Smart Pick 31 May 2018 Today’s strategy Accumulate on Big Cap stocks

Smart Pick

Accumulative Buy BANPU Closing Price: THB20.60

Target Price: THB32.00 Accumulative Buy PTT Closing Price: THB51.50

Target Price: THB59.50 Accumulative Buy AOT

Risk Level

Closing Price: THB67.50

Target Price: THB92.00

Neutral

Speculative Buy MINT Closing Price: THB34.00 Resistant level: THB34.75-36.00

TRADING : Buy&Hold

Profit-Taking

Share price should rebound after coal prices futures in 3 markets rose by 1.3% dod. Currently, Newcastle price closed at US$108.65/ton. BANPU should have a limit impact from MSCI reshuffle as BANPU weights only 1.1%. We see earnings had ready bottomed out in 1Q18. Current price trades at 7.1x PER18.

Energy stocks should gain benefit from rebounding NYMEX prices by 2.2% dod closed at US$68.21/barrel after OPEC and Non-OPEC still not yet increase oil production in this year. Share price dropped 8.9% since MSCI announced to reduce investment weight in Thai stock market on May 15th. We thus expected a reshuffle impact would limit although PTT weights in the index by 14.5%, a chance for investors to buy back.

Share price dropped 4.9% since the MSCI announced a reshuffle plan on May 15th. The reshuffle plan is effective today. So, we recommend to buy share back today as AOT’s fundamental remains solid. We have a positive view on Thai tourism sector and a clearer plan on 4 new regional airports (Udon Thani, Sakon Nakhon, Tak and Chumphon). These positive catalyst will be proposed to the Ministry of Transport in June. MINT should technically rise to test THB34.75-36.00. Support level is at THB33.75 (stop loss below THB33.25). We see a limit downside risk after share priced dropped by 23% YTD. However, key overhang factor is investment plan in NH Hotel Group after announced to hold 7% stake in this group. If MINT would like to increase stake holding, it might be cash call risk on MINT.

N.A.

Today’s Strategy

Strategist Team Mayuree Chowvikran Head of Research 662-009-8050 Padon Vannarat Strategist 662-009-8060 Piyapat Patarapuvadol Strategist 662-009-8062 Nutt Treepoonsuk Strategist 662-009-8059

On the last trading day in May, investment sentiment in stocks markets seems to be easing. U.S. and European stock markets rebounded. NYMEX crude oil prices closed up by 2% dod. Moreover, domestic political issue become clearer after the constitutional’s ruling on the draft of MP election bill is not against the constitution. Today, major factor for all EMs in Asia stock markets including Thai stock market is weight reduction after MSCI added A-share into MSCI EM Index. The SET Index, however, has already plugged by 2.7% since the MSCI announced on May 15th reflecting this factor. The reshuffle is effective today. Therefore, we expected the SET may be stronger than market expect and possible to close in a range of 1725-1730 with high trading volume. For June investment outlook, the SET index tends to recover during June based on latest 10 years data that a positive performance in June is 7 out of 10 years. Today, we recommend investors to “accumulate big cap stocks” which share price previously dropped as MSCI reshuffle factor such as Energy/ petrochemical/ ICT / Banking / Commerce sector (PTT / PTTEP / PTTGC / ADVANC / KBANK / BJC / CPALL). Moreover, we expected political tension in Italy will be easing after 2 parties who have the highest votes (Five Star and League) try to form a new government again in order to avoid re-election, supporting yesterday’s Italy stock market closed up by 2% and 10-year CDS spread fell more than 61bps.

Smart Pick

HOT

Topic 1.

2. 3.

4.

The constitutional court’s ruling on the MP election bill is not against the constitution. Any impact on the election roadmap? The MSCI Index reshuffle, today. Which stocks are attractive? Key factors is political tension in Italy which are on a process of forming government and bond auction which reflects investors’ confidence. What’s our view on stock market today and June?

Yesterday’s Market Movement Yesterday, the SET hit a lowest of the day at 1711 before rebounded to close at 1725.14 points (-9.40 point). Trading volume was THB77bn with 2 big lot items on SCC and BJC of THB1.3bn and THB1.2bn, respectively. Foreign investors were net sellers for a 9th day by THB4.4bn (-THB31bn in 9 days). Local institutions continued as net buyers for a 4th day by THB351mn (+THB3.7bn in 4 days). In SET50 index futures, foreign investors opened short contracts for a 6th day by 5,500 contracts (47,000 of short contracts in 6 days and 14,000 of short contracts in QTD) but local institutions & proprietary opened long contracts by 2,900 contracts (3,300 of long contracts in QTD). In the bond market, foreign investors bought bonds for a 5th day by THB18bn (+THB20bn in 5 days).

Today’s Main Factors • Thai Constitutional court’s ruling on the MP election bill is not against the constitution. • The FPO reveal Thai economy in April expanded further from 1Q18 and expected 2Q18 GDP to grow more than 4% YoY. • The 5 Stars Movement and the League parties do not want to re-election and propose an impeachment the President of Italy. • EU proposes to ban on single use disposable plastic products. The proposal will be considered in the European Parliament and member countries within May 2019. • 1Q18 U.S. GDP (2nd round) expanded 2.2% closed to previous reported of 2.3% • Media reveals that OPEC and Non-OPEC will control crude oil production until the end of 2018 but may gradually rise the production if needed. • Central Bank of Russia reveals that the weakening global oil price is a major risk for domestic financial institutions. • OECD revises down global GDP in 2018 to 3.8% from 3.9%. • U.S. prepares to charge an import tariff on steel and aluminum from Europe, today • Central Bank of Indonesia hike the policy rate by 0.25% to 4.75% (2nd time in this month) to support Rupiah currency. • Europe inflation and U.S. inflation (PCE) on May 31st (market expected at +1.8%) • Thai economic number in April, today • Thai inflation (CPI) and U.S. labor market on June 1st

Neutral - Settrade

May 31, 2018 - Moreover, domestic political issue become clearer after the constitutional's ruling on the draft of MP election bill is not against the constitution.

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