Asia Wealth Securities (AWS) has made an analysis for the trading session on August 30, 2019, pointing out some of the must-know events in the equity market as follows:
1) Dollar strong, baht strong
2) The Chinese government insists that they are discussing with the US to arrange for a trade negotiation meeting in September and announces its intention to resolve the trade dispute with the US peacefully which help lessened investors’ concerns on the trade war.
3) Yesterday, there was a Battle Strategy event which was attended by experts in public and private economics. Most see that, from now on, AWS needs to be prepared to deal with the economic crisis. The 90% of the inverted yield curve that occurred in the past correctly indicates that the economic crisis is occurring. The trigger of this crisis comes from the trade war that had already emerged, even ending the trade war from Trump’s daily tweets might not be in time.
4) Preparing for the impact of Brexit that remains uncertain. There is a deadline on 31 October to reach a conclusion.
5) SCB (AWS TP Bt159) stated that it is adjusting heavily as it is aware of the digital disruption issue and has to change the mindset of people in the organization. It considers that it once used to be a bank that creates technology advancement but it may now need to turn itself to a technological company that provides banking services.
6) EA prepares to commercially launch the first phase of battery in 2Q20. It is ready to increase its production capacity to move towards the second phase in 2021, and eventually expand its business to energy trading which is currently under the process of setting up a platform.
Today’s Investment Ideas
1) Bottom Fishing Strategy means seeking to profit from stocks that are of low value or out of favor with positive factors but no one is interested in. Pick BANPU and SSP.
2) Stocks continue to rise, keep tighten the port, cut stock holdings again once the index revises up and hold more than 60% of the cash.
3) Try not to buy high-priced stocks. However, electricity, industrial estate, leading retailers, airport, and public transportation businesses are still prominent sectors at this moment. Core port stocks include GPSC, WHAUP, AMATA, CPALL, OSP, AOT and BEM.
4) Today’s index range is expected to be 1, 620-1,650 points. Today’s recommended stocks are BANPU, SCB, EA, SSP, and CKP.
Stock & Comment
BANPU – TP Bt14.50
SCB – TP Bt159.00
EA – TP Bt52.50
SSP – TP Bt11.00
CKP – TP Bt7.60
Pick of the day: NOBLE (TP Bt14.50)
AWS believes that 2Q19 net profit will be the lowest of this year. Even, the rest of the year, there will still be a risk from falling coal prices, there are positive factors from (1) production cost reduction plans (2) Coal sales volume increases (3) Power generation businesses in China that benefit from reduced coal prices and (4) risk of foreign exchange loss that is reduced. In terms of interim dividends, the company announced a payment of Bt0.35 per share (XD on 11 September, paid on 24 September). AWS recommends Buying with a target price of Bt14.50.