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

Friday, January 10, 2020

As US-Iran tension and US-China trade war soften, SET Index is expected to rebound further and probably reach 1,600 pts again. We recommend partly cutting investment in PTT and CPF and switching to ROBINS and PSH. Top picks are EASTW(FV@B14), PYLON(FV@B7.35), and PSH(FV@B18.50).

SET Index 1,579.64 Change (pts) 20.37 Market Cap (Million B) 66,546

Watch SET Index signal today

U.S. President Donald Trump did not have aggressive stance, having positive sentiment on Asian as well as Thai stock markets. Yesterday, SET Index opened up 13 pts and remained in a positive territory for the entire day and closed at 1,579.64 pts, up 20.37 pts (+1.31%) with trading value of B66.4bn. The market was mainly supported by 1) energy plays, especially BGRIM (+6.70%), GPSC (+3.12%), and GULF (+3.26%), 2) commerce plays, led by BEAUTY (+23.00%), CPALL (+2.07%), and BJC (+2.38%), and 3) food plays, led by CPF (+5.36%), OSP (+4.14%), and MINT (+0.75%), as well as other big-cap stocks, e.g. AOT (+1.71%), SCC (+1.64%), and IVL (+5.74%).

Many international factors seem positive. US-Iran tension has softened and probably not turn out violent. US-China trade deal phase 1 is set to be signed on January 13, 2020. Thus, stock markets worldwide are rebounding. Although SET Index is supposed to rebound too, fund inflow has not entered Thai stock market yet as THB is still overly strengthening. Many organizations are attempting to slow down THB appreciation or weaken THB. However, Thailand is at risk of being added to U.S. currency manipulator watchlist, which may cause the US to terminate GSP program for Thailand. Meanwhile, the BOT is anticipated to revise LTV limit (effective on April 1, 2019) as urged by the Minister of Finance and the Thai Real Estate Association. If LTV rule is eased up (especially for second homes) this would have positive on housing plays, especially big-cap LH and PSH that have not rallied yet. We recommend decreasing investment in PTT by 10% (from 20% to 10%) and CPF by 10% (from 20% to 10%) and increasing investment in ROBINS by 10% and PSH by 10%. Top picks are EASTW, PSH, and PYLON.

Global markets at ease

Global stock markets have rebounded as US-Iran tension has softened. Neither the US nor Iran has declared any further action yet. Plus, there are two positive issues from the US:

1) The US wrote a letter to the UN, stating that it is ready for serious negotiation with Iran. 2) U.S. House of Representatives has approved a resolution seeking to limit U.S. President

Donald Trump's powers to take military action.

Markets have been optimistic that the situation would not escalate and turn in to a war. Fund flow has switched out from safe assets (e.g. gold and bonds) for the short term. Crude oil price is still decreasing, having negative sentiment on oil stocks, e.g. PTT and PTTEP.

Net Buy and Sell by Investor Type (Million B) Foreign -1,413.58 Proprietary 806.34 Institutional 1,261.93 Retail -654.69

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

Wanapruk Komonwitayatorn Fundamental Investment Analyst on Securities

License No: 110506

Pawat Pattrapong Quantitative Analyst Assistant

Market Talk Investment Strategy | Research Division

There are still many important international issues next week:

On January 13-15, the signing ceremony of the US-China trade deal phase 1 will take place in Washington. According to news, D.C. China's Vice Premier will travel to the US to sign the agreement.

On January 14, U.S. December inflation rate will be reported. The figure is expected at 2.3%yoy, close to Fed's target of 2%. This would encourage Fed to maintain the benchmark interest rate at 1.75% longer.

On January 17, China's 4Q19 GDP growth will be reported. The figure is expected at 6%yoy, staying flat from 3Q19 but the still the weakest growth in 27 years. If GDP growth turns out worse than expected, China is expected to use additional monetary policies.

2020 budget bill second, third readings. December CCI. THB manipulator watchlist?

This is the last day of the second and the third reading of the 2020 national budget bill with the total value of B3.2tr; it is expected to be passed without difficulty. Then, the budget bill will be considered by the Senate on January 20. We expect the budget bill to be ready for disbursement in early-2020, enabling the government to push forward major investment projects; this would encourage speculation on contractor plays, e.g. PYLON, CK, and STEC.

The University of the Thai Chamber of Commerce (UTCC) will report December consumer confidence index (CCI) at 11:00 today. Notably, CCI has declined for ten consecutive months and made the lowest point in 65 months in November. If it drops further in December, it would have negative sentiment on commerce plays.

Moreover, it has been concerned that Thailand may be added to U.S. currency manipulators watchlist. THB is at B30.3/US$ at present, weakening slightly after strengthening 7% in 2019. Bloomberg revealed that, according to U.S. Census Bureau data, Thailand is at risk of violating the three criteria of U.S. currency manipulators watchlist:

1) Thailand has trade surplus with the US of over US$20bn. 2) Thailand has current account surplus of over 2% of GDP (normally at least 2% of GDP) 3) Intervention in THB is equivalent to 2% of GDP in more than six months of the past year.

Notably, Thailand is violating two of the three criteria, with 1) trade surplus with the US of over US$20bn and 2) current account surplus of at least 2% of GDP (since 2015).

For the worst-case scenario that Thailand is added to U.S. currency manipulator watchlist, Thailand may be affected as follows:

1) The US may terminate the Generalized System of Preferences (GSP) program with Thailand (only preferential market access provided by the US to Thailand now). The US will terminate GSP program on some of Thai goods for the first time on April 25, 2020 (see more on Market Talk on October 28, 2019). Thailand's economy may be pressured more by the US from now on.

2) Fund flow in Thai stock market may slow down in Thailand, while THB would strengthen further. The Bank of Thailand (BOT) may not be able to implement additional to devalue THB (weaken THB) further. This may adversely affect Thailand's export.

Market Talk Investment Strategy | Research Division

LTV limit revision more likely, benefiting big-cap property plays

There is increasing expectation that the Bank of Thailand (BOT) should ease the current loan-to-value (LTV) limit from 80% of collateral value for second homes. The Ministry of Finance and the Thai Real Estate Association pointed out that 1) due to changes in the society, second homes are no longer intended for speculation but should be considered as real demand and 2) current LTV limit for second home has affected the property industry too severely.

Based on data from the 16 property developers under our coverage (medium- and big-cap), after property presales fell 28%yoy in 9M19, 2019 presales are expected at B271bn, plummeting severely by 23.5%yoy from B354bn in 2018. In this situation, property inventories would increase. Inventories under construction of 12 big-cap property plays totaled B598bn at end-3Q19, which is high compared with presales. However, end-3Q19 overall backlog is still as high as B332bn, which would gradually generate revenue. Transfers are determined by housing loans, especially strictness of financial institutions' loan issuance and LTV rule.

If the BOT eases up LTV rule for second homes (lifting LTV limit of 80%), it would benefit the property sector. Many property stimulus measures are already launched, especially transfer fee and mortgage fee cuts to 0.01% for home priced up to B3m and Baan Dee Mee Down (Good House with Down Payment) cashback of B50,000/unit on down payment for homes bought and transferred before March 31, 2020. These measures are expected to boost presales and backlog transfers, benefiting property developers. Among our recommended property plays, AP and SPALI already rallied, while LH(FV@B12) and PSH(FV@B18.50) are still favorable but have not rebounded much. Thus, LH and PSH are our top property pick.

Market dull in January 2020. Invest 45% in risky assets

US-China trade deal phase 1 is set to be signed soon and then talks on phase 2 will happen soon. However, US-China import tariff barriers have remain. Trade war would still have downside on global stock markets. Moreover, US-Iran conflict has intensified become volatile, probably take twists and turns any time.

Investment portfolio breakdown vs benchmark levels

Source: ASPS Research

Recommended securities by asset allocation

Source: ASPS Research

ASP InvestingFinancial

MarketBond

Other

SecuritiesThai Stocks

International

StocksBonds TCMFENJOY

BJC233A

SCC234A

FCN (EA US,

ILMN US,BKR

BGRIM,PTT,LH

AP,ROBINS,CPF

EA US

2313 HK

Financial Market15%

(up 5%)

Bonds30%

Other Securities

(FCN)10%

Thai Stocks35%

(down 5%)

International Stocks10%

Financial Market

15%

Bonds15%

Other Securities

(FCN)10%

Thai Stocks35%

International Stocks25%

Market Talk Investment Strategy | Research Division

We recommend investing 45% of portfolio in risky assets as follows:

Thai stocks 35% (benchmark level) - We decrease investment in Thai stocks by 5% from last month as the SET is still surrounded by negative factors. We expect Thailand's 2020 GDP growth at 2.8%, lower than the IMF's forecast of 3.4%. Political tension may escalate any time this month. THB is still strong. All these factors are still slowing down fund inflow. Our recommended stocks are still providing good returns; our portfolio provided 2.8%ytd return, outperforming SET return of -0.01%.

International stocks 10% (lower than benchmark level) - In 2019, international stock markets rallied robustly, so RSI entered the overbought zone. Particularly, U.S. stock markets jumped more than 30% (versus 20-year average market return of 5%p.a) and thus have 2020 expected P/E ratio as high as 18.8x. We recommend international stocks that have particular good news and not too expensive valuation to avoid risk in case as stock markets face negative factors, e.g. Electronic Arts Inc and Shenzhou International Group Holdings.

We recommend investing the other 55% of portfolio in safe assets, as follows:

Financial market 15% (benchmark level) - We recommend investing in the financial market, which is a good safe haven and provides higher or at least the same level of yields as deposit rates.

Bonds 15% (benchmark level) - While the stock market is surrounded by risk, bonds are also safe havens. The BOT has not closed the door for future interest rate cut yet if the economy decelerates further, which would boost bond prices while lower bond yields.

Other investment assets 10% (benchmark level) - It is advisable to partly invest in FCN that invest in international stocks (e.g. Electronic Arts Inc, Illumina Inc, and Baker Hughes Co) and provide stable returns of over 10%p.a. This would help reduce risk and ensure higher return than the financial market.

For additional recommendation and details, stay tuned to our researches. In 2019, our portfolio showed 11.0% and outperform the benchmark return of 5.9%.

ASPS’s 2019 investment return

Source: ASPS Research

11.0%

5.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Portfolio Benchmark

ytd)

Portfolio Benchmark

Market Talk Investment Strategy | Research Division

SET vs Sector Return 2019 SET vs Sector Return 2020 YTD

Source: ASPS Research Source: ASPS Research

Market Talk Investment Strategy | Research Division

Market Talk Top Picks

Source: ASPS Research

2016F 10-Jan-2020Start

Date Avg. Cost Last

MAJOR 30-Dec-19 10% -2.97% 25.25 24.50 32.00 16.90 3.22 5.32หุน้พืน้ฐานแข็งแกร่งทีม่ผีลประกอบการเตบิโตจากการขยายสาขาตา่งจังหวัดและ

ตา่งประเทศ คาดหวังเงนิปันผลสงูกวา่ 4%ตอ่ปี

LH 30-Dec-19 15% 2.68% 9.93 10.20 12.00 14.95 2.01 6.37ผลประกอบการไตมาส 4 มักจะเป็นจดุสงูสดุของปีเสมอ และไดม้าตรการภาครัฐ

อยา่ง บา้นดมีดีาวน์ เขา้มาหนุนอกีแรง

CPF 30-Dec-19 20% 7.27% 27.50 29.50 35.00 13.32 1.19 3.05ราคาสนิคา้โภคภัณฑท์ีฟ้ื่นตัวอยา่งตอ่เนื่อง อาท ิราคาหมูทีข่ ึน้มาเร็วและแรง ดี

ตอ่หุน้อาหารสง่ออกอยา่ง CPF

PYLON 02-Jan-20 10% 0.42% 4.74 4.76 7.35 11.63 2.92 6.88คาดผลประกอบการจะเพิม่ขึน้ใน 4Q62 และงวด 1Q63 น่าจะท า New High

เพราะ Backlog สงูสดุเป็นประวติกิารณ์ อกีทัง้คาดหวังปันผลไดส้งูเกนิ 5%

ROBINS 30-Dec-19 10% -1.14% 66.00 65.25 70.00 20.66 3.26 2.18มโีอกาสได ้Capital Gain จากการแปลงหุน้ CRC ทีม่ฐีานธุรกจิทีม่คีวามมั่นคง และศกัยภาพเตบิโตสงูกวา่ เพราะธุรกจิครอบคลมุ ทัง้กลุม่อาหาร, ฮารด์ไลน์

และแฟชัน่

EASTW 07-Jan-20 15% 4.50% 11.10 11.60 14.00 16.82 1.66 3.92

ไดอ้านสิงคจ์ากสถานการณ์ภัยแลง้ และในปี 2563 EASTW มกีารทยอยปรับขึน้

ราคาขายน ้าดบิดว้ยสตูรใหม่ ผลักดันใหก้ าไรสทุธปีิ 2563 กลับมาโตครัง้แรกใน

รอบ 5 ปี

PTT 30-Dec-19 20% 6.82% 44.00 47.00 56.00 13.33 1.41 4.26คาดก าไรปกต ิ4Q62 จะฟ้ืนตัวขึน้จาก 3Q62 หนุนหลักจาก PTTEP ทีค่าดจะได ้

ในสว่นของปรมิาณขายทีเ่พิม่ข ึน้

Accumulated contribution returns since beginning of the year

Strategist CommentStocks Fair Value

Accumulated returns

Accumulated returns since our recommendation

WeightDividend

Yield

Accumulated

ReturnPBV 2020F

PER

2020F

Price

วนันีป้รบัลดน ำ้หนกั PTT และ CPF อยำ่งละ 10% แลว้ลงทุนใน PSH 10% และเพิม่ ROBINS อกี 10%

7.27%

6.82%

4.50%

2.68%

0.42%

-1.14%

-2.97%

-7.0% -2.0% 3.0% 8.0%

CPF

PTT

EASTW

LH

PYLON

ROBINS

MAJOR

1.5%

1.3%

0.7%

0.4%

0.0%

-0.2%

-0.3%

-0.3%

-0.4%

-7.0% -5.0% -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0%

2.80% 2.80%

1.46%

-0.01% -0.01%

1.31%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

YTD MTD -1D

ASPS Portfolio SET Index

Stock with solid fundamentals from upcountry and overseas branch

expansion. Dividend yield is expected over 4%p.a.

4Q profit usually makes year's high. Plus, LH will benefit from

government economic stimulus measures, e.g. Baan Dee Mee Down

(Good House with Down Payment).

Pork and chicken prices in Thailand keep rising (especially pork price),

directly benefiting CPF.

Profit is expected to make new highs in 4Q19-1Q20 as backlog makes

record high. Dividend yield is expected over 5%p.a.

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).

EASTW benefits from the drought. It is gradually raising raw water

selling price with new formula. 2020 profit is expected to grow for the

first time in five years.

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.

Today we decrease investment in PTT by 10% and CPF by 10% and increase investment in PSH by 10% and ROBINS by 10%

Equity Calendar

Research DivisionJanuary 10, 2020

Monday Tuesday Wednesday Thursday Friday6 7 8 9 10

XD New listing - MAI > Services XE XD New shares trading

CPW @B0.021 Yggdrazil Group (YGG) 180m shrs, B0.50 par TWZ-W5 1:1w @B0.10 (final, "SP") TPCORP @B0.16 BROOK 4.0698m shrs (w)

(IPO 45m shrs @B5.00) SQ 2.894m shrs (w)

XN New shares trading

MIT @B0.175 New shares trading AMANAH 1.073m shrs (w)

WHA 237.503m shrs (w) BTS 18,600 shrs (w)

CGH 16,696 shrs (w)

JAS 45.018m shrs (w)

13 14 15 16 17

New shares trading Last trading day XE

CHO 13.015m shrs (w) GJS-W3 GJS-W3 0.50:1w @B0.1668 (final,"SP")

SCB 8,733 shrs (p) PDJ-W3 PDJ-W3 1:1w @B1.00 (final, "SP")

Conversion

CRANE-W1 1:1w @B3.00

20 21 22 23 24

XR XD XD XE

NOK 3.50:1n @B2.50 MGE @B0.21 GOLD @B0.48 NUSA-W3 1:1w @B1.00 (final, "SP")

Conversion

LIT-W1 1:2w @B4.00

RICHY-W2 1.22449:1w @B2.246

27 28 29 30 31

XD XR XD Conversion

TSC @B0.60 YCI 1:2n @B10.00 UV @B1.00 TWZ-W5 1:1w @B0.10 (final)

XE

STAR-W3 1:1w @B4.00 (final, "SP")

BOT : Nov-19 Trade

Monday Tuesday Wednesday Thursday Friday3 4 5 6 7

Conversion XD Conversion

BH-P 1:1 IRC @B0.4164 GJS-W3 0.50:1w @B0.1668 (final)

KTIS @B0.15 PDJ-W3 1:1w @B1.00 (final)

MOC : Jan-20 CPI MPC meeting

10 11 12 13 14

XD

PUBLIC HOLIDAY METCO @B10.00

(Makha Bucha Day)

17 18 19 20 21

XR Conversion XR Conversion

NEX 4:1n @B2.50 NUSA-W3 1:1w @B1.00 (final) KWG 1.7561:1n @tba STAR-W3 1:1w @B4.00 (final)

24 25 26 27 28

NESDB - GDP 4Q/18 BOT : Jan-20 Trade

Monday Tuesday Wednesday Thursday Friday2 3 4 5 6

XR

T 10:1n @B0.03

MOC : Feb-20 CPI

9 10 11 12 13

16 17 18 19 20

MPC meeting

January 2020

February 2020

March 2020

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)