunity for an interest rate cut in 2H19 as the market and Maybank forecast. Maybank finds that SET index gaining 5% was a response to such positive momentum. So Maybank believes that the Thai bourse is likely to start correction and moving in a range of 1,690-1,730 points with anticipation on the results of the G20 Summit to take place on June 28-29.
Initially, Maybank has a neutral view on this summit results as Maybank expects the US may postpone the tariffs hikes on the Chinese imported goods with a limit of USD300b to avoid the tech war. However, if the results are better than expected, where both counterparts partially or as a whole, cancel the trade barrier, it will be a supportive factor to boost the global equity markets in 3Q19. Maybank expects the SET index should swing sideways up to trade at 1,750-1,800 points.
For the domestic factor, Maybank expects that after the government forming finalised within the next couple of weeks, Maybank may sees short-term economic stimulus measures gradually launched, especially for consumption. Maybank maintains positive view on CPALL.
Maybank estimates the large cap stocks may enter a correction period. This gives a chance to speculate mid caps, recommend “HOLD” PTTEP, BEM, CPALL and speculate TRUE, WORK, S and TPCH.
1) Xi Jinping to meet Kim Jong Un.
2) Brent sharply gained by 4.5% to USD64.6.
3) Thai Baht strengthens to THB30.8.
Stock Pick and Trading Idea
PTTEP: Accumulate, target price at THB150, added by 3 upsides; THB8 from Murphy, THB1 from Partex and THB3 from Mozambique FID, totaling THB162/share.
The MZ LNG project will help boost PTTEP’s sales volume by 22 KBOED for 25 years after reaching full production capacity in FY2025. That represents a 5% upside of sales volume in 2025. Based on the average LNG price of USD6.8/MMTU, the sales volume of 12.2 MTA, and WACC of 10.3%, Maybank estimates the average profit of THB4.1b pa, and addition value to PTTEP by THB3 per share. Fundamentally, PTTEP still growing 5-10% YoY, better than Global plays peers. Maybank expects it will begin recognising revenue from Murphy and Partex in 3Q19, with volume increasing over 7.5% and 20% in 2020.
If breakouts resistance 1720, more upside, next resistance is 1760: The SET index continued rallying, driven by strong buying pressure on big caps in all sectors, especially the energy sector. As a result, the index continued gaining and hit the resistance of the uptrend channel at 1720. With a +5.74% jump in Brent, Maybank believes the index is likely to manage to breakout the resistance 1720 and will open more upside. The next resistances are 1740 and 1760. Intraday, if the index weakens, it should not dip through the support 1710. If it slips, gradually lock profit.
1) With stocks, keep holding stocks and consider selling pressure at the resistance 1720 and 1740. But if dips below 1710 support, lock profit.
2) Without stocks, if weakens to test the support 1710 and holds, accumulate stocks.
Maybank sets a support line at 1700 points and 1710 points while setting a resistance line at 1740 and 1760 points
Keep an Eye On
1) G20 Summit on June 28-29.
2) Domestic factors: May exports data report.