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ASEAN STOCK WATCH Asean Affairs   6  April  2011

Asean will open lower

Shayne Heffernan

Asean will open lower today after a slow day in New York. A weaker US dollar and higher oil prices will weigh on local investors today.

The DJIA .DJI was off 6.3 pts, or 0.05 percent, at 12,393.90.

The Standard & Poor's 500 Index .SPX was minus 0.24 pts, or 0.02 percent, at 1,332.63. The NAS Composite Index .IXIC was up 2.0 points, or 0.07 percent, at 2,791.19.

The S&P 500 failed to crack a Key technical resistance mark for a second straight day Tuesday on very low trade.

In Bangkok yesterday the The Stock Exchange of Thailand (SET) composite index on Tuesday lost 2.53 points, or 0.23 percent, to close at 1,076.13 points. The market value was 30.89 billion baht, with 4.86 billion shares traded.

Today is a holiday in Thailand, for Thursday the Shayne Heffernan best buys are PTTEP

PTT Exploration and Production PCL announced its PTTEP Canada International Finance Limited unit has raised US$700 million for the company through its issue of unsecured and unsubordinated debentures to foreign institutional investors. They carry a coupon of 5.692 percent per annum with a 10-year tenor. They have been rated BBB+ by Standard and Poor's.

PTT Exploration and Production Public Company Limited is a Thailand-based company engaged in the exploration, extraction, production and development of petroleum products. It produces crude oil, condensate, natural gas and liquefied petroleum gas (LPG).


Banpu Public Company Limited, through its subsidiaries, engages in coal mining and coal-fired power generation businesses primarily in Thailand, Indonesia, and the People’s Republic of China. It engages in the exploration, mining, and trading of coal.

The company holds interests in various coal properties, including various mines in Lampang and Phayao provinces in Thailand; coal assets in Kalimantan in Indonesia; and the mines located in Henan and Shanxi provinces, in the People’s Republic of China.

It offers its coal products to customers, including coal-fired power plants, cement, petrochemical, paper, plastic, textile, and chemical industries. The company also invests in and operates coal-fired power projects, through which it involves in the production and trading of power. The company was founded in 1983 and is headquartered in Bangkok, Thailand.

Yesterdays most active were as follows;

IRPC closed at 6.25 baht, up by 0.15 or 2.46 percent.

BANPU closed at 782.00 baht, down 4.00 or 0.51 percent.

TRUE closed at 6.20 baht, down 0.10 or 1.59 percent.

STA closed at 32.25 baht, up by 1.75 or 5.74 percent.

PTTEP closed at 192.00 baht, down 1.50 or 0.78 percent.

Manila will open lower today after a good rally in the last few sessions that seen the index recapture the 4200 level briefly.

Shayne Heffernan best buys are Alliance Global and First Philippine Holdings Corporation

Alliance Global looked oversold at the close and will rally back over the next week.

Alliance Global Group, Inc. (AGI) is a holding company presently engaged in the food and beverage business (manufacturing and trading of consumer products), real estate (investment in and development of real estate, lease of properties, hotel operations and tourism-oriented businesses), and quick service restaurant (McDonald’s). The Company’s operating businesses are categorized into three segments: Food and Beverage (F&B); Real Estate (RE) and Quick Service Restaurant (QSR). Its subsidiaries include First Oceanic Property Management, Inc, Citylink Coach Services, Inc., Emperador Distillers, Inc., Anglo Watsons Glass, Inc., Golden Arches Development Corporation, Golden Arches Realty Corporation, Alliance Global Brands, Inc. and Emperador International Ltd.

First Philippine Holdings Corporation (FPHC) is a holding company. The Company, along with its subsidiaries, is engaged in investments in real and personal properties including, but not limited to, shares of stocks, notes, securities and entities in the power generation, manufacturing and construction, and other service industries.

FPHC is 42.79 percent owned by Benpres Holdings Corporation of the Lopez family. Its subsidiaries include First Gen Corporation, First Gas Holdings Corporation, First Gen Renewables, Inc., FG Bukidnon Power Corporation, First Philippine Realty Development Corporation and First Philec Solar Corporation, among others.


Valuation Ratios

Company Industry Sector S&P 500
P/E Ratio (TTM) 1.22 7.10 8.36 17.27
P/E High – Last 5 Yrs. 59.83 90.07 78.13 88.95
P/E Low – Last 5 Yrs. 4.79 16.48 15.62 12.27
Beta 1.28 0.49 0.51 1.32
Price to Sales (TTM) 0.54 2.16 2.11 2.15
Price to Book (MRQ) 0.52 0.41 0.50 2.91
Price to Tangible Book (MRQ) 0.55 0.45 0.58 5.22
Price to Cash Flow (TTM) 1.09 5.18 6.19 71.05
Price to Free Cash Flow (TTM) 3.96 9.38 9.21 56.55
% Owned Institutions - - - -



Company Industry Sector S&P 500
Dividend Yield 5.69 2.44 2.40 1.70
Dividend Yield – 5 Year Avg. 2.42 1.46 1.61 2.51
Dividend 5 Year Growth Rate 4.85 6.70 -5.52
Payout Ratio(TTM) 4.60 37.08 35.05 42.58


Growth Rates

Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago 24.13 12.98 16.28 10.05
Sales (TTM) vs TTM 1 Yr. Ago 15.04 10.10 10.68 10.14
Sales – 5 Yr. Growth Rate 8.07 10.09 10.14 7.33
EPS (MRQ) vs Qtr. 1 Yr. Ago -92.06 101.91 138.11 78.04
EPS (TTM) vs TTM 1 Yr. Ago 382.16 - - -
EPS – 5 Yr. Growth Rate 8.17 6.74 6.66 4.43
Capital Spending – 5 Yr. Growth Rate -24.78 24.39 26.68 3.42


In Manila yesterday the Philippine Stock Exchange index (PSEi) slipped by 42.34 points to 4,167.09. The broader all-share index decreased 0.82 percent or 25.48 points to 3,061.25.

Trading volume reached 2.34 million shares worth 17.16 billion pesos (396.30 million U.S. dollars), with 56 issues advancing, 82 declining, and 47 were unchanged.

Net foreign buying stood at P9.53 billion after the Alliance Global Group, Inc. of property tycoon Andrew L. Tan sold and reissued 871.95 million treasury shares worth P9.73 billion to foreign institutional investors yesterday.

Profit taking was the lead factor after hitting the 4,200 level on Monday, investors took the cue and sold their positions while the market is still on its rally mode.

In Jakarta yesterday the JCI fell 14.11 points, or 0.4 percent, to close at 3,685.94. About 3.2 billion shares worth Rp 3.5 trillion ($402.5 million) changed hands, with decliners outpacing gainers 122 to 88.

The rupiah inched up to 8,659 against the US dollar as of the market’s close, as slowing inflation during March continued to drive capital inflows.

Today will also see the market trading lower as the overnight session in the USA will do nothing to lift local confidence.

Shayne Heffernan best buys are Bank Mandiri and Bank Rakyat

Bank Mandiri, Indonesia’s top bank by assets, which declined 2.9 percent to Rp 6,650 yesterday, and Bank Rakyat Indonesia, the nation’s No. 2 lender, that shed 0.9 percent to Rp 5,750.

Both are set to recover in trading today.

Singapore will trade lower today following the lead from Wall St Overnight.

Shayne Heffernan best buys are OCBC

OCBC are continuing their share buy back and the stock is responding well.

Oversea-Chinese Banking Corporation Limited is a Singapore-based bank. It operates in five segments: Global Consumer Financial Services, which comprises a range of products and services offered to individuals, including deposit products, consumer loans, credit cards and wealth management products; Global Corporate Banking, which provides financial services to business customers; Global Treasury, which engages in foreign exchange activities, money market operations and derivatives trading; Insurance, which includes its fund management activities, and Others, which comprises P.T. Bank OCBC NISP Tbk, PacificMas Berhad, corporate finance, capital markets, property holding, stock brokerage and investment holding.


Singapore's Wilmar International , the world's largest listed palm oil firm, said on Tuesday it will borrow $1.5 billion via a syndicated revolving credit facility to finance its general and working capital requirements.

BNP Paribas , Citigroup , DBS , Hongkong and Shanghai Banking Corp , Oversea-Chinese Banking Corp and Sumitomo Mitsui Banking Corp are lead arrangers and bookrunners for the facility.

Wilmar International Limited is an investment holding company engaged in the provision of management services to its subsidiaries. It operates in five segments. Merchandising and Processing segment comprises the merchandising and processing of palm oil and laurics related products. Processing includes refining, fractionation and other down-stream processing. Oilseeds and grains segment comprises the merchandising and processing of a range of edible oils, oilseeds and grains from the crushing, further processing and refining of soybean, as well as other oilseeds and grains. Consumer Products segment comprises packing and sales of consumer pack edible oils, rice, flour and grains. Plantations and Palm Oil Mills segment comprises oil palm cultivation and milling

Yesterday in Singapore the Straits Times Index closed at 3,146.75, up 0.20 per cent, or 6.13 points.

About 1.3 billion shares exchanged hands.

Asian agribusiness giant Wilmar International has taken over the Benso Oil Palm Plantation.

Benso Oil Palm Plantation Limited grows oil palm and processes palm fruits in Ghana. The company produces palm oil and palm kernel. Benso Oil Palm Plantation Limited was incorporated in 1976 and is based in Takoradi, Ghana. Benso Oil Palm Plantation Limited is a subsidiary of Unilever Ghana Limited. As of March 31, 2011, Benso Oil Palm Plantation Limited operates as a subsidiary of Wilmar Africa Ltd.

It comes after it successfully acquired shares in the oil palm plantation in a cash offer.

About 1,200 shareholders tendered in their shares during the offer. Wilmar now has nearly 80 percent interest in BOPP.

The company last year completed the takeover of manufacturing and marketing of Unilever’s frytol cooking oil.

Wilmar International operates in 20 countries around the world and has expertise in lauric oils and palm oil production and marketing.

It made the acquisition through its African subsidiary.

The Singapore Stock Exchange is growing fast on many fronts, expansion through acquisition is just part of the plan.

The Singapore Stock Exchange is also attracting high profile IPO's like Suzlon and Hutchinson Ports.

Now The Singapore Exchange (SGX) will expand their Securities Lending and Borrowing program to help boost liquidity and activity in the Singapore market.

Retail investors can currently lend their stock scrips to SGX for a return of four per cent per annum. The exchange will then allow other parties to borrow these stocks at an interest rate of six per cent per annum.

In an effort to boost market liquidity of less popular stocks on the exchange, SGX is looking to allow market forces to decide the scrip lending and borrowing rates for such counters.

The aim is to make them more attractive and competitive. This will be in line with more mature markets in the West, where such rates can range between 10 and 20 per cent.

The SGX said this will fill gaps not covered by banks currently, but has declined to give a timeframe on the rollout of its plans.

Savvy investors typically borrow stocks to cover short-selling positions in order to avoid settlement failures as part of their trading strategies.

Mr. Tay Keng Kian, Vice President of Depository Services at SGX, said: "Really nothing is stopping us from doing that, in actual fact we do explore that as an alternative as to how we can actually grow the programme to support the market in terms of market activities. We are in the midst of looking at how we could do strategic lending as part of the programme as well. That's up and coming, keep your eyes on this space and look at us for what's going to happen in the future. But that's definitely happening.

"We are not really competing as per se. It's peculiar in Singapore in that sense because most of the small caps and mid caps are held in individual investors' hands. So in order to increase market activities in that kind of space, that's where we want to come in and fill the gap and that's where we really want to go.

"We are not competing against the agent lenders, the broker dealers because that's not our mandate per se. Because they are better at doing what they do, and we just want to be part of the whole industry."

In line with those plans, the SGX will be looking to build the pool of stocks it can lend. This will involve getting more retail investors to join its scheme to lend them stocks from their Central Depository accounts.

The Central Depository (CDP), which safe-keeps securities for retail investors and institutions, is the counterparty for all lenders and borrowers.

The SGX said possible ways of education could include more roadshows and seminars, and how it can work with brokerage firms.

Observers said the move will help bring the market in line with practices in mature markets like those in the West, but warn that it may take time for the local market to be ready.

Visiting Assoc Prof (Practice) Bernard Lee of SMU, said: "You're potentially looking at a smaller company who you would be trying to increase the security lending liquidity on those names. And one of the potential issues is some of these companies may not necessarily be ready to deal with any kind of significant kind of price with any type of shorting, there's always a possibility of manipulation.

"The credit market looks at the stock market as to the credit worthiness of the company, so if the stock price driven down to close to zero on a unjustified basis, sometimes there are issues with lenders. One of the potential issues is like let's just say when they first do this programme in Singapore there are a few extremely active shorters in the market, who are just targeting specific stocks, then you potentially create an issue.

"You have a situation where you have a people who potentially with the ability to sort of manipulate the stock from one side, because the market hasn't grown used to it, you don't necessarily have the other people jumping in and basically balancing it out."

The SGX first rolled out its borrowing and lending programme in 2002, offering about 150 stocks. Last year, it expanded the pool to more than 600 stocks, which represent more than 80 percent of the total listed counters on the exchange.


Shayne Heffernan brings more than 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over US$500m and 1 that reach a peak market cap of US$15billion. He has managed and overseen start-ups in Mining, Shipping, Technology and Financial Services.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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