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ASEAN STOCK WATCH Asean Affairs  18 April 2013 

ASEAN Market Preview

OCBC Singapore

CBC Bank led the banc assurance business in Singapore, with sales (based on total weighted premiums1) closing in at S$268 million in 2012 - an increase of 160% from 2009. Last year, the Bank made significant inroads in protection products, with sales growing sevenfold year-on-year.

OCBC Bank offers a wide range of insurance products - including endowment plans, protection products (whole-life, mortgage insurance and health plans) and universal life - through its Personal Financial Consultants and Relationship Managers located at 55 OCBC Bank branches and 19 Premier Banking centres, and a mobile team of more than 30 Financial Protection Specialists.

Typically, the category of endowment products is the biggest contributor to all banks' bancassurance business. It is no different for OCBC Bank. In 2012, sales of regular premium endowment plans grew 26%, contributing more than

40% to OCBC Bank's overall bancassurance business.

While the Bank continues to do well for its endowment plans, it saw the need to place more emphasis to increase customer awareness of its offering of protection plans. As a result, sales of protection products increased - total gross premiums collected grew sevenfold in 2012.

One protection plan which has done well is mortgage insurance. In 2010, OCBC Bank became the first financial institution in Singapore to offer Mortgage Protector Plus (MPP), a single premium mortgage insurance plan which refunds the premium to the customer at the end of the policy term if no claim is made. Following the success of MPP, a regular premium version, called Mortgage Protector Advantage, was launched in December last year. These two products proved to be popular because customers can get back their premiums if nothing untoward happens and, at the same time, enjoy protection throughout the policy term.

Siam Cement Thailand

Fitch Ratings (Thailand) Limited has affirmed Siam City Cement Public Company Limited's (SCCC) National Long-Term rating at 'A(tha)', its National Short-term rating at 'F1(tha)' and its senior unsecured debentures at 'A(tha)'. The Outlook is Stable.

The ratings reflect SCCC's leading market position as the second-largest cement and ready mixed concrete producer in Thailand. This has helped maintain reasonable EBITDA and EBITDA margin despite pressure from price competition and higher energy costs in the past five years. Strong cement demand in Thailand driven by a strong urbanisation trend in the provinces and the government's large spending plan on infrastructure projects, in particular, should drive healthy growth in SCCC's cement and ready mixed concrete sales in 2013-2015.

Fitch believes SCCC's low financial leverage of 0.5x at end-2012 should provide enough flexibility for the company's high capex in the next two years. The expected higher capex for several capacity expansions is likely to increase the company's net adjusted debt/EBITDAR to 1.0x-1.5x in 2013-2014. Its interest coverage should remain solid with funds from operations (FFO) interest coverage in a range of 10x-20x.

Indonesia Freeport Faces Strikes

Workers at the Indonesian unit of Freeport McMoRan Copper & Gold Inc have refused to rule out a repeat of a 2011 strike that crippled the world’s largest copper mine, trade union officials said in the run-up to pay negotiations next month.

A deal inked in December 2011 to resolve Indonesia’s longest running industrial dispute is due to end in October at Freeport’s Grasberg mine in west Papua province.

It included a pay rise of 37 percent over two years for workers who joined the three-month strike demanding higher pay.

“Whether there will be a strike or not in 2013 is dependent on the result of the negotiations,” union spokesman Juli Parorrongan told Reuters on Wednesday.

“The company is the one which can create a strike, not labor. If the company management offers, or decides, lower benefits than its ability or revenues, it means the company asks us to strike.”

Indonesian officials of Arizona-based Freeport did not reply to e-mails or telephone calls from Reuters seeking comment.

Mining contributes around 12 percent to GDP in Indonesia, which is also a major exporter of nickel ore, refined tin, bauxite and iron ore.

Ayala Land Philippines

Ayala Land Inc. plans to debut into the affordable hotel property business and expand its industrial estate developments to establish new growth areas as a full-range property developer.

In a press briefing after the company’s stockholders meeting on Wednesday, ALI officials announced plans to develop a new hotel chain under a new homegrown brand that would offer rooms for $60 a night, half the price of the group’s new boutique brand Seda, which has been selling rooms for $120 a night to business travelers.

Jose Emmanuel Jalandoni, ALI capital and hotels group head, said the first of such “affordable” hotel property would break ground by the fourth quarter of this year at the group’s newly acquired property in Muntinlupa – the “South Park District” that used to be the site of a Nestle coffee factory.  The new hotel property will be “up and running” in a year’s time, according to Jalandoni.

Typically, the affordable hotel projects would have 150 to 200 rooms, Jalandoni said.  After the Muntinlupa project, plans are under way to put up similar hotels in Iloilo and Bacolod.

By 2015, ALI expects to have built up a portfolio of 4,000 rooms.  In 2012, it opened the 280-room upscale Fairmont Hotel and the 32-room Raffles Suites.  Its first homegrown hotel brand Seda also opened in Bonifacio Global City (BGC) and Cagayan de Oro, adding a combined 329 rooms.

Although industrial estate has been a laggard among local property segments, ALI believes that this segment would soon catch up.  “We certainly feel manufacturing is back,” Aquino said, noting that ALI’s Laguna Technopark has been running out of capacity and ALI has started talks to acquire additional landbank for industrial estate development in the Calabarzon (Cavite-Laguna-Batangas-Quezon) area.  Pampanga is another area being considered by ALI for such types of development.  Asked whether ALI has been looking outside Luzon, Aquino said the company would always look at opportunities.

During the stockholders meeting, ALI chair Fernando Zobel de Ayala cited “indicative signs of a revival in the manufacturing sector as the country becomes a compelling alternative to our Asian neighbors.”

Yesterday in Asia

Tokyo climbed 1.22 percent, or 161.45 points, to 13,382.89, Sydney rose 1.09 percent, or 53.8 points, to 5,004.6 and Seoul was flat, edging up 1.63 points to 1,923.84.

Shanghai also ended flat, dipping 1.05 points to 2,193.80, while Hong Kong fell 0.47 percent, or 102.36 points, to 21,569.67 as an early rally was wiped out by continuing fears about the strength of the mainland Chinese economy.

– Singapore ended flat, dipping 0.12 points to 3,291.46.

United Overseas Bank rose 1.87 percent to Sg$20.73 while oil-rig maker Keppel Corp. shed 0.53 percent to Sg$11.29.

– Taipei rose 0.10 percent, or 8.02 points, to 7.809.07.

Smartphone maker HTC rose 3.23 percent to Tw$272.0 while Taiwan Semiconductor Manufacturing Co. was 0.5 percent lower at Tw$100.0.

– Manila closed 0.94 percent higher, adding 63.93 points to 6,850.26.

LT Group surged 11.1 percent to 23 pesos while Philippine Long Distance Telephone rose 0.9 percent to 2,910 pesos.

– Wellington jumped 1.14 percent, or 50.43 points, to 4,478.27.

Auckland Airport rose 2.1 percent to NZ$2.98, Telecom added 0.6 percent to NZ$2.45 and Chorus was up 2.6 percent at NZ$2.72.

– Jakarta climbed 1.08 percent, or 53.40 points, to 4,998.65.

Bank Negara Indonesia jumped 5.00 percent to 5,250 rupiah, while palm oil firm Astra Agro Lestari slipped 0.55 percent to 18,150 rupiah.

– Bangkok lost 0.38 percent, or 5.79 points, to 1,521.53.

Airports of Thailand added 5.26 percent to 130 baht, while supermarket operator Siam Makro jumped 14.84 percent to 650 baht.

– Kuala Lumpur added 0.61 percent, or 10.44 points, to end at 1,710.97.

– Mumbai was flat, edging down 13.77 points to 18,731.1



Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager


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ASEAN  ANALYSIS

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.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

 

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