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ASEAN STOCK WATCH Asean Affairs   18 April 2012

ASEAN Markets to Open Higher

By Shayne Heffernan Ph.D.

ASEAN Stocks will post big gains at open but the best buys are Palm Oil Stocks.

Overnight in the USA
U.S. stocks scored their best gains in a month on Tuesday after Coca-Cola led another round of strong earnings and bond yields fell in Spain, easing some concerns about Europe's debt crisis.
Dow Jones
13,115.54     +194.13 (1.50%)
S&P 500
1,390.78     +21.21     (1.55%)
3,042.82     +54.42     (1.82%)

ASEAN will follow the USA higher today after recent falls.

Demand for edible oils has been resilient to a slowdown in the global economy, history shows. Consumption of the nine biggest oils gained 3.8 percent in the 2008-09 marketing year as economies grappled with the worst global recession since World War II, USDA data show.

Demand for edible oils is climbing to a record as drought damages crops across South America, leaving buyers with the smallest stockpiles in three decades.

Cooking oils advanced as drought in Brazil and Argentina contributed to a 9 percent slump in global soybean harvests, the most since 1996. Palm oil increased 9.5 percent to 3,477 ringgit this year and soybean oil rose 7.5 percent in Chicago as the Standard & Poor’s GSCI Agriculture Index of eight commodities declined 2.2 percent.

Retail sales of bottled oils will reach a record 38.7 million tons this year, lifting the value by 6.8 percent to $56.5 billion, according to Euromonitor International, a London- based research group.

Kuok Oils & Grains, a unit of Wilmar International, had a global market share of 8.9 percent in 2010, making it the biggest supplier to the retail market, Euromonitor estimates.

The use of soy, palm, rapeseed and six other oils will rise 3.9 percent this year, reducing the ratio of reserves to demand to the lowest since 1977, the US Department of Agriculture estimates. Palm, the most-consumed oil, will advance 9.3 percent to 3,800 ringgit ($1,239) a metric ton in Kuala Lumpur by Dec. 31, the highest since February 2011, according to the median of 11 analyst and trader estimates.

Production of palm, which represents more than 30 percent of cooking-oil output, will expand two million tons this year, compared with a 5.5 million-ton increase in 2011, according to Dorab Mistry, the director of Godrej International. He predicts prices will climb to 4,000 ringgit by June.

Output in Malaysia, the second-biggest producer after Indonesia, will drop in the first half from a year earlier, Mistry said last month.

Wilmar International Limited is an investment holding company engaged in the provision of management services to its subsidiaries.

The Company operates in seven segments: palm and laurics, which comprises the merchandising and processing of palm oil and laurics related products; oilseeds and grains segment, which comprises the merchandising and processing of a range of edible oils, oilseeds and grains from the crushing; consumer products, which comprises packaging and sales of consumer pack edible oils, rice, flour and grains; plantation and palm oil mills, which comprises oil palm cultivation and milling; milling segment, which comprises milling of sugarcane to produce raw sugar and also by-products, such as molasses; merchandising & processing comprises the merchandising and processing of sugar and its related products, and others, which includes the manufacturing and distribution of fertiliser products and ship-chartering services.

Bumitama Agri IPO followed the path predicted by Economist Shayne Heffernan of HCM today. Bumitama shares traded as high as S$1.02, about 37 percent higher than its IPO price of S$0.745, on volume of more than 195 million shares. It was the top traded stock by value and the second highest by volume in the market.

The IPO was heavily over subscribed and the issue was the latest in a string of IPOs returning to the Singapore market this year.

The weighted average age of Bumitama’s oil palm trees is about five years old and only 28.1 percent of its planted area have reached peak production age of between 7 and 18 years, the company said in a statement. This makes Bumitama a long term winner, IOI Corp the parent company of Bumitama traded heavily in Kuala Lumpur today, IOI should see long term gains both from it’s stake in Bumitama and from redeploying the cash raised from the sale.

Shayne Heffernan has a short term target of $2 on Bumitama.

Sime Darby
Sime Darby Berhad operates in six segments. Its plantation segment is engaged in the production and marketing of fresh fruit bunches. Its property segment develops and markets residential, commercial and industrial properties. Its industrial segment is engaged in sales, rental and servicing of heavy equipment. On January 5, 2012, it incorporated Nanjing Sime Darby Motors Sales & Services Company Limited.

In January 2012, it disposed Dunlopillo Holdings Sdn Bhd. On December 31, 2011, it dissolved Sime Darby Realty Development Corporation, Sime Darby Industries Inc. and Sime Darby Pilipinas, Inc. In March 2012, it liquidated Sime Darby Harta (Damansara) Sdn Bhd, Sime Darby Property Development Sdn Berhad and Sime UEP Executive Suites Sdn Bhd. On March 31, 2012, Malaysia Marine and Heavy Engineering Holdings Berhad acquired Pasir Gudang Fabrication Yard together with assets located thereon from Sime Darby Engineering Sdn Bhd, which is its subsidiary.

Asia Real Estate News
Megaworld Corp. net profit jumped by 60 percent to P8.03 billion on double-digit increases in real estate sales, rental and hotel revenues alongside some one-time gain from a share sale.

Consolidated total revenues surged by 39.35 percent to P28.63 billion resulting from strong property sales and increased leasing income and nonrecurring gain from the sale of shares.

Shayne Heffernan strong buy Megaworld, which is led by Andrew Tan, revenues came from the sale of condominium units and residential lots amounting to P15.89 billion in 2011, up by 21.18 percent from the previous year.

Group-wide sales mostly came from the following projects: Eight Forbestown in Fort Bonifacio Taguig; Eastwood Le Grand in Eastwood City; Mckinley West, Morgan Suites and The Venice Luxury Residences in Mckinley, Taguig City; Manhattan Heights in Quezon City; and Newport Palmtree Villas, 81 Newport Boulevard and Newport City in Pasay.

Singapore’s exports dropped in March as sales fell amid a decline in demand from China.

Singapore’s electronics shipments rose 2.8 percent in March from a year earlier, after climbing 23.3 percent the previous month.

Non-electronics shipments, which include petrochemicals and pharmaceuticals, fell 7.8 percent. Petrochemicals exports decreased 13 percent, while pharmaceutical shipments grew 43 percent. Singapore’s non-oil exports slid a seasonally adjusted 16.8 percent last month from February, when they climbed a revised 7.2 percent, Tuesday’s report showed.

Non-oil domestic exports fell 4.3 percent from a year earlier, after a revised 30.4 percent increase in February, the trade promotion agency said in a statement on Tuesday. The median of 12 estimates in a Bloomberg News survey was for a 7.1 percent gain.

After a growth rebound last quarter, Singapore’s central bank said last week it will allow faster gains in its currency, which may make exports less competitive, even as Indonesia and South Korea kept interest rates unchanged.

In Asia Yesterday
Tokyo was flat, edging down 5.93 points to 9,464.71, Seoul was 0.37 percent lower, slipping 7.33 points to 1,985.30 and Sydney gave up 0.32 percent, or 13.7 points, to close at 4,288.6.

Hong Kong shed 0.23 percent, or 48.33 points, to 20,562.31 and Shanghai lost 0.94 percent, or 22.04 points, to end at 2,334.44.

– Singapore closed down 0.18 percent, or 5.53 points, at 2,986.59.

Real estate developer Capitaland shed 1.36 percent to $Sg2.91 while palm oil producer Wilmar International was down 0.41 percent at Sg$4.83.

– Taipei fell 1.86 percent, or 143.99 points, to 7,585.87.

Hon Hai Precision fell 3.93 percent to Tw$110.0 while TSMC was 1.3 percent lower at Tw$83.8.

– Manila closed 0.77 percent, or 39.82 points, higher at 5,157.28.

Philippine Long Distance Telephone rose 0.62 percent to 2,590 pesos and Bank of the Philippine Islands put on 0.40 percent to 75.00 pesos.

– Wellington ended 0.20 percent, or 7.04 points, higher at 3,480.54.

Contact Energy was 0.4 percent higher at NZ$4.77, Telecom was down 1.8 percent at NZ$2.485 and Fletcher Building was up 0.8 percent at NZ$6.26.

– Kuala Lumpur was flat, edging down 1.32 points to 1,596.19.

Financial firm CIMB Group Holdings fell 0.13 percent to 7.60 ringgit, while Malayan Banking lost 0.45 percent to 8.81 ringgit. Plantation firm Sime Darby gained 0.20 percent to 9.90 ringgit.

– Jakarta gained 0.26 percent, or 10.78 points, to 4,157.37.

– Bangkok slipped 0.79 percent, or 9.22 points, to 1,160.23.

– Mumbai rose 1.21 percent, or 206.99 points, to 17,357.94 points.

Shayne Heffernan Ph.D.  
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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