Market Talk Investment Strategy Research Division

English research reports are a rough translation of our Thai-language research products. It is produced primarily with time efficiency in mind, so that English-English research reports are a rough translation of our Thai-language research products. It is produced primarily with time efficiency in mind, so that English-reading clients can see what the main recommendations are from our Thai-language research team. Given that this is a rough-and-ready translation, Asia Plus Securities Company cannot be held responsible for translation inaccuracies.

ASIA PLUS SECURITIES CO.,LTD. Broker#8. Research Protection @Copyright 2015

The Thai language research reports and information contained therein are compiled from public data sources and our analysts' interviews with executives of listed companies. They are presented for informational purposes only and not to be deemed as solicitations to buy or sell any securities. Best attempts have been made to verify information from these vast sources, but we cannot guarantee their accuracy, adequacy, completeness and timeliness. The analyses and comments presented herein are opinions of our analysts and do not necessarily reflect the views of Asia Plus Securities.

SECURITIES CO.,LTD. Broker#8. Research Protection @Copyright 2015"

Investment Strategy

Tuesday, November 19, 2019

3Q19 GDP growth was worse than expected, but it may encourage additional economic stimulus measures. There is usually late-year LTF rally. Thus, SET Index is expected to stand above 1,600 pts. We lower investment in STPI and switch to RS. Top picks are CPN(FV@B94), FPT(FV@B20.10), and RS(FV@B15.70).

SET Index 1,608.00 Change (pts) 5.77 Market Cap (Million B) 42,907

Watch SET Index signal today

Driven by optimistic outlook about US-China trade war and late-year LTF buy rally, SET Index was in a positive territory for the entire day and closed at 1,608.00 pts yesterday, up 5.77 pts (+0.36%) with trading value of B42.9bn. The market was mainly supported by 1) energy plays, especially GULF (+2.98%), GPSC (+2.05%), ACE (+8.10%), and PTTEP (+0.83%), 2) transportation plays, particularly AOT (+0.94%) and BTS (+0.71%), and 3) petrochemical plays, led by IVL (+4.96%) and PTTGC (+1.91%), as well as some other big-cap stocks, e.g. AWC (+4.50%) and SCC (+1.06%).

3Q19 GDP growth was 2.4%yoy, lower than market projection of 2.6-2.8%, having short-term negative sentiment on SET Index. The government is expected to implement additional economic stimulus measures in the future, probably focusing on household consumption that would immediately inject money into the economic system and boost the economy for the rest of 2019. At the same time, the government would also accelerate investment (especially state enterprises), but this would not inject money into the economic system in the short term but take more time to take effect. Meanwhile, it would be very hard to solve export problems within the rest of the year. SET Index is still possibly robust mainly because 1) LTF buy rally is usually robust near the end of a year and 2) fund flow are switching from safer assets to riskier assets (stocks); all these factors would keep SET Index above 1,600 pts. For our portfolio today, we exclude STPI from portfolio and switch to RS; we upgrade recommendation for RS to BUY. Top picks today are CPN, FPT, and RS.

Trade war both positive and negative

Global stock markets have been volatile mainly as a result of trade war, which recently has both positive and negative sentiment:

Positive issue (+) – U.S. Commerce Department granted China-based Huawei (the world's No.1 telecom equipment producer) another 90-day extension of a temporary license, allowing Huawei to resume business with U.S. firms until February 16, 2020. This is the second time the US give Huawei reprieve after Huawei is blacklisted by the US in May 2019. This issue relieves concern about trade war escalating into tech war.

Negative issue (–) – According to CNBC, China is still not confident that the US would agree to sign the trade war truce deal phase 1 after U.S. President Donald Trump announced that he had not agreed with the rollback of import tariffs on Chinese goods yet. This issue reflects that trade war risk has remained.

Net Buy and Sell by Investor Type (Million B) Foreign -514.64 Proprietary 499.44 Institutional -119.01 Retail 134.22

Therdsak Thaveeteeratham Fundamental Investment Analyst on Capital

Market, Technical Investment Analyst License No: 004132

Paradorn Tiaranapramote Fundamental Investment Analyst on Securities

License No: 075365

Takit Chardcherdsak Fundamental Investment Analyst on Securities

License No: 087636

Jerdjaras Kaewkua Analyst Assistant

Wanapruk Komonwitayatorn Fundamental Investment Analyst on Securities

License No: 110506

Pawat Pattrapong Quantitative Analyst Assistant

Market Talk Investment Strategy | Research Division

Since mid-2018, the US and China has imposed four rounds of import tariffs against each other at the rate of 25% on goods worth over US$360bn, the first three rounds have been effective and the fourth round phase 1 already took effect in September, while phase 2 is set to happen on December 15, 2019.

However, global stock markets may face short-term profit-taking selling pressure if the US imposes the fourth hike phase 2 or threatens China with either harsher import tariff (from 25% at present to 30-40%) or additional non-tariff measures.

US-China trade war

Source: ASPS Research

Thailand's 3Q19 GDP growth worse than expected. Late-year stimulus likely...

The National Economic and Social Development Board (NESDB) reported Thailand's 3Q19 GDP growth of 2.4%yoy, lower than our forecast of 2.7% but still improving from 2.3%yoy in 2Q19. 3Q19 GDP growth was worse than expected mainly because 1) export contracted 0.5%yoy as a result of prolonged US-China trade war and THB appreciation by 6.8%yoy on average in 3Q19 and 2) private investment grew weaker than expected due to a decrease in purchase orders and a decline in confidence.

4Q19 economic growth would still be hindered by prolonged trade war and a delay in 2020 budget bill (which still unable budget disbursement for investment projects that do not build up contingent liabilities).

We anticipate the government to implement addition economic stimulus measures (financial measures), as follow:

Short-term economic boost – The government will have to implement consumption stimulus measure that does not require budget (due to limitation on 2020 budget) such as late-year tax deduction, especially Shop for Nation (tax deduction for spending on goods and services of up to B15,000) that has not been implemented yet. The government are currently implementing Chim-Shop-Chai (Eat, Shop, Spend)

Upstream• Organic chemical• Steam engine• Power generator

Intermediate• Jet engine• Electric circuit board• Rollform machine• Soldering machine

US$50bn25% import tariff

Jul 6, 2018 - Present

Up to 30% on

Oct 15, 2019

US$50bn25% import tariff

Jul 6, 2018 - Present

Upstream• Meat (beef & pork)• Dairy products• Soybean• Nut

Intermediate• Processed seafood• Processed fruit• Tobacco

Downstream• Auto• Leatherwear• Carpet & textile• Electric appliances• Tech goods

US$200bn10% import tariff

Sep 24, 2018 – May 9, 2019

25% import tariffMay 10, 2019 - Present

Up to 30% on

Oct 15, 2019

US$60bn5-10% import tariff

Sep 24, 2018 - Present

5-25% import tariff

Jun 1, 2019 – Present

Downstream• Alcoholic beverage &

tobacco• Leatherwear• Carpet & textile

Downstream• Agricultural goods• Clothing & footwear• Kitchen utensil• Antique

US$110bn15% import tariff(up from 10%)

Effective on Sep 1, 2019

US$30bn expected

5-10% import tariff

Effective on Sep 1, 2019

Downstream• Auto *• Tea & coffee• Alcoholic beverage • Crude oil *• Small-sized aircraft

Downstream• Smartphone (iPhone)• Laptop• Toy• Camera• Musical instrument

US$160bn15% import tariff(up from 10%)

Effective on Dec 15, 2019

US$45bn expected5-10% import tariff

Effective on Dec 15, 2019

Downstream• Aircraft• Agricultural goods• Glassware & kitchen

utensil• Furniture• Clothing & textile

China’s import tariff hike on USUS$185bn

U.S. import tariff hike on ChinaUS$520bn

Round

Round

Round 4.1

Round 4.2

Market Talk Investment Strategy | Research Division

program phase 1-3 worth B13bn in total, effective in October 2019 – January 2020, which is not boosting the economy significantly enough. These measures would benefit commerce plays. Top commerce pick is CPALL(FV@B100).

Medium- and long-term economic boost – The government is accelerating budget disbursement for investment projects, especially for state enterprises. According to the Ministry of Finance, state enterprises are set to invest B100bn worth of investment budget (0.7% of 2018 GDP) in November-December 2019, especially the State Railway of Thailand (SRT), Thai Airways, and Metropolitan Electricity Authority (MEA). This would have positive on investment. Meanwhile, disbursement processes take time, so these measures would not immediately inject money into the economic system.

Overall, Thailand's 9M19 GDP growth averaged 2.5%yoy, weaker than our 2019 forecast of 2.7%. Considering 9M19 economic components, they may be able to rebound and reach our 2019 assumptions. We maintain Thailand's 2019-2020 GDP growth forecast at 2.7% and 2.8%, which is still weak compared with the IMF's 2019-2020 GDP growth forecasts for Malaysia (4.5% and 4.4%) and the Philippines (5.7% and 6.2%).

Thailand’s GDP growth forecasts

Source: BOT / NESDB / ASPS Research

Look for positive earnings momentum: CPN, FPT, RS

3Q19 earnings report season has ended. 3Q19 earnings results of 585 SET-listed companies accounting for 92% of market capitalization (excluding AOT's 2019 earnings result that will be reported on November 29) have been reported with combined net profit of B213bn, increasing 1.7%qoq but decreasing 17.3%yoy. Overall, 9M19 market earnings (net profit) amounted B696bn, decreasing 15.20%yoy from B821bn in 9M18 and accounting for 69.58% of our 2019 forecast; we may cut 2019 earnings forecast. Moreover, 3Q19 GDP growth was reported at 2.4% (worse than expect), raising economic deceleration concern. All these negative factors caused SET Index plummeted 35 pts or 2.17% last week. Meanwhile, international factors are still unclear.

20107 2018 9M19 2019F 2020F 2019F 2020F 2019F 2020F

GDP Growth% (CVM) 3.9% 4.1% 2.5% 2.7% 2.8% 2.6% 3.2% 2.8% 3.3%

Household Consumption (C) 3.2% 4.6% 4.5% 3.9% 3.0% 4.3% 3.7% 3.8% 3.1%

Private Investment 1.7% 3.9% 3.0% 3.8% 3.8% 2.8% 4.2% 3.0% 4.8%

Government Investment -1.2% 3.3% 1.7% 2.5% 4.5% 2.3% 6.5% 2.5% 6.3%

Government Spending (G) 0.5% 1.8% 2.1% 2.0% 2.5% 2.2% 2.6% 2.3% 3.4%

Export (X) in USD 10.0% 7.5% -2.2% -3.0% 0.0% -2.0% 2.3% -1.0% 1.7%

Import (M) in USD 14.7% 13.7% -4.0% 0.5% 2.5% -3.8% 3.4% -3.6% 3.5%

THB/USD Exchange Rate 34 33 30.72 31 31 n.a. n.a. n.a. n.a.

Crude Oil Price (US$/bbl) 55 65 59.11 60 65 n.a. n.a. 64 63

Avg, Inflation Rate 0.7% 1.07% 0.81% 1.0% 1.12% 0.8% 1.0% 0.8% 1.0%

Interest Rate 1.5% 1.5% 1.25% 1.25% 1.25% n.a. n.a. n.a. n.a.

BOTNESDBASPS

Market Talk Investment Strategy | Research Division

We recommend stocks with great growth potential from now on: KKP, CPN, EA, CPALL, FPT, and RS. Top picks are CPN(FV@B94), FPT(FV@B20.1), and RS(FV@B15.7) for today owing to the following factors:

CPN(FV20@B94) – CPN is still laggard compared with SET Index, despite better growth potential from now on. 4Q19 profit would be driven by transfers of four new condominiums (Escent Chiang Mai 2, Chiang Rai, Nakhon Ratchasima, and PHYLL Phahol 32) as well as the two new malls that will be open for a full quarter (I-City Malaysia and Central Village). CPN sets 2019 operating revenue growth target at 10%yoy. Moreover, the sale of leasehold rights in five shopping malls worth up to B48.6bn to CPNREIT would result in extraordinary profit as well as cash flow for investment in 17 new projects. CPN has over 46.30% upside. This is a good entry point.

FPT(FV@B20.1) – FPT's businesses have grown more remarkably. 2019 net profit (October 2018 – September 2019) was B1.79bn, increasing significantly by 172%yoy. 2020 profit is expected to grow more robustly owing to consolidation of GOLD's financial statement for a full year. FPT's property portfolio is expanding and becoming more and more diversified, e.g. property for sales, service apartment, office building, department store, hotels, and factory-warehouse. FPT is expanding to new businesses (e.g. data center and co-working space). All these businesses would enhance FPT's growth potential from now on. This December, FPT will pay dividend yield of B0.46 (3% dividend yield); XD date is December 24.

RS(FV@B15.7) – RS is transforming into a data-driven player. Its two new partnering channels will be announced within this year. Then, RS will have 4-5 digital TV channels as product distribution channels and have audience base of 40 million per day. The multi-platform commerce business (MPC) is expected to rebound in 4Q19 as Grand Sales promotion would boost sales in December to a year's peak. Then, RS's profit would grow further in 2020 owing to new partners. RS has 23% upside now.

SET vs Sector Return 2018 SET vs Sector Return 2019 YTD

Source: ASPS Research Source: ASPS Research

5.7%

3.2%

-5.4%

-6.3%

-10.4%

-10.6%

-10.8%

-13.1%

-14.2%

-14.8%

-15.6%

-17.2%

-17.2%

-18.0%

-20.3%

-22.1%

-22.8%

-26.6%

-29.3%

-30.8%

-40% -30% -20% -10% 0% 10%

HELTH

FIN

TRANS

ENERG

PETRO

BANK

SET

COMM

ICT

CONMAT

PROP

AGRI

INSUR

ETRON

AUTO

TOURISM

FOOD

CONS

MEDIA

STEELS

25.1%

21.5%

19.5%

16.9%

13.9%

10.7%

4.2%

2.8%

-3.7%

-5.9%

-6.5%

-7.0%

-14.1%

-16.3%

-17.2%

-18.9%

-20.9%

-24.0%

-26.2%

-30.1%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

FIN

ICT

TRANS

MEDIA

FOOD

ENERG

COMM

SET

INSUR

CONMAT

HELTH

PROP

BANK

AUTO

TOURISM

AGRI

CONS

STEELS

ETRON

PETRO

Market Talk Investment Strategy | Research Division

Market Talk Top Picks

Source: ASPS Research

StartDate Avg. Cost Last

CPALL 11-Nov-19 10% -2.24% 78.25 76.50 100.00 29.96 8.77 1.72

2020 profit would show the biggest growth in three years. Fee income

from services would play more significant roles. The advertising media

deal with PLANB (at 1,000 stores) would make income in 2020.

EA 29-Oct-19 10% -7.33% 47.75 44.25 56.00 27.09 6.68 0.55

3Q19 net profit grew 16.4%qoq (slightly better than expected), mainly

because normalized profit was driven by the wind turbine business.

4Q19 normal profit is expected to grow further and make a year's high.

LH 26-Sep-19 10% 1.01% 9.90 10.00 12.00 12.17 2.14 7.50Solid integrated property business structure (both for sales and for rent).

Strong shared profit from associates (QH, HMPRO, and LHFG).

FPT 18-Nov-19 10% -1.27% 15.70 15.50 20.10 25.08 1.06 2.392020 profit is expected to grow more significantly thanks to

consolidation of GOLD's financial statement for a full year. Fair value is B20.10, still providing wide upside.

STPI 08-Nov-19 10% 0.00% 6.35 6.35 8.30 5.31 1.17 7.09 Today we exclude STPI from portfolio and switch to RS.

AMATA 24-Oct-19 10% -3.69% 25.75 24.80 35.70 15.13 1.89 2.64AMATA has over 11,000 rai of land in EEC areas (the most among

peers). Land backlog makes a new high of B3,750m.

CPN 21-Oct-19 10% 0.39% 64.00 64.25 94.00 25.04 3.99 1.80Still laggard compared with SET Index. CPN is selling leasehold rights in

five malls worth up to B48.6bn to CPNREIT.

KKP 16-Oct-19 10% 1.15% 65.50 66.25 79.50 9.26 1.28 6.79

KKP has dividend yield over 6%p.a. Core businesses for the rest of 2019

would be driven by net loan growth (mainly from high-yield loans) and

income from IB deals.

POPF 14-Nov-19 20% -0.38% 13.25 13.20 n.a. n.a. n.a. 7.60POPF's dividend yield is expected over 7.6%p.a. 3Q19 dividend is B0.15;

XD date is November 18, 2019.

Accumulated contribution returns since beginning of the year

Accumulated returns since beginning of the year

Stocks Fair Value Strategist Comment

Accumulated returns

Accumulated returns since our recommendation

WeightDividend

Yield

Accumulated

ReturnPBV 2019F

PER

2019F

Price

Today we exclude STPI from portfolio and switch to RS.

Yesterday we excluded JWD from portfolio and switched to FPT.

1.15%

1.01%

0.39%

0.00%

-0.38%

-1.27%

-2.24%

-3.69%

-7.33%

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

KKP

LH

CPN

STPI

POPF

FPT

CPALL

AMATA

EA

INTUCH, -0.14%JMT, -0.15%

QHPF, -0.16%BJC, -0.18%WORK, -0.24%BDMS, -0.24%

TU, -0.26%ERW, -0.28%DIF, -0.34%

PTTGC, -0.41%AMATA, -0.56%

MINT, -0.80%EA, -0.89%

DCC, -1.03%TTCL, -1.55%CK, -1.57%

JWD, -1.66%SPALI, -2.15%

BBL, -2.86%

-4% -3% -2% -1%

MCS, 3.38%TASCO, 2.43%

MAJOR, 2.14%WHA, 1.39%

MTC, 1.28%STEC, 1.11%PTTEP, 1.10%

QH, 1.05%TFG, 1.01%FPT, 1.00%PLANB, 1.00%

POPF, 0.96%STPI, 0.89%PTT, 0.89%BCH, 0.87%

SCC, 0.81%RS, 0.80%DRT, 0.78%

LH, 0.67%SEAFCO, 0.63%STA, 0.60%JASIF, 0.58%

KKP, 0.50%EASTW, 0.43%

M, 0.38%CPALL, 0.35%

TPIPP, 0.21%ROBINS, 0.17%THANI, 0.17%CPF, 0.16%SCCC, 0.15%

ADVANC, 0.06%CPN, 0.05%DTAC, 0.04%KBANK, 0.01%

0% 1% 2% 3% 4%

12.57%

-0.07%

0.19%

2.82%

0.41% 0.36%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

YTD MTD -1D

ASPS Portfolio SET Index

-5%

0%

5%

10%

15%

20%

25%

ASPS Portfolio SET Index

Equity Calendar

Research DivisionNovember 19, 2019

Monday Tuesday Wednesday Thursday Friday18 19 20 21 22

Co's name change XD XD XD XDAsian Seafoods Coldstorage (ASEAN) > HREIT @B0.19877 B-WORK @B0.188 BKI @B3.00 BGC @B0.09

Asian Sea Corporation (ASIAN) TPRIME @B0.1307 CPNREIT @B0.406 MCS @B0.25 BOFFICE @B0.1632IMPACT @B0.20 WHA @B0.0815 BSBM @B0.04

XD XN SAAM @B0.025 WHAUP @B0.0925 INSET @B0.035ATP30 @B0.02 TPRIME @B0.0616 MGT @B0.05

CPNCG @B0.1848 XN XR SRIPANWA @B0.2204DIF @B0.1656 New shares trading SPRIME @B0.176 MPG 4:1n @B0.18 SUTHA @B0.03POPF @B0.1569 AWC 1,043m shrs (pp)

PPF @B0.092 Conversion XNSIRIP @B0.10 AJA-W1 1.30972:1w @B1.527 (final) BOFFICE @B0.0081

XNERWPF @B0.0823

ConversionSAMART-W2 1.014:1w @B14.80

NESDB - GDP 3Q1825 26 27 28 29

XD XD XD Last trading date XDAIMCG @B0.1904 BROOK @B0.02 AMATAR @B0.185 CRYSTAL HPF @B0.0965AIMIRT @B0.1365 BTSGIF @B0.103 ASIA @B0.05 M-II @B0.14

APCS @B0.10 DCC @B0.022 BRRGIF @B0.14846 XD M-STOR @B0.10BKKCP @B0.20 FTREIT @B0.167 CPR @B0.2312 CPTGF @B0.2085 MNIT2 @B0.065

IVL @B0.35 HPT @B0.0181 FUTUREPF @B0.3624 EGATIF @B0.21

LHK @B0.12 KAMART @B0.07 ICN @B0.05 EPG @B0.10 XNPTL @B0.36 LPH @B0.075 PRM @B0.06 PREB @B0.20 CRYSTAL @b0.1313

TIF1 @B0.136 ROJNA @B0.20 SEAFCO @B0.07 RAM @B0.90 M-PAT @B0.10

SHREIT @B0.0285 SPI @B0.20 TFFIF @B0.1195 TMB @B0.03

XR SPC @B0.60 SUPER @B0.011 TTLPF @B0.431NBC 2:1n @B0.53 TNH @B0.55 ConversionNMG 3:10n @B0.06 XR Conversion AKR-W1 1:1w @B1.00

CHUO 1:1n @B0.10 XE META-W4 1:1w @B3.50 B-W3 0.12024:1w @B4.99Conversion MILL-W3 1.099:1w @B2.732 (final, "SP") BKD-W2 1.00731:1w @B3.971ECF-W3 1.008:1w @B4.9958 XN BTS-W4 1.011:1w @B10.384 (final)TMB-T1 1:1T @B1.40 (final) BTSGIF @B0.123 Conversion CGH-W3 1:1w @B2.00

SHREIT @B0.0657 CHEWA-W1 1:1w @B1.75 (final) CSC-P 1:1

DOD-W1 1:1w @B15.75

NUSA-W3 1:1w @B1.00

NVD-W1 1.018:1w @B7.86

PACE-W3 1:1w @B0.25

SAWAD-W1 1.237:1w @B48.476

SUPER-W4 1:1w @B2.50

TCMC-W2 1:1w @B4.00 (final)

UKEM-W2 1:1w @B0.50

BOT : Oct-19 Trade

Monday Tuesday Wednesday Thursday Friday2 3 4 5 6

Conversion ConversionCI-W1 1.0172:1w @B2.1628 NCL-W3 1.50:1w @B2.40 (final)

PUBLIC HOLIDAY

(H.M. the Late King Bhumibol Adulyadej's Birthday

National Day and National Farther's Day)

MOC : Nov-19 CPI 9 10 11 12 13

XDGOLD @B0.48

PUBLIC HOLIDAY

(Constitution Day)

16 17 18 19 20XW ConversionBTS 10 existing: 1BTS-W5 @free MILL-W3 1.099:1w @B2.732 (final)

MPC meeting23 24 25 26 27

XDFPT @B0.46

30 31

PUBLIC HOLIDAY

(New Year's Eve)

BOT : Nov-19 Trade

November 2019

December 2019

C = conversion, CB = convertible bonds, PP = private placement, p = preferred shares, w = warrants, n = new, STD = stock dividend, NPG = Non-Performing Group Provided by Amika (ext 1229)