Asia Wealth Securities (AWS) has made an analysis for the trading session on August, 2019, pointing out some of the must-know events in the equity market as follows:
1) There was a big lot sale of INTUCH shares at Bt60.75 which was 5-6% lower than a closing price. It was totaling of Bt 15.6 bn. There was also a selling force of energy stocks due to lower oil prices.
2) The BOT lessened on LTV criteria by considering the relaxation of counting borrowers who do not have residence ownership to receive more appropriate loans. This benefits property businesses. Outstanding stocks are ANAN, AP, LPN, SPALI, NOBLE and ORI which are all affected by the strict LTV measure.
3) Crude oil price continues to fall by 1% -2%. BDI was up by around 5.0% from the IMO 2020 measure. As a result, ship supply became shortage and drove up freight rate. The fall of crude oil and plastic pellets prices benefit to TASCO and EPG.
4) With the weak global economy and domestic economy in the second half of the year, it is expected that the government will issue economic remedies that stimulate both private consumption and government investment. Stocks that will be benefitted are stocks in retail and construction material sectors. The outstanding ones are CPALL, HMPRO, TASCO and TIPCO, etc.
5) Today’s investment strategy: Resume an investment mode -speculative by sector focusing on 1. The sector that benefits from the fall of oil price such as TASCO and EPG 2. The sector that benefits from the BOT’s easing on LTV measure by focusing on ORI, AP and ANAN. 3. The sector with good dividend of which the price is falling without any changes in its fundamental by focusing on INTUCH and ADVANC.
6) Today’s index range is expected to be 1,595-1,615 points. Recommended stocks are TASCO (TP ฿22.40), ORI (TP ฿11.50) and CPALL(TP ฿94.00).
Pick of the day: Recommend BUY TASCO at the target price of ฿22.40/share
AWS have a positive view on TASCO from the Analyst Meeting and expect that, in 2019, TASCO’s net profit will recover.
TASCO reported the 2Q19 net profit of Bt1.05bn (+769% YoY and +47% QoQ) and actual operating profit was Bt455mn. The 2Q19 sales had improved significantly from overseas sales. The entire year sales are expected to be 1.95 million tonnes. The management believes that there is a chance to increase to 2.1 million tonnes.
The selling price of asphalt has improved significantly in 2Q19. Asphalt selling price was higher than Brent crude oil price for the first quarter in the past 12 quarters. This situation has previously occurred in 2015 when TASCO profit and share price revised up relatively high.
AWS revised recommendation from HOLD to BUY with an adjusted target price from Bt19.70 to Bt22.40 based on 12.5x PER of 2020.
TASCO still has a major trend in the uptrend from the occurrence of Monthly Buy Signal. However, TASCO remains weak in both short and long terms form Daily & Weekly Sell Signal. The first target is at Bt20.20 and the initial target is at 24.60, respectively. (Resistance: 17.80, 18.10, 18.50; Support: 17.50, 17.20, 16.80)