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

Wednesday, December 25, 2019

The government is reviving the economy in 1Q20, good for earnings of listed companies. Still, fund inflow is unlikely in early-2020. Window dressing would be main drivers from now on. There is nothing new for our portfolio. Top picks are PTT(FV@B56), LH(FV@B12), and CPF(FV@B35)

SET Index 1,568.63 Change (pts) -4.94 Market Cap (Million B) 39,581

Watch SET Index signal today

There is no notable issues recently. Most stock market are closed during long holiday (Christmas plus New Year), so trading value is very thin. Yesterday, SET Index swung narrowly in the morning and fell almost 5 pts in the afternoon and finally closed at 1,568.63 pts, down 4.94 pts (-0.31%) with trading value of B39.5bn. The market was mainly closed by transportation plays, especially AOT (-2.33%), BEM (-0.90%), and JWD (-1.31%), and ICT plays ADVANC (-2.27%) and INTUCH (-2.53%), while it was supported by healthcare plays BDMS (+0.98%) and BH (+2.06%) as well as some other big-cap stocks, e.g. GULF (+2.49%), GPSC (+3.04%), and CPF (+1.83%).

The government is attempting to revive the economy in 1Q20 and launching more and more consumption stimulus campaigns. The 2020 budget bill is anticipated to be passed and ready for disbursement in February 2020. The BOT is focusing on stopping THB appreciation – after it has strengthened too much compared with fundamentals – and weakening THB in order to improve export. According to the BOT, investors have different opinion about THB, while the BOT is working on bringing THB appreciation. The MPC is still open the door to further interest rate cut if it is necessary to boost the economy. All these factors would have positive impact on fundamentals and boost earnings of listed companies. However, fund inflow is still unlikely because investors would face Fx loss if THB weakens; thus, foreign would slow down buying reverse to selling. There would be no more LTF buying from 2020 on, so institutional buy rally would plummet severely. SET Index is less likely to rebound in early-2020. Meanwhile, SET Index in late-2019 may still be driven by LTF and window dressing buy rally. There is nothing new for our portfolio. Top picks are CPF, PTT, and LH.

No new global issue. BOT revises inflation rate target

There is no new global issue. Stock markets worldwide have recently rebounded, while global oil prices are rising, especially Dubai (+1.3%), Brent (+1.2%), and WTI (+1%). The market still enjoyed positive sentiment from US-China trade talk that is taking a positive turn. Yesterday, U.S. President Donald Trump stated that he and Chinese President Xi Jinping will officially sign the US-China trade deal phase 1 in the first week of January 2020.

Many stock markets are closed on Christmas (today), e.g. U.S. markets. Meanwhile in Thailand, the cabinet approved the new 2020 inflation rate target of 1-3%, proposed by the Bank of Thailand (BOT) and the Ministry of Finance, versus the original target of 1-4%.

Net Buy and Sell by Investor Type (Million B) Foreign -1,158.64 Proprietary 132.12 Institutional -565.82 Retail 1,592.34

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

2020

HE

ALT

H

FREINDSHIP

Wish you all the best for 2020

LOVE

SUCCESS

GOOD LUCK

MO

NE

Y

HAPPY NEW YEAR

Market Talk Investment Strategy | Research Division

Notably, Thailand's inflation rate target was revised down to reflect changes in inflation structure. Technology development lowered production cost. E-commerce competition causes prices of goods (especially consumer goods) to decrease significantly. Moreover, Thailand is becoming an aged society, thus slowing down spending.

The BOT stated that this revision of 2020 inflation rate target does not signal changes in future monetary policies. The inflation rate was 0.21%yoy in November, not likely to rebound in 2020 yet and still far from the new target. The real interest rate (interest rate minus inflation rate) is still positive, so there is still a room for an interest rate cut. Still, we expected the interest rate to be maintained at 1.25% at least until mid-2020.

THB may weaken in 2020, slowing down fund inflow

2019 is the third consecutive year that Thailand faced foreign selling pressure. Thailand was with YTD cumulative foreign net selling of US$1.3bn or B43bn, the largest among Asian markets that were mostly with net buying, Taiwan at US$9.7bn, South Korea at US$929bn, and Indonesia at US$3.4bn, except the Philippines that also faced net selling of US$227m (must lower than Thailand). Foreigners were also with YTD cumulative net selling of B69bn in Thai bond market. Overall, Thailand faced YTD total foreign fund outflow (in both stock and bond markets) of B110bn.

Monthly Foreign Fund Flow in Asia

Source: ASPS Research

THB strengthened the most among Asian currencies by 7.23%ytd to B30.14/US$ at present, compared with IDR (+3.8%), PHP (+3.2%), and MYR (+0.4%). This has resulted in Fx gain and partly encouraged profit-taking selling pressure (a.k.a. fund outflow) in Thailand's money markets (bond and stock). On the other hand, strong THB makes Thai export goods more expensive than neighbors, while exporters would make less money converted to THB. As a result, Thailand's 11M19 export contracted 2.8% on average.

2017 2018 2019

Developed Countries

Japan 0 0 0 -0.1 0.2 -0.30

US 3 4 -3 1.75 2.1 -0.35

UK 1 1 0 0.75 1.5 -0.75

EU 0 0 0 0.0 1.0 -1.00

Developing Countries

Philippines 0 5 -3 4.0 1.3 2.70

Indonesia -2 5 -4 5.00 3.00 2.00

Malaysia 0 1 -1 3.0 1.1 1.90

Thailand 0 1 -2 1.25 0.21 1.04

India -1 2 -5 5.15 5.54 -0.39

Hikes/Cuts (times) Interest

Rate (%)

Inflation

Rate (%)

Real Interest Rate

(Interest Rate - Inflation Rate)

Date Indonesia Philippines S. Korea Taiwan Thailand Total2017 -2960 1095 8268 5736 -796 11343

2018 -3656 -1080 -5676 -12182 -8913 -31508

2019 (ytd) 3397 -227 929 9741 -1336 12503

Unit: Million US$

Market Talk Investment Strategy | Research Division

YTD foreign trading value in Thai stock vs bond markets

Source: ASPS Research

Change in worldwide currencies

Source: Bloomberg / ASPS Research

THB is anticipated to either appreciate or depreciate in 2020, as follows:

THB appreciation – Based on latest Bloomberg consensus, THB is expected around B30.4/US$ on average in 2020, strengthening from 2019 (YTD) average of B31.1/US$ (in line with our 2020 assumption of B31/US$). THB may strengthen further because:

1) Thailand has been with current account surplus for six consecutive years. In 10M19, Thailand's current account surplus amounted US$26.4bn, mainly from trade surplus. Export contracted, but import decreased more severely. Thailand was still with service surplus owing to a growth in tourist volume.

2) Thailand's YTD foreign direct investment (FDI) was as high as US$9bn. 3) In 2020, Thailand's credit rating is expected to be upgraded for the first time in 16 years

from A- to BBB+. After R&I upgraded Thailand's credit rating earlier, Moody’s and S&P are expected to lift Thailand's credit ratings too. THB are still considered safe haven. Thailand is still with current account surplus. International reserve is as high as B220bn (much higher than neighbors), covering 11 months’ worth of import.

-69,573,ytd

-43,458,ytd

-113,030,ytd

-140,000

-120,000

-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Bond Trading Value Stock Trading Value TotalMillion B

In the past five months, foreigners were net sellers in Thai stock and bond markets at B100bn and B53bn, marking total foreign

net selling of B150bn.

-2.49%

-0.87%

-0.51%

-0.20%

1.55%

3.33%

-6.65%

-3.25%

-2.08%

-1.23%

-0.73%

-0.50%

-0.18%

1.03%

-7.35%

-3.83%

-3.22%

-0.39%

1.83%

1.94%

-2.02%

-1.32%

4.22%

-0.86%

1.30%

-0.55%

3.17%

-0.86%

-10% -5% 0% 5% 10%

Thai Baht

Indonesian Rupiah

Philippine Peso

Malaysian Ringgit

Chinese Renminbi

Indian Rupee

British Pound

Taiwanese Dollar

South Korean Won

Singapore Dollar

Dollar Index

Hong Kong Dollar

Euro

Japanese Yen

2019 (ytd) 2019 (Aug 2 - Present)

DepreciationAppreciation

Market Talk Investment Strategy | Research Division

THB/USD Fx rate (2018 vs 2020 consensus)

Source: Bloomberg

THB depreciation – On the other hand, the BOT expects THB to weaken further in 2020. According to the BOT, THB has strengthened too much compared with fundamentals, so it is anticipated to stop strengthening or weaken in 2020. Similar to the BOT, we anticipate THB to weaken in 2020 while maintain 2020 assumption at B31/US$. THB may weaken because:

1) Fed will use stricter monetary policies. Fed signals it would keep the interest rate flat throughout 2020. This would strengthen USD while weaken THB in comparison.

2) Trade surplus (making up the most of current account balance) may fall. Trade war tension has subsided, allowing Thailand to expand export markets and increase export.

3) If Thailand's economy slows down significantly and probably fall below forecast, foreigners may become net sellers in Thai stock markets.

4) The BOT may have to use harsher measures (interest and non-interest) to stop THB appreciation.

Thailand’s financial balance

Fund inflow is still expected to slow down as a result of THB depreciation, political uncertainty, and MSCI rebalancing. MSCI is increasing weight inclusion of Chinese A shares, probably lowering investment weight in Thai stocks.

700 MHz band in NBTC bidding, weakening ICT plays

The NBTC approved the biddings of four 5G bands (700 MHz, 1800 MHz, 2600 MHz, and 26 GHz), in contrary to the telecom arbitrary committee's resolution to remove 700 MHz band from the biddings. ICT plays have been concerned that the bidding of 700 MHz band (which is advantageous for good coverage) would make it easier for the fourth player to enter competition. However, we are not concerned about the fourth competitor. We believe ICT plays rallied too much last week. CAT seems interested in 700 MHz bidding. Although CAT's

1Q19 2Q19 3Q19 4Q19 1Q20F 2Q20F 3Q20F 4Q20F 2018 2019 2020F

THB/USD 31.6 31.6 30.7 30.3 30.3 30.4 30.4 30.4 32.3 31.1 30.4

Appreciation (+) /

Depreciation (-)

(%yoy)

0.20% -1.00% -6.80% -7.70% -4.10% -1.00% 0.30% 0.30% -4.70% -3.80% -2.25%

3 4 1-8

1

13

0

1914 12

0 0

1727

37 34

22 205 5 5 5 5

6

5

6

7

-5

4 11

10

19

2430

23164.7 4.8 2.8

-7.6

2.3

15.7

2.2

21.9

14.89.4

-1.7-4.9

15.2

32.1

48.251.1

28.5 26.4

-40

-30

-20

-10

0

10

20

30

40

50

-40

-20

0

20

40

60

80

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Trade Balance Service Balance Primary Income (wage)

Secondary Income (transfer) Current Account Deficit (rhs)

Billion US$ Billion US$

Market Talk Investment Strategy | Research Division

financial position is strong enough, its subscriber base is still not ready and it would not be able to use the band immediately after the bidding; for example, disruption from microphone wave would take at least one year to fix. CAT would mostly provide ICT service for the public in accordance with the government's principles, so it is not likely to directly compete with private ICT players. Moreover, the NBTC has raised bidding guarantee requirement from 10% to 30% of reference price, which would help screen for bidders that are really interested in investing in these bands to do businesses, preventing the same risk as during the 4G bidding.

Under the new bidding structure, all three operators are still focusing on 2600 MHz and 26 GHz that are less expensive, not owned by any of them yet, and can be used for 5G service. 19 licenses of 2600 MHz band and 27 licenses of 26 GHz band are probably sufficient for all three mobile operators, while state enterprises are probably more interested in 700 MHz band, so prices of 2600 MHz and 26 GHz bands are likely to end up near the reference prices. Provided that 2600 MHz and 26 GHz licenses are evenly won by all three mobile players, each operator would have to bear additional cost of up to B1bn/year, much less expensive than the 4G licenses. Cost of new licenses would hurt earnings of all three mobile operators at different rates. It would have less impact on ADVANC’s 2019 normalized profit base of B32bn, while DTAC’s normal profit base of B6.2bn and TRUE’s normal loss of B1.3bn would be affected more severely. ADVANC's profit would still shine the most. Cost of new licenses would weaken 2020 earnings growth near market return, so we reiterate NEUTRAL. ICT plays fell yesterday, so this is a good entry point for solid ICT play that would still have solid profit base. We choose only ADVANC(FV@B270) 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

24.1%

16.0%

13.8%

12.7%

9.9%

8.3%

0.7%

-0.7%

-2.2%

-2.9%

-7.7%

-10.3%

-14.4%

-15.5%

-18.0%

-19.2%

-22.2%

-24.6%

-24.7%

-25.6%

-30

%

-20

%

-10

%

0%

10

%

20%

30%

FIN

ICT

FOOD

TRANS

MEDIA

ENERG

SET

COMM

HELTH

INSUR

CONMAT

PROP

BANK

AUTO

ETRON

AGRI

CONS

TOURISM

PETRO

STEELS

Market Talk Investment Strategy | Research Division

Market Talk Top Picks

Source: ASPS Research

StartDate Avg. Cost Last

MAJOR 17-Dec-19 10% 1.21% 24.70 25.00 32.00 19.73 3.40 4.82Dividend yield is over 4%p.a. LTF holds MAJOR shares. Based on five-

year statistics, MAJOR usually rallied in the last two weeks of a year.

LH 26-Sep-19 10% -2.02% 9.90 9.70 12.00 11.81 2.08 7.73Solid integrated property business structure (both for sales and for rent).

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

CPF 29-Nov-19 20% 3.74% 26.75 27.75 35.00 13.40 1.19 2.88

Pork and chicken prices in Thailand are rising thanks to long holidays in

December, directly benefiting CPF. Feed mill raw material cost is low

now.

RS 19-Nov-19 10% -7.75% 12.90 11.90 15.70 28.78 5.48 3.36

MPC business to rebound in 4Q19 as sales in December would make a

year's high thanks to Grand Sales promotions. Growth would continue in

2020.

ROBINS 03-Dec-19 20% -1.15% 65.00 64.25 70.00 22.47 3.50 2.10

ROBINS may have capital gain from the share swap with CRC owing to

CRC's stronger business bases, better growth potential, and better

business diversification (food, hardline, fashion).

BCH 27-Nov-19 10% -0.58% 17.10 17.00 21.10 35.68 5.92 1.54

2019 profit is expected to grow 10.4%. 2020 profit would be driven by

growth from cash patients. The number of patients (Thai and non-Thai)

at Kasemrad Hospital Ramkhamhaeng is growing significantly.

PTT 13-Dec-19 20% 0.00% 44.25 44.25 56.00 13.15 1.39 4.52

4Q19 profit is expected to improve qoq, driven by PTTEP's sales volume

growth. PTT is one of the most popular LTF stocks, so it would benefit

from late-year massive LTF buy rally.

Accumulated contribution returns since beginning of the year

Accumulated returns since beginning of the yearAccumulated returns

Accumulated returns since our recommendation

WeightDividend

Yield

Accumulated

ReturnPBV 2019F

PER

2019F

PriceStocks Fair Value Strategist Comment

3.74%

1.21%

0.00%

-0.58%

-1.15%

-2.02%

-7.75%

-10.0% -5.0% 0.0% 5.0%

CPF

MAJOR

PTT

BCH

ROBINS

LH

RS

RS, -0.03%CPALL, -0.13%

INTUCH, -0.14%JMT, -0.15%QHPF, -0.16%ROBINS, -0.17%

BJC, -0.18%WORK, -0.24%BDMS, -0.24%TU, -0.26%

ERW, -0.28%DIF, -0.34%

PTTGC, -0.41%CPN, -0.44%

AMATA, -0.70%MINT, -0.80%

DCC, -1.03%EA, -1.27%

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, 2.27%

WHA, 1.39%

MTC, 1.28%

STEC, 1.11%

PTTEP, 1.10%

QH, 1.05%

TFG, 1.01%

PLANB, 1.00%

CPF, 1.00%

PTT, 0.89%

STPI, 0.89%

SCC, 0.81%

POPF, 0.79%

DRT, 0.78%

BCH, 0.75%

FPT, 0.71%

SEAFCO, 0.63%

STA, 0.60%

JASIF, 0.58%

KKP, 0.56%

EASTW, 0.43%

LH, 0.40%

M, 0.38%

TPIPP, 0.21%

THANI, 0.17%

SCCC, 0.15%

ADVANC, 0.06%

DTAC, 0.04%

KBANK, 0.01%

0% 1% 2% 3% 4%

10.09%

-1.82%

-0.03%

0.30%

-1.38%-0.31%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

YTD MTD -1D

ASPS Portfolio SET Index

-5%

0%

5%

10%

15%

20%

25%

Jan 1

9

Feb 1

9

Mar

19

Apr

19

May 1

9

Jun 1

9

Jul 19

Aug 1

9

Sep 1

9

Oct 19

Nov 1

9

Dec 1

9

ASPS Portfolio SET Index

Equity Calendar

Research DivisionDecember 25, 2019

Monday Tuesday Wednesday Thursday Friday23 24 25 26 27

Shares Delist XD Conversion Par decrease

SSTPF FPT @B0.46 AS-W1 1:1w @B2.00 STARK B0.59 par (from B1.00)

STAR-W3 1:1w @B4.00

XD New shares trading XD

SSTRT @B0.2606 AYUD 54,900 shrs (w) AF @B0.025

NCL 127 shrs (w) BC @B0.11

XN TCAP @B4.00 (special div.)

SSTPF @B0.6752 TCAP-P @B4.00 (special div.)

Conversion

APEX-W1 1:1w @B0.40

B52-W2 0.204:1w @B7.355

CKP-W1 1.0007:1w @B6.00

GJS-W3 0.50:1w @B0.1668

PERM-W1 1:1w @B1.80

SST-W2 1:1w @B10.00

TGPRO-W3 1:1w @B0.50

TRITN-W3 1.00027:1w @B0.24993

30 31

XB

FTREIT @tba

XD

INGRS @B0.026

TTT @B1.70

Conversion

APURE-W2 1:1w @B4.50

B-W4 1.3087:1w @B0.92

BROOK-W5 1:1w @B0.25

CGD-W4 1:1w @B2.75

CHO-W2 1:1w @B0.86

CSC-P 1:1

GLOCON-W4 1:1w @B0.50

HPT-W1 1:1w @B0.50

J-W1 1:1w @B2.00

JCK-W5 1:1w @B3.50

JMT-W2 1.02031:1w @B18.62187 PUBLIC HOLIDAY

NOK-W1 1.5695:1w @B3.18574 (New Year's Eve)

ORI-W1 1:1w @B13.3333

PACE-W3 1:1w @B0.25

PRIME-W1 1.3946:1w @B1.0752

PRIME-W2 1.3095:1w @B1.5273

SCB-P 1:1

SDC-W1 1:1w @B0.50

SINGER-W1 1:1w @B7.00

SINGER-W2 1:1w @B14.00

SMT-W2 1:1w @B2.10

TAKUNI-W 1.07:1w @B1.88

TCC-W3 1.23886:1w @B0.807

TCC-W4 1.10801:1w @B0.903

TFG-W2 1:1w @B9.50

TNITY-W1 1:1w @B5.00

TTCL-W1 1:1w @B18.00

TVD-W2 1.002:1w @B0.998

U-W4 0.01:1w @B6.00

VGI-W2 1:1w @B10.00

WAVE-W1 1:1w @B6.00

WIIK-W2 1.185:1w @B4.221

ZMICO-W4 2:1w @B2.70

BOT : Nov-19 Trade

Monday Tuesday Wednesday Thursday Friday1 2 3

Conversion XW

TRITN-W3 1.00027:1 @B0.24993 RWI 2 existing: 1RWI-W2 @free

PUBLIC HOLIDAY

(New Year's)

MOC : Dec-19 CPI

6 7 8 9 10

XN

MIT @B0.175

13 14 15 16 17

XE

PDJ-W3 1:1w @B1.00 (final, "SP")

20 21 22 23 24

XR XD XE

NOK 3.50:1n @B2.50 GOLD @B0.48 NUSA-W3 1:1w @B1.00 (final, "SP")

27 28 29 30 31

XD XR XD

TSC @B0.60 YCI 1:2n @B10.00 UV @B1.00

BOT : Nov-19 Trade

January 2020

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)