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

Monday, December 23, 2019

In the last week of 2019, window dressing is likely. US-China trade talk issues would boost SET Index. Fund inflow would be driven by driven by LTF (final bend). There is still no new negative political issue. There is nothing new for our portfolio. Top picks are PTT(FV@B56), LH(FV@B12), and CPF(FV@B35).

SET Index 1,572.92 Change (pts) -0.59 Market Cap (Million B) 54,902.31

Watch SET Index signal today

Although the market was supported by the US-China trade talk phase 1 that seemed positive and late-year window dressing buy rally, it was still pressured political uncertainty. SET Index last Friday rallied in the morning but swung flat in the afternoon and closed at 1,572.92 pts, down 0.59 pts (-0.04%) with trading value of B54.9bn. The market was weakened by ICT plays, led by ADVANC (-1.82%), INTUCH (-1.26%), and TRUE(-1.28%), and banking plays, especially BBL (-0.63%), SCB (-2.04%), and TMB (-1.85%), while it was supported by construction plays, led by SCC (+2.33%) and TASCO (+1.40%), as well as some other big-cap stocks, e.g. CPALL (+2.04%), CPF (+1.85%), and IVL (+2.13%).

In the last week of 2019, buy rally is expected from LTF and window dressing, so SET Index would rebound or at least stay near 1,580 pts. Fundamentals would keep SET Index high. US-China trade talk seems positive, so the trade deal phase 1 is anticipated to be signed in early 2020. Economic stimulus measures is expected, while the political situation is not likely to be more negative for the rest of this year. Speaking of share repurchases (treasury stock), 42 companies announced its share repurchases in the past ten years, 15 of which repurchased shares in 2019. Notably, these stocks tended to rally in the first one week after the share repurchases, stayed flat after that, and finally fell after the first six months. Technically, a company announces a stock repurchase to tell shareholders that the share price is lower than it should be. In terms of financial position, fundamental plays have excess liquidity now, which can be taken into consideration for treasury stocks. There is nothing new for our portfolio. Top picks are LH, CPF, and PTT that benefit from window dressing

Global markets positive about trade talk phase 1

There is no significant international this week as 2019 is ending soon. Main focus still revolves around progresses on the trade talk phase 1 and USMCA deal (consisting of the US, Mexico, and Canada) that will affect the economy and stock markets in 2020 as follows:

The US-China trade talk phase 1 is anticipated to be signed in the first week of January 2020. According to Chinese President Xi Jinping during the weekend, China agreed with the US that the trade deal phase 1 would be beneficial for the economy of not only China the US but also the whole world. Markets highly anticipate both nations to officially reach the deal. This issue would boost global stock markets and oil prices for the short term.

Net Buy and Sell by Investor Type (Million B) Foreign -3,395.20

Proprietary 636.44

Institutional 2,523.31

Retail 235.45

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

U.S. House of Representatives approved the United States-Mexico-Canada Agreement (USMCA) trade deal late last week. USMCA is now under U.S. Senate deliberation and it is anticipated to be approved by January 2020.

USMCA, new trade agreement replacing original NAFTA, provides tariff exemption under stricter regulations on trade and production as follows:

1) Automobile must have 75% of components (originally 62.5% under NAFTA) manufactured in these three countries.

2) 70% of steel and aluminum utilized in automobile production must be sourced from these three countries.

3) 40% of automobile parts must be manufactured in places where employees make average earning of at least US$16/hour (B510/hour).

Thailand export cars to Mexico to be exported to the US. Notably, Thailand is under a free trade agreement (FTA) with Mexico. Thai auto does not meet USMCA (especially in terms of material sourcing and employee earning), so Thai auto export to North America (8% of total auto export) would decline in the future. If Thai auto manufacturers fail to find new export markets or boost domestic sales to offset this, this issue would adversely affect Thailand's auto production and hurt auto part producers. Investors have to watch this issue closely.

Govt proceeding with economic boost measures in 2020

The Ministry of Commerce reports Thailand's November international trade figures at 10:30 today. Thailand's export (X) in USD is expected to contract 4%yoy in November and shrink 2.7%yoy on average in 10M19. Meanwhile, import (M) is projected to plummet 6.7%yoy in November and contract 4.13% in 10M19. International trade is still slowed down by worldwide economic deceleration caused by US-China trade war, after the US and China imposed four rounds of import tariff hikes (at the rate of 25%) against each other. As export makes up 68% of Thailand's GDP, Thailand's economy would still be pressured by trade war in 4Q19 and 2020 GDP growth is still expected lower than 3%, in line with our forecast (2.7%) and forecasts of the NESDB (2.6%) and the BOT (2.6%).

We expect Thailand's 2020 GDP growth at 2.8%. There is still downside from export (still depressed by trade war and strong THB) and the political conflicts. The economy would be driven by the government's economic stimulus measures for every segment, especially consumption.

In 2020, the government is preparing some measures, e.g. welfare card (for low-income people), Chim-Shop-Chai (Eat, Shop, Spend) phase 4, Mother Pracharat, and village fund (B0.2m each). These measures would benefit commerce plays like CPALL and BJC.

Market Talk Investment Strategy | Research Division

4Q19 – 2020 government economic stimulus measures

Source: FASPS Research

ASF infects Indonesia. Thailand not infected yet

African Swine Fever (ASF) has been confirmed in Indonesia. It has already infected almost every Asian pork producers, e.g. China, Vietnam, Mongolia, North Korea, South Korea, Laos, Cambodia, Myanmar, the Philippines, and most recently Indonesia. On the other hand, Thailand has not been infected with ASF yet. ASF has caused the number of pigs in China and Vietnam to plummet 50%yoy or 250 million pigs. This would benefit CPF and TFG, which make 7% and 2% of sales from their pork businesses in Vietnam, respectively. Farm gate pork price in Vietnam makes a new record high of VND70,000/kg (B96/kg) while farm gate pork price in China rises to CNY33/kg (B14/kg) at present, reflecting that China and Vietnam are facing pork shortage and have to increase pork import. Plus, China has to open its pork import market for U.S. and Brazilian pork.

Chinese government is negotiating with Thai government on import of live hog, chilled pork, and frozen pork, which is expected to reach a conclusion in mid-2020. TFG anticipated 50% chance that Chinese government would approve import of Thai pork. However, if ASF infects Thailand in the future, China is less likely to import Thai pork. Latest farm gate pork price in Thailand is B66/kg (as of December 20), rising 6.5%qoq thanks to rising pork consumption during long holiday. Moreover, some small-sized pig farmers have reduced pork production by 15% to avoid ASF risk; there is no vaccine for ASF yet. We expect pork price to rebound further in 2020 because China and Vietnam are facing pork shortage problem and China have to import a massive amount of pork. Meanwhile, Thailand is exporting pork to Cambodia through border. All these factors would keep global pork price soaring high throughout 2020.

The Department of Livestock Development and major pig growers have been working on fighting ASF for years. Government and private funds are providing remedy payment to farmers. The Department of Livestock Development will immediately order culling of pigs in

• Price guarantees for agricultural products (e.g. rice, rubber, cassava)• Minimum wage hike by % to B321.9/day on average

Spending• Chim-Shop-Chai phase 1, 2, 3

Effective Measures

Property• Ownership transfer fee cut from 2% to 0.01%• Mortgage fee cut from 1% to 0.01%• B50,000 cashback on down payment for people with income up to B100,000/month

Tourism• Visa on Arrival (VOA) fee waiver extension for foreign tourists• Visit Thailand with 100 Baht

Expected Measures

International Trade• Reviving Thailand-EU FTA deal• Reviving CPTPP deal

Tax• 10% personal income tax cut (considering • 7% VAT on all goods import online (originally randomly collected)• 7% VAT on imported goods valued below B

Market Talk Investment Strategy | Research Division

suspected farms to stop ASF from spreading and pay remedy to owners of these farms. Moreover, major pig farmers make up 70% of Thailand's total pork production and they mostly grow pigs in EVAP closed system with good disease control; on the other hand, small-sized pig farmers make up 70% of China and Vietnam's pork output, so it is harder to keep ASF under control. For the worse-case scenario that ASF infects Thailand, it would not have widespread impact like in China and Vietnam. The pork business in Thailand and Vietnam is expected to rebound from 2020 on. We recommend CPF(FV@B35) and TFG(FV@B4.80).

African Swine Fever (ASF) outbreaks in Asia

Source: FAO / BBC

Share repurchases boost stocks for short term (one months after announcement)

Amid SET fluctuation, many stocks plummeted severely, so many SET-listed companies had to repurchase their treasury stock to revive investors' confidence. Last week, TCAP, RS, and FSMART announced share repurchases, which caused their prices to rally 2.7%, 2.5%, and 7.8%, respectively.

Based on our quantitative study on share repurchases (impact of share repurchases, the stocks that announced share repurchases, and investment strategies), 42 SET-listed companies announced share repurchases in the past ten years, especially in the years that SET Index plummeted severely, as follows:

In 2015, SET Index plummeted 14% (the biggest plunge in ten years). Five companies announced share repurchases in 2015 and then four more companies repurchased their treasury stock in early 2019. SET Index rebounded 19.8% in 2016.

In 2018, SET Index plummeted (the second biggest plunge in ten years). 13 companies announced share repurchases in 2018. Six months after that (1H19), SET Index rebounded 10.6%.

In 2H19, 15 companies have announced share repurchases so far, especially after SET Index plummeted severely.

Market Talk Investment Strategy | Research Division

Number of companies announcing share purchases vs SET Return

Source: SET / ASPS Research

After these companies announced massive share repurchases, SET Index tended to rebound later on, reflecting that these stocks are still favorable in terms of valuation. Still, how consistent SET Index rallied depended on the atmosphere and fund flow.

Based on ten-year statistics, buying on the share purchase announcement day and selling one month after that grant the highest return of 2.6% on average (10% for some stocks). Share repurchases keep share prices high and raise EPS (while the number of share is decreasing). However, these stocks tended to drop in more than six months after the share repurchases because 1) treasury stock period is normally less than six months and 2) they may not have new investment project, so they use their money to repurchase shares.

Share purchases stocks after announcement date

Source: SET / ASPS Research

Statistically, SET Index tended to rally following massive share repurchases. Stocks announcing share repurchases tended to rebound the most in one months after announcement. In more than six months after announcement, these stocks tended to drop, while SET Index started to rebound. We like RS that is recently declining despite good growth and recently announced a share repurchase. RS will announce its two new partnering channels soon, having 4-5 digital TV channel partners, which would result in 2020 profit growth of 36%.

1 1 2 1

5 4

0

1315

-0.7%

35.8%

-6.7%

15.3%

-14.0%

19.8%13.7%

-10.8%

0.6%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-20

-15

-10

-5

0

5

10

15

20

2011 2012 2013 2014 2015 2016 2017 2018 2019

CompanyYearly Return

SET Index

2.4% 2.0%1.0%

2.6%

0.0%

-1.1%

-4.0%

69%

61%64%

61%

47% 45%

38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

Less than 3Days

1 Week 2 Weeks 1 Month 3 Months 6 Months 9 Months

Average Return Probability (rhs)

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

24.0%

14.9%

14.5%

13.1%

9.9%

8.0%

0.6%

-0.5%

-2.6%

-4.0%

-7.0%

-10.4%

-14.9%

-16.1%

-18.5%

-19.3%

-22.2%

-22.8%

-24.1%

-26.0%

-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% 0.40% 24.70 24.80 32.00 19.57 3.37 4.85Dividend 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% -1.52% 9.90 9.75 12.00 11.87 2.09 7.69Solid integrated property business structure (both for sales and for rent).

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

CPF 29-Nov-19 20% 2.80% 26.75 27.50 35.00 13.28 1.17 2.91

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% -6.20% 12.90 12.10 15.70 29.26 5.58 3.31

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% -2.31% 65.00 63.50 70.00 22.20 3.46 2.13

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% 0.00% 17.10 17.10 21.10 35.89 5.95 1.53

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% 0.56% 44.25 44.50 56.00 13.22 1.40 4.49

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

2.80%

0.56%

0.40%

0.00%

-1.52%

-2.31%

-6.20%

-10.0% -5.0% 0.0% 5.0%

CPF

PTT

MAJOR

BCH

LH

ROBINS

RS

CPALL, -0.13%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%ROBINS, -0.43%

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, 2.18%

WHA, 1.39%

MTC, 1.28%

STEC, 1.11%

PTTEP, 1.10%

QH, 1.05%

PTT, 1.02%

TFG, 1.01%

PLANB, 1.00%

STPI, 0.89%

BCH, 0.82%

SCC, 0.81%

CPF, 0.79%

POPF, 0.79%

DRT, 0.78%

FPT, 0.71%

SEAFCO, 0.63%

STA, 0.60%

JASIF, 0.58%

KKP, 0.56%

LH, 0.46%

EASTW, 0.43%

M, 0.38%

TPIPP, 0.21%

THANI, 0.17%

SCCC, 0.15%

RS, 0.14%

ADVANC, 0.06%

DTAC, 0.04%

KBANK, 0.01%

0% 1% 2% 3% 4%

9.96%

-1.94%

0.35%0.58%

-1.11%-0.04%

-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 23, 2019

Monday Tuesday Wednesday Thursday Friday23 24 25 26 27

Shares Delist XD Conversion XDSSTPF FPT @B0.46 AS-W1 1:1w @B2.00 AF @B0.025

STAR-W3 1:1w @B4.00 BC @B0.11

XD New shares trading TCAP @B4.00 (special div.)SSTRT @B0.2606 AYUD 54,900 shrs (w) TCAP-P @B4.00 (special div.)

XN ConversionSSTPF @B0.6752 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 31XBFTREIT @tba

XDINGRS @B0.026

TTT @B1.70

ConversionAPURE-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 XWTRITN-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

13 14 15 16 17XEPDJ-W3 1:1w @B1.00 (final, "SP")

20 21 22 23 24XR XD XENOK 3.50:1n @B2.50 GOLD @B0.48 NUSA-W3 1:1w @B1.00 (final, "SP")

27 28 29 30 31XD XR XDTSC @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)