Asia Wealth Securities (AWS) has made an analysis for the trading session on November 8, 2019, pointing out some of the must-know events in the equity market as follows:
1) The US and China agree to gradually cancel the import duties of each party that has been established during the US and China made previous trade wars.
2) The unwinding of trade war will benefit commodity goods. If interesting to invest in, we recommend PTT, PTTEP as a Play Save stock of the commodity sector.
3) The BDI dropped by -105 points to 1,428 points, or -6.85%, PSL experienced a loss of Bt29mn this quarter. It is likely to delay to invest in shipping sector.
4) China is considering to cancel restrictions on poultry imports from the US, which might post a negative sentiment to GFPT, CPF, and TFG.
5) PTTGC posted a 3Q19 earnings of Bt2.67bn, -79%YoY, which closed to our forecast. BCP reported a 3Q19 net income of Bt370mn, -80%YoY, while TOP will announce its turnover today with expected net income of Bt450mn.
6) SCB cut the loan and deposit interest rate by 0.25%, effective on 8 Nov 19. Keep an eye on KBANK, which is expected to cut the rate today.
7) The SET is estimated to be around 1,625-1,655 points with recommend stocks of GPSC, ORI, CPALL, MTC, and SAWAD
Stock & Comment
GPSC – TP ฿97.00/share
ORI – TP ฿10.00/share
CPALL – TP ฿94.00/share
MTC – TP ฿75.00/share
SAWAD – TP ฿72.00/share
Pick of the day: GPSC (BUY; AWS TP Bt97.00)
GPSC completed in capital increase along with the repayment of the loan at Bt74.0bn since October 2019 so that we expect that the firm will have the profit in 4Q19 at Bt1.48bn (+66%QoQ) due to the repayment of the loan will save the interest in 4Q19 at Bt590mn.
The earning in 2020 will jump from Bt4.4bn to Bt10.5bn, or increasing 139%YoY due to (1) The firm will obtain the profit from Glow, expected the earning GPSC+GLOW around Bt7.0bn (2) The firm reduces the debt so it will save interest paid this year at Bt2.4bn, and (3) The firm will gain the profit from Xayaburi at Bt1.0bn after the production capacity increased to 4,748MW at the end of 2019 and 4,766MW in 2020.
AWS recommends “BUY” with a target price at Bt97.00 by SOTP method. The merger of GPSC with GLOW has a reasonable price at Bt86.00 and synergy from the merger is Bt11.00.