Krungsri Securities (KSS) has made an analysis for the trading session on October 21, 2019, pointing out some of the must-know events in the equity market as follows:
Market Recap on last Friday
SET Index slipped 1.4 points (-0.1%) to close at 1,631 in Bt55b turnover in the absence of new support and following weaker-than-expected China 3Q19 GDP growth because of the trade war. There was selling in PROP, TOURISM and ETRON sectors.
Foreign investors were net sellers of Thai shares at Bt1,655m, net short TFEX at 6,224 contracts, and sold net Bt1,134m worth of Thai bonds.
KSS is neutral towards the market today, expecting the SET Index to move within 1,625 – 1,640. Thailand’s parliament passed the first of three readings for the FY2020 budget. However, the IMF cut global GDP growth to a 10-year low of +3.0% (from +3.2%) after adjusting for the trade war, and Brexit is still unresolved after the UK asked the EU to delay the withdrawal deadline by 3 months.
The SET will also be pressured by negative fund flows (Net Sell Bt6.6b MTD) and weak results from Energy counters due to huge stock losses.
Investment Strategy: Selective Buy
1) Stocks with robust 3Q19 earnings prospects: GPSC, BGRIM, EA, ADVANC, BCH, CHG, EPG, TASCO, PRM, JMT, JMART, BGC
2) Finance (MTC, SAWAD): To benefit from lower costs amid falling interest rates.
3) Defensive stocks: AOT, INTUCH, ADVANC, BEM, BTS, BDMS, BCH, CHG, GPSC, BGRIM, TTW, CPALL
ADVANC (BUY/TP Bt260 vs Bt231 close) – large domestic exposure shielded from the trade war. Earnings should continue to grow in 3Q19, and outperform big caps in Energy and Bank sectors. We project net profit at Bt8.5b, up 10% QoQ and 25% YoY.
EPG (TRADING/ IAA Consensus TP Bt9.4 vs Bt7.85 close) – 2Q20 net profit (Jul-Sep 2019) should expand QoQ and YoY led by a recovery in all business units, especially Packaging and Aeroklas on the back of lower HDPE, PP, and PET prices. Feedstock costs will continue to drop along with oil prices, which are currently at a 2-month low.