Asia Wealth Securities (AWS) has made an analysis for the trading session on December 12, 2019, pointing out some of the must-know events in the equity market as follows:
1) The Federal Reserve’s Monetary Policy Committee (FOMC) unanimously agreed to maintain a short-term interest rate at 1.50-1.75% at yesterday’s meeting as the market has expected. In addition, the latest Fed meeting has signaled that there will be no change in interest rate throughout 2020 amid low inflation rate.
2) Investors still keep their eyes on trade negotiations between the US and China in the hope that both parties will be able to reach an agreement before the 15 December deadline which is the date when the US will impose new tariffs on imported goods from China.
3) SCC has adapted its retail business using both Online and Offline Marketing and focuses to be an Open Innovation, while reduce R&D roles in order to keep up with the Disruption in retail business. AWS sees it to benefit the adjustment of SCC. However, AWS sees only “HOLD” SCC with a target price of Bt345 as petrochemical business remains very bad since the 2H19 onwards. It is expected that the impact will remain until 2020. The recent price of HDPE plastic pellets has revised down by 11%QoQ to USD840 due to weak demand and supply comes in on time.
4) Tesco England aims to sell its business in Thailand and Malaysia worth up to Bt270bn. Large companies that are expected to acquire the business are CP group, the Berli Jucker group, and the Central Group. AWS sees that there is clarity in the current global trend on Retail Meltdown which is needed to adapt itself in using an Omni Channel marketing which is to use all forms of strategy combined with Online-Offline Marketing.
5) Investment strategy: Focus on service businesses such as health care and the airport, while the return to buy telecommunications and media which are expected to perform well in 2020. Focus on BDMS, BCH, AOT, ADVANC and PLANB.
6) Today’s index range is 1,545-1,560 point. Recommended stocks are AOT, BDMS and PLANB.
Stock & Comment
AOT – TP ฿84.00/share
BDMS – TP ฿27.50/share
PLANB – IAA Consensus TP ฿10.50/share
Pick of the day: AOT (BUY; AWS TP Bt84.00)
Aviation statistics are still strong. The number of foreign passengers in October and November grew by 11.4%YoY and 9.9%YoY, while from 1 to 7 December, the number of foreign passengers grew by 7.6%YoY. AWS sees 1Q20 net profit (Oct-Dec 2019) grow QoQ and YoY.
In case that the Department of Air Portion will divide the revenue collected from the Passenger Service Charge (PSC) of 6 airports at AOT by not more than 10% into the Regional Airport Development Fund of the Department of Transport (Thailand) still have to wait for the Council of State to interpret the law as to whether or not. It is expected to take at least 3 – 6 months.
AWS believes that AOT will not have much impact when considering the PSC rate adjustment conditions if there is an increased operating cost from the said case.
There is still an upside from duty-free auction at Don Muang Airport, expect conclusion no later than 23 December 2020. The latest King Power DutyFree Company Limited is the only private company to submit an auction envelope. December 13 will allow applicants to submit information. December 16 will open an envelope for a price or compensation / December 18 will be presented to the Revenue Committee / December 23 will present to the Board of Directors Concession covers an area of 1,880 square meters, and the airport will be entitled space administration Don Muang Phase 3 (The administration begins 1 October 2022 – 31 March 2033).
The share price has decreased by more than 11% in the past 3 weeks. AWS views it as an investment opportunity. As the current share price has an upside of 13%, fundamentals still recommend BUY.
AOT is likely to be in an uptrend due to the occurrence of the Monthly Buy Signal, but the AOT is still weak in the short and medium-term from both the Daily & Weekly Sell Signal. If the AOT is able to close the market above 75.25 baht again when considering AOT, the main target of making a new high is 82.25 baht. (Resistance: 75.00, 75.50, 76.50; Support: 74.25, 73.75, 72.75)