Maybank Kim Eng Securities has made an analysis for the trading session on July 2, 2019, stating that the SET on Monday sharply gained alongside the regional markets driven by strong buying on SCB and energy stocks PTTEP, TOP, GPSC, GULF including mid caps SINGER and HANA.
The index closed at 1,740.9 points (10.5 points) with a trading value of THB68 billion (THB61 billion the previous day). Foreign investors switched to net buy Thai shares by THB4.697 billion. Institutional investors net bought by THB773 million. There were net Short on SET50 index future by 20,978 contracts.
Investment Theme: Eyes on OPEC meeting
Maybank recommends investors keep an eye on the OPEC meeting this week in Vienna, Austria. Over the weekend, Russia has agreed with Saudi Arabia to extend by six to nine months a deal with Opec on reducing oil output.
What Maybank wants to update is the official results of the meeting tonight which include the amount of the production cut (the market expects at 1.2m bbl) and the period of time of production cut (the market forecast at 6 months). If the result comes out more than 1.2m bbl and/or longer than 6 months, Maybank expects it should affect the crude oil price in the short term.
In summary, Maybank still likes the upstream oil sector rather than the refinery and petchem sectors. Maybank also believes that OPEC will help stabilise the oil price. If the oil price sharply weakens and dips below our assumption of USD60-70/bbl for Dubai crude oil, accumulate PTTEP, target price at THB150. It has upside risk from Murphy, Partex and Mozambique LNG, with a total of THB12.
Maybank believes the SET should swing in a range of 1730-1750 points this week. Maybank still recommends investing in domestic plays stocks over global plays. Accumulate CPALL, BEM, TRUE, S and SINGER. For global plays, Maybank chose PTTEP as a top pick as its 2Q19 earnings should outperform the sector.
1) EU summit ends in deadlock as leaders fail to agree over the top job.
2) Ministry of Commerce reported June CPI grew 0.87%, 0.92% for 6M19.
Stock Pick and Trading Idea
MCS: Initiate coverage, “BUY”, target price at THB10. (upside 23%). The share price has plunged more than 55%, to reflect concerns about a decline in recognition of project gaining. However, with a return of Dr. Naiyuan Chi, it brings back confidence among investors (follow more details in our full research). Maybank expects 2H19 earnings should jump by 170% HoH and will be prominent from FY2020 onwards to THB512 million (+36% YoY). The share price trades at a low PER20 at 7.6x, with a high dividend yield of 6.6%.
If corrects but holds above 1730-1735, trading buy for a short term: The SET index opened with a gap, driven by buying pressure on big caps in all sectors. It moved sideways up all day with slight selling pressure at the end of the session. In the near term, if the index corrects but holds above 1730, it is just a brief correction. This is a buy opportunity at around 1730-1735 areas for trading. The resistances are 1750 and 1770. But if it dips below 1730, lock the profit.
1) With stocks, if holds above 1730, hold stocks and gradually take profit at 1750 and 1770. But if dips below 1730, lock the profit.
2) Without stocks, if weakens but holds above 1730-1735, accumulate stocks for rebound trading.
Maybank sets a support line at 1715 points and 1730 points while setting a resistance line at 1750 and 1770 points
Keep an Eye On
1) Trump may intensify sanctions on Iran.
2) Fed chair Powell to testify before the congress on July 10-11.
3) The U.S. to consider Huawei blacklist details this week.