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.

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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.

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Investment Strategy

Monday, August 19, 2019

This inverted yield curve is probably just a short-term incident, while negative sentiment on SET Index will gradually subside. Still, fund inflow has not returned yet, so SET Index still has limited upside. There is no change in our portfolio today. Top picks are TASCO(FV@22.50) and FPT(FV@20.30). FPT has clearer business direction after GOLD acquisition, while its new business is becoming more concrete.

SET Index 1,631.40 Change (pts) 27.37 Market Cap (Million B) 66,019

SET Index rallying all day

Last Friday, SET Index rallied in the morning and the afternoon, surpassed 1,620 pts resistance range, and finally closed at 1,631.40 pts, jumping 27.37 pts (+1.71%) with trading value of B66bn. The market was mainly supported by 1) energy plays, especially PTT (+1.18%), PTTEP (+2.03%), TOP (+0.78%), and EA (+2.21%), 2) banking plays, led by BBL (+3.59%), KBANK (+1.61%), and SCB (+2.90%), and 3) commerce plays, e.g. CPALL (+2.42%), RS (+8.28%), and BJC (+1.44%), as well as big-cap AOT (+1.44%), TRUE (+5.00%), and SCC (+1.97%).

During the previous two rounds of U.S. inverted yield curve, before the Dot-Com crisis and the Subprime Crisis, U.S. two-year and ten-year bond yields were around 5-7%; bond yield tended to plummet significantly after inverted yield curves. Unlike the previous rounds, U.S. two-year and ten-year bond yields are only around 2-2.5% this time, having limited downside. This inverted yield curve is probably just a short-term incident and it is not likely to lead to economic crisis like the previous rounds. Still, investors have to watch other surrounding factors, especially trade war. Thailand's 2Q19 GDP growth will be reported this morning. Economists estimate the figure around 2.4-2.7%, which is low. Thus, the government may have to push forward easing monetary policies to boost the economy. These measures would benefit some sectors, especially tourism, commerce, and construction material. Yet, these sectors would not boost SET Index significantly. Investors have to remain cautious. We maintain our investment portfolio, investing 50% in safe assets.

Watch Jackson Hole meeting, Fed minutes, Thailand's 2Q19 GDP growth this week

Fed minutes for the July 31 meeting will be published on August 22. Notably, Fed lowered U.S. benchmark interest rate for the first time in 11 years by 0.25% to 2.25% at the July 31 meeting. The minutes probably revolve around Fed fund rate direction at the three remaining Fed meetings this year. Bloomberg survey suggested 100% probability of another Fed fund rate cut in September, 63% chance of 0.25% cut and 37% chance of 0.5% cut.

Jackson Hole meeting will be held on August 22-24. Central bank presidents and finance ministries of many countries will attend this meeting, including Fed chairman Jerome Powell, ECB president Mario Draghi, and Bank of Japan (BOJ) governor Haruhiko Kuroda. Investors

Net Buy and Sell by Investor Type (Million B) Foreign -5,068.91 Proprietary -1,722.70 Institutional 7,716.26 Retail -924.66

Porranee Thongyen Fundamental Investment Analyst on Capital

Market, Technical Investment Analyst License No: 004146

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 Economist Assistant

Pawat Pattrapong Quantitative Analyst Assistant

Market Talk Investment Strategy | Research Division

have to keep a watchful eye on economic outlook and monetary policies of each country for the rest of this year.

The National Economic and Social Development Council (NESDB) will report Thailand's 2Q19 GDP growth today. The figure is estimated at 2.4%yoy (weaker than our forecast of 2.7%), slowing down from 2.8% in 1Q19 as a result of trade war. Particularly, 6M19 export contracted 2.9% on average, in line with our assumption that 2019 export would contract 3%. Consumption is also expected to decelerate as purchasing power is depressed by the drought. GDP growth may turn out lower than expected, having negative sentiment on the market.

U.S. inverted yield curve not severe

As we mentioned in Market Talk on August 15-16, U.S. ten-year (long-term) bond yield declined lower than two-year (short-term) bond yield last week, also known as U.S. inverted yield curve. As a result, global stock markets were concerned about U.S. potential economic recession. Notably, after the previous rounds of U.S. inverted yield curve happened in 2000 and 2006-2007, they were followed by U.S, financial crises in 2001 and 2008-2019, causing stock markets worldwide to undergo correction.

However, this round of U.S. inverted yield curve would not cause economic crisis like the previous rounds. Notably, bond yields during the previous rounds were fairly high compared with current bond yields.

During the U.S. inverted yield curve in 2000, average two-year bond yield was 6.23%, higher than average ten-year bond yield of 5.96%

During the U.S. inverted yield curve in 2006-2007, average two-year bond yield was 4.81%, higher than average ten-year bond yield of 4.73%.

During the current (2019) U.S. inverted yield curve, average two-year bond yield is 2.18%, still lower than average ten-year bond yield of 2.37%.

Inverted yield curve (two-year bond yield higher than ten-year bond yield)

Source: Bloomberg

We believe bond yields have limited downside now, not likely to drop much from the current level. Thus, long-term bond yield is less likely to drop lower than short-term bonds; in other words, inverted yield curve is less likely to happen.

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Two-Year Bond Yield Ten-Year Bond Yield%

Dot-ComCrisis

Subprime Crisis

Crisis ?

Market Talk Investment Strategy | Research Division

U.S. inverted yield curve is caused by US-China trade war, which have resulted in worldwide economic deceleration and thus encouraged Fed fund rate cut; this has encouraged fund flow to switch from risky assets to safer assets. SET Index would have limited downside. This is a great entry point for stocks with solid fundamentals that are undergoing correction.

Economic cabinet proceeding with economic measures valued B316bn

Last Friday, the economic cabinet decided to push forward 2H19 economic stimulus measures valued B316bn focusing on consumption, tourism, and private investment; these measures will be proposed for cabinet approval on August 20.

Economic cabinet’s stimulus measures to be proposed for cabinet approval

Source: Compiled by ASPS Research

Out of the total B316bn economic stimulus budget, B200bn or 64.5% will be distributed through state banks, e.g. the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Government Savings Bank (GSB), to help relieve debt burden for farmers or lower interest. The other B110bn or 35.5% will come from the annual budget bill. Out of B316bn total budget, only B30-40bn of which (or 0.25% of 2018 GDP of B16.3tr) would be immediately injected into the economic system through 1) B500 additional welfare card allowance (from B500 to 1,000) and 2) 1,000 cash handout for domestic tourism outside home provinces.

These cash injection measures would stimulate the economy. However, Thailand's economic growth is still limited and the economy is still surrounded by international negative factors.

Fund outflow since early August. Limited downside now

Last Friday, foreign funds possessed a net selling position in Asian market was US$703m (sixth day). Only the Philippines reversed to be with net buying of US$5m (after eight days of net selling), whereas the rest faced net selling: Taiwan at US$406m (fifth day), South Korea at US$87m (12th day), Indonesia at US$50m (fifth day), and Thailand at US$164m or B5bn (fifth day). On the other hand, local institutions were net buyers at B7.7bn.

MeasureGovernment Measures

Benefiting StocksTarget

Consumption

Spending

•Raising welfare card allowance by B500 to B1,000 each in August-September 2019.

•Raising welfare card allowance by B500 each for elderly people, disabled people, and poor people in August-September 2019.

•Mother Pracharat: B300/month subsidy for child aged 0-6 in August-September 2019.

•Tax deduction on spending (e.g. Shop for Nation).

BJC, ROBINS, CPALL,

DCC, DRT

Farmers •Emergency loan of up to B500,000 for drought-hit farmers, totaling B5bn.

•Extending loan repayment deadline for loans at the Bank for Agriculture and Agricultural Cooperatives (BAAC) and providing production cost reduction for in-season rice farmers in 2019/20 crop year.

Tourism•B1,000 allowance for domestic tourism (outside home provinces) for 10 million people aged over 18.

•15% cash rebate for tourism spending B30,000.

•Extending visa on arrival (VOA) fee waiver for Chinese and Indian tourists for one more year.

ERW, CENTEL, MINT

Investment

Private Sector •150% tax deduction for spending on new machinery.

•Promoting investment in EEC provinces (Chachoengsao, Chonburi, and Rayong).

AMATA, WHA, FPT

Market Talk Investment Strategy | Research Division

Economic recession concern has remained, so fund flow is still switching from risky assets to safer assets. Foreigners have possessed MTD cumulative net selling in Thailand at B40bn, marking this August the month with the largest net selling, as well as opened more than 72,000 net contracts of short position in SET50 Futures. These factors have resulted in U.S. inverted bond yield during the day. However, U.S. ten-year bond yield is currently much lower than in the past, so it would have limited downside. Amid US-China trade war concern, Fed fund rate is expected to be lowered further, so SET Index would have more limited downside.

Monthly Foreign Fund Flow in Asia

Look for particular positive factors: TASCO, FPT

Markets are waiting for conclusions about many issues, especially conclusions about economic outlooks and future monetary policies at the Jackson Hole meeting. Trade war has receded for the short term but still needs to be watched closely. Economic stimulus measures would boost SET Index, but they would not boost the economy very significantly. We recommend stocks benefiting from purchasing power boost and defensive stocks with solid fundamentals and particular good news.

Top picks today are:

FPT(FV@B20.30) - The analyst meeting will be hold today. 3Q19 net profit (April-June 2019) was B279m, advancing 332.45%yoy mainly from higher revenue from property sales and factory and warehouse rental. FPT's businesses are expected to grow further. FPT just signed a 15-year lease agreement with Central Retail (CRC) to develop a mega-scale Omnichannel distribution center of over 75,000 sqm, aiming to become Thailand's first world-class logistic campus to serve the digital trend and future technology for the logistic industry. Moreover, GOLD acquisition would make FPT an integrated property developer; GOLD's financial statement is not consolidated yet. Preliminarily, GOLD acquisition would boost FPT's fair value by B1.14 to B21.44. TASCO(FV@B22.50) - Asphalt price is rising. Additional insurance claims will be booked in 4Q19, boosting 2H19. The price has 25% upside from the fair value of B22.50, still attractive.

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

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

2019 (ytd) 4389 332 4571 646 657 10594

Jan 2019 964 356 3658 1818 214 7010

Feb 2019 -237 178 615 2471 -106 2923

Mar 2019 118 88 262 24 -516 -24

Apr 2019 3740 194 2252 1676 107 7968

May 2019 -514 -270 -2548 -3726 114 -6944

June 2019 776 -139 287 1091 1505 3520

July 2019 -20 81 1620 -616 653 1717

Aug 2019 (ytd) -437 -156 -1577 -2092 -1314 -5576

Unit: Million US$

Market Talk Investment Strategy | Research Division

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

26.2%

22.5%

21.5%

20.6%

12.2%

9.8%

4.3%

4.3%

3.1%

2.3%

-0.5%

-1.8%

-3.1%

-6.9%

-7.1%

-9.5%

-12.2%

-16.1%

-23.7%

-25.6%

-30

%

-20

%

-10

%

0%

10

%

20%

30%

ICT

MEDIA

FIN

FOOD

COMM

TRANS

SET

ENERG

CONS

PROP

AGRI

CONMAT

INSUR

AUTO

HELTH

BANK

TOURISM

STEELS

PETRO

ETRON

Market Talk Investment Strategy | Research Division

Market Talk Top Picks

Source: ASPS Research

StartDate Avg. Cost Last

Accumulated contribution returns since beginning of the year

Accumulated returns since beginning of the year

13.60

Accumulated returns

Accumulated returns since our recommendation

18.90 18.10 22.9410-Jul-19 23.00 10% -4.23%

ROBINS 01-Aug-19

POPF 13.70

TU

15-Aug-19

70.00 20%

n.a.n.a. 20%

2.04-0.59%63.38 63.00

1.39

n.a.

0.74% n.a.

2.62

GOLD acquisition expands FPT's integrated property development

business. Profit base would grow further owing to joint ventures with

foreign partners.

-5 Day Chart

n.a.

20.30

Price

18.4010%

Market price is only 5% above benchmark value (premium is much

lower than peers). Dividend yield is expected as high as 8.49%p.a.11.20

Stocks Fair Value Weight

06-Aug-19 n.a. 10% 11.60

17.65 35.92

JASIF

22-May-19FPT

22.03 3.42

Investors normally have to buy IPO shares by themselves, but ROBINS

shareholder will have better chance to own CRC shares. Yield is

expected over 4.7% until share swap in early-2020.

n.a.

Dividend

Yield

3.57%

PER

2019F

2Q19 profit would be strong as tuna and shrimp export enters high

season. 2Q19 net profit is expected at B1.25bn, growing significantly

from 2Q18.

2.491.93

n.a.POPF is less volatile than the market (beta below 1x). Dividend yield as

high as 7%. Great safe haven.

Accumulated

Return

4.25%

Strategist CommentPBV 2019F

MCS 02-Aug-19 11.30 10%

TASCO

7.65

18.00

PLANB 07-Aug-19 10.40

8.75 14.38% 9.93 1.32

14-Aug-19 22.50

1.28

PLANB wins the broadcast rights for the 2020 Tokyo Olympics, so 2020-

2022 earnings are expected to grow significantly. 2Q19 profit is

estimated to grow 20%yoy and 19%qoq.

10% 8.60 8.40 -2.33%

10% 17.50

2Q19 profit jumped 769%yoy as normalized profit was boosted by

consistent crude oil supply to asphalt plants; plus, gain from insurance

claims was booked.

2.86% 10.84

6.15

1.95

39.21 4.58

4.44

2Q19 profit is expected at B82m, up 18%qoq as delivery volume grows

and boosts sales. MCS is likely to win two new projects soon.

14.38%

4.25%

3.57%

2.86%

0.74%

-0.59%

-2.33%

-4.23%

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

MCS

FPT

JASIF

TASCO

POPF

ROBINS

PLANB

TU

INTUCH, -0.14%JMT, -0.15%

QHPF, -0.16%BJC, -0.18%

BDMS, -0.24%PLANB, -0.27%ERW, -0.28%

DIF, -0.34%PTTGC, -0.41%

ROBINS, -0.63%MINT, -0.80%

DCC, -1.03%BBL, -1.84%

-3% -2% -1%

PTTEP, 1.69%

MCS, 1.60%

MAJOR, 1.53%

WHA, 1.39%

MTC, 1.28%

STEC, 1.11%

FPT, 1.09%

QH, 1.05%

TFG, 1.01%

POPF, 0.94%

STPI, 0.88%

SCC, 0.81%

RS, 0.80%

BCH, 0.78%

SEAFCO, 0.63%

CPALL, 0.60%

JASIF, 0.56%

LH, 0.55%

DRT, 0.49%

EASTW, 0.43%

M, 0.38%

TPIPP, 0.38%

KKP, 0.37%

TASCO, 0.33%

AMATA, 0.21%

THANI, 0.17%

CPF, 0.16%

TU, 0.16%

SCCC, 0.15%

PTT, 0.14%

ADVANC, 0.06%

CK, 0.05%

DTAC, 0.04%

TTCL, 0.03%

KBANK, 0.01%

0% 1% 2% 3%

15.39%

-1.26%

1.06%

4.32%

-4.71%

1.71%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

YTD MTD -1D

Portfolio SET Index

-2%0%2%4%6%8%

10%12%14%16%18%20%

Jan-1

9

Feb-1

9

Mar-

19

Apr-

19

May-1

9

Jun-1

9

Jul-19

Aug-1

9

ASPS SET Index

Equity Calendar

Research DivisionAugust 19, 2019

Monday Tuesday Wednesday Thursday Friday19 20 21 22 23

XD XD XD XD XDINTUCH @B1.35 B-WORK @B0.181 BAFS @B0.23 AIT @B0.50 AMATAR @B0.19

JASIF @B0.23 BOL @B0.06 BRRGIF @B0.12318 BH @B1.15 ANAN @B0.091

MBKET @B0.68 DCC @B0.023 BOFFICE @B0.1698 BH-P @B1.15 BGC @B0.09

RPH @B0.07 GVREIT @B0.21 CPNREIT @B0.4055 BEM @B0.06 KAMART @B0.07

TBSP @B0.68 LPN @B0.20 FSMART @B0.32 BKI @B3.00 KIAT @B0.01

OTO @B0.03 FTE @B0.07 CBG @B0.50 MAJOR @B0.65

New shares trading SYNEX @B0.15 GLANDRT @B0.178 CSS @B0.02 PSH @B0.60AIRA 140 shrs (w) TEAMG @B0.05 IMPACT @B0.20 GC @B0.22 SYNTEC @B0.04

S5013C1909A 198m units TU @B0.25 PDG @B0.10 GPI @B0.10

SGP @B0.10 GSC @B0.036 ConversionXR SMPC @B0.24 IVL @B0.35 ECF-W3 1.0008:1w @B4.9958KKC 4:1n @B1.00 SPRC @B0.1202 MACO @B0.012

TKS @B0.20 MAKRO @B0.40

XT TPCH @B0.084 MBAX @B0.12TSE 5:1TSE-T1 @free TPRIME @B0.1379 PHOL @B0.05

UVAN @B0.17 PM @B0.20

PT @B0.12

XE SAAM @B0.025EARTH-W4 1.02:1w @B6.861 (final, "SP") SAT @B0.35

NEP-W3 1:1w @B0.55 (final, "SP") SMIT @B0.12

T-W4 1:1w @B1.00 (final, "SP") SPRIME @B0.174

TFG @B0.07

XN TOG @B0.10BOFFICE @B0.0103 TVO @B0.70

BRRGIF @B0.22

NESDB - GDP 2Q18 TPRIME @B0.062126 27 28 29 30

XD XD XD XD ConversionASP @B0.06 AUCT @B0.15 2S @B0.07 BLA @B0.32 CSC-P 1:1

AYUD @B0.75 ARROW @B0.15 AH @B0.36 GPSC @B0.50 ECL-W3 1:1w @B1.85

BCH @B0.10 BEAUTY @B0.035 AJ @B0.07 HTECH @B0.04

CHG @B0.02 BGRIM @B0.15 AMATA @B0.20 LALIN @B0.175

DIF @B0.3469 CMAN @B0.02 BCP @B0.50 PORT @B0.005

FORTH @B0.12 CPTGF @B0.21 BJC @B0.18 PORT 10 existing: 1STD @free

GCAP @B0.07 EASTW @B0.21 CPF @B0.30 SEAFCO @B0.03

GRAMMY @B0.10 EGATIF @B0.18 FUTUREPF @B0.362 SENA @B0.078426

JUBILE @B0.42 FPI @B0.05 HPF @B0.084

KCE @B0.40 FTREIT @B0.167 IHL @B0.15 XRM @B1.30 HUMAN @B0.06 KCAR @B0.36 B52 9:2n @B0.20

QLT @B0.05 JMT @B0.25 LH @B0.30

PCSGH @B0.10 OSP @B0.35 M-II @B0.14 ConversionRS @B0.20 QH @B0.07 M-PAT @B0.10 SPORT-W7 1:1w @B0.20 (final)

SABINA @B0.57 RAM @B0.90 M-STOR @B0.10

SNP @B0.04 S11 @B0.15 MEGA @B0.31

TACC @B0.10 SAMTEL @B0.20 MNIT2 @B0.065

TTW @B0.30 SIRI @B0.02 ORI @B0.205

WINNER @B0.09 SPALI @B0.40 PLANB @B0.091

SPCG @B0.50 RJH @B0.60

XN SUSCO @B0.08 SCB @B1.50BTSGIF @B0.204 SWC @B0.125 SCB-P @B1.50

URBNPF @B0.12 TASCO @B0.40 SHREIT @B0.1146

TFFIF @B0.0962 SSTRT @B0.2428

XR THE @B0.03 SUTHA @B0.09DREIT @tba THG @B0.10 TAE @B0.20

TTLPF @B0.412 TNP @B0.02

Conversion TIPCO @B0.24 TQM @B0.65WORK-W1 1:1w @B38.10 TOA @B0.23

TSR @B0.06 XEVL @B0.05 WORK-W1 1:1w @B38.10 (final, "SP")

XO @B0.105

XNXN MNRF @B0.54TFFIF @B0.0184 SHREIT @B0.0608 BOT : Jul-19 Trade

Monday Tuesday Wednesday Thursday Friday2 3 4 5 6

XD XRCCET @B0.06 GPSC 1:0.8819n @B56.00

NEX 1:1n @B1.00

XEGSTEEL-W1 0.20:1w @B2.75 (final)

MOC : Aug-19 CPI GSTEEL-W2 0.20:1w @B2.75 (final, "SP")9 10 11 12 13

Conversion ConversionB52-W1 0.657:1w @B2.283 (final) EARTH-W4 1.02:1w @B6.861 (final)

NEP-W3 1:1w @B0.55 (final)

T-W4 1:1w @B1.00 (final)

16 17 18 19 20XW XRSMART 5 existing :1w @free TSI 1:2n @tba

MPC meeting23 24 25 26 27

XE XD ConversionMONO-W1 1.015:1w @B2.646 (final, "SP") JMART @B0.0260824 GSTEEL-W1 0.20:1w @B2.75 (final)

JMART 4.26 existing : 1STD GSTEEL-W2 0.20:1w @B2.75 (final)

30ConversionWORK-W1 1:1w @B38.10 (final)

BOT : Aug-19 Trade

August 2019

September 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)