Asia Wealth Securities (AWS) released an analysis for the trading session on January 15, 2020, indicating the essential events in the stock market as follows:
Worries about the world trade situation resumed pressuring the market again after Bloomberg reported that the import duty tax on China’s goods will continue to apply until the finish of the US presidential election in November, although the report states that both the US and China, have the same understanding.
Keep an eye on the signing of the first phase of trade agreement with China at the White House today (15 Jan) at 11:30 a.m. in US time (11.30 p.m. in Thai time)
Social Security Office agrees to adjust the medical service fees in 2020 to the contracting hospitals in the social security system. The analysts of AWS have a positive view on BCH (AWS TP ฿20.60) and CHG (AWS TP ฿2.80). To note, AWS has not included these positive factors in the FY2020 earnings forecasts yet.
TISCO reported FY2019 net profit at ฿7.27bn, up 3.6%YoY, in line with the estimation of AWS. This was due to an 81%YoY decrease in bad debt provisioning. Loans at the end of 2019 stood at ฿240bn, up 0.9%YoY, while the NPL ratio dropped to 2.4% from 2018 of 2.86%.
Theme Investment – (1) Benefit from depreciation of Thai baht, world trade is unwind. AWS chooses HANA (AWS TP ฿39.00), TU (AWS TP ฿18.40), and CPF (AWS TP ฿31.00). (2) Relaxing LTV measures. AWS chooses AP (AWS TP ฿8.20), and ORI (AWS TP ฿10.00). (3) Yields from government bonds have decreased, AWS selects power plant stocks GPSC (AWS TP ฿97.00) and (4) Government stimulus measures AOT (AWS TP ฿84.00), CPALL (AWS TP ฿94.00), and HMPRO (AWS TP ฿19.00).
AWS expects the SET to move within 1,581 – 1,599 points (support 1,581 1,574 and 1,568 / resistance 1,593 1,595 and 1,606).
Stock & Comment
PYLON – TP ฿5.60
PTTEP – TP ฿147.00
CPF – TP ฿31.00
Pick of the day: PYLON (BUY; AWS TP ฿5.60)
The 4Q19 net profit is expected to grow outstandingly in construction sector. In the 4Q19, net profit is expected to grow YoY and QoQ, driven by large-scale construction work like Queen Sirikit National Convention Center worth around ฿600mn, while expenses remain nearly at the same level.
Received good news from the meeting of House of Representatives approving the draft Act of 2020 Budget for the amount of ฿3.2tn. The total value of the remaining construction projects over ฿520bn is expected to be able to open for auction again which will be in line with the period when large-backlog works will be delivered. The next step is to submit to the Senate for consideration. The consideration is expected to be completed by 20 January 2020.
PYLON is expected to pay dividend yields of ฿0.14 per share in 2019 or 2.9% per year.
Recommend “BUY” with a target price of 2020 at ฿5.60 based on a 16x PER.
Weekly outlook: the price closed above the 10-week mean line and there is a signal of reversal from RSI Crossover. Daily outlook : the price has risen to test the 100-day average line but has not yet passed. AWS sees the stock price being cheap by selling force for short-term profit. However, it is expected to fall below Bt4.90. If the price could stand above ฿5.00, it is expected to revise up to test the next resistance at ฿5.30 with a stop loss point of ฿4.84.