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ASEAN STOCK WATCH 4  August  2010

Consolidation in ASEAN Markets Today

Shayne Heffernan

After attending the 3rd ASEAN Affairs Save our Planet Conference today in Kuala Lumpur it is clear that the leaders in the local Green business areas seem to be Multinational Companies.

These 3, Emerson, Bayer and Siemans Regional Managers outlined what they are doing in ASEAN and globally in the Green sector and it was to say the least impressive. Their sustanable business models and innovations not only make them inspirations, but also make them worth having in your portfolio.

Emerson Electric Co. (Public, NYSE:EMR)

Emerson Electric Co. is a diversified global technology company. It is engaged in designing, designing and supplying product technology and delivering engineering services in a range of industrial, commercial and consumer markets globally. It has five segments. The Process Management segment provides measurement, control and diagnostic capabilities for automated industrial processes producing items. The Industrial Automation segment brings integrated manufacturing solutions to industries worldwide. The Network Power segment provides power and environmental conditioning to help keep the telecommunication systems, data networks and critical business applications continuously operating. The Climate Technologies segment is engaged in enhancing household and commercial comfort. Its Appliance and Tools segment provides designed motors for a range of applications, appliances and integrated appliance solutions. In July 2010, it acquired Innovative Control Systems Inc.

Bayer AG (ADR) (Public, PINK:BAYRY)

Bayer AG is a management holding company. The Company’s business operations are organized into three subgroups: HealthCare, CropScience and MaterialScience, supported by the service companies Bayer Business Services, Bayer Technology Services and Currenta. Bayer HealthCare is involved in the research, development and manufacture of health products for people and animals. Bayer CropScience is engaged in the crop protection and non-agricultural pest control. Bayer MaterialScience supplies polymers, and develops solution for a range of applications. In November 2009, Bayer MaterialScience acquired the polymer coatings business from Lombard Medical Technologies PLC. On November 2, 2009, it acquired Athenix Corporation. On October 1, 2009, it acquired two dermatology product lines from SkinMedica, Inc., Carlsbad, California, United States. On June 25, 2009, it acquired the remaining 10% interest in Bayer Polymers (Shanghai) Co. Ltd., China.

Siemens AG (ADR) (Public, NYSE:SI)

Siemens AG (Siemens) is a Germany-based multinational company with a business portfolio of activities in the field of electronics and electrical engineering. The Company has seven business areas: Information and Communications, which consisted of three businesses (devices, enterprise networks and carrier networks); Automation and Control, which includes three groups: Automation and Drives, Industrial Solutions and Services, and Siemens Building Technologies; Power, which includes two groups: Power Generation, and Power Transmission and Distribution; Transportation, which includes two groups: Transportation Systems and Siemens VDO Automotive; Medical, which includes the Medical Solutions group; Lighting, which includes the Osram group, and Financing and Real Estate, which includes Siemens Financial Services and Siemens Real Estate. During the fiscal year ended September 30, 2006, the Company acquired Diagnostic Products Corporation. In November 2006, it acquired Kuehnle, Kopp & Kausch.

The Jakarta Composite Index fell 85.32 points, or 2.79 percent, to close at 2,973.65. It was the index’s steepest decline since the height of the European debt crisis in May, the fall was excessive and makes the Jakarta Index a stron buy in the monin session.

Volume was heavy, with 5.2 billion shares worth Rp 5.3 trillion ($593.6 million) changing hands. Decliners trounced gainers 183 to 37.

Financial stocks were the biggest drag on the index. Bank Central Asia, the country’s biggest lender by market value, slumped 4.2 percent, while Bank Rakyat Indonesia, the second-largest bank by assets, also declined 4.2 percent.

Bank Mandiri, the top lender by assets, fell 3.4 percent.

Astra International, the nation’s largest automotive retailer, tumbled 12.4 percent, the biggest loss in more than a year.

Apac Citra Centertex, a manufacturer of textile and garment products, plunged 8.6 percent, its sharpest drop since April 30. The company said its first-half net loss widened to Rp 26.4 billion from Rp 7.8 billion a year earlier.

“The concern is that interest rates will rise sooner than people thought,” said Fadlul Imansyah, who helps manage $190 million in assets at CIMB Principal Asset Management in Jakarta.

Bank Indonesia will announce its decision on the benchmark rate today.

Citigroup said in a report that a surge in July inflation had boosted the odds the central bank would lift interest rates earlier than its forecast for a first-quarter increase. Bank Indonesia would be “more hawkish” in its next monetary policy statement, Citigroup said.

The consumer price index rose to an annualized 6.22 percent last month, the Central Statistics Agency (BPS) said on Monday.

Bank Indonesia is expected to keep its benchmark interest rate at a record-low 6.5 percent for a 12th straight month to support growth, according to all 22 economists asked in a Bloomberg survey.

Meanwhile, the rupiah advanced for a ninth day, its longest winning streak since December 2005, ahead of a report on Thursday that is forecast to show the fastest quarterly economic growth since 2008.

“Sentiment is buoyant on economic growth, which is supporting the rupiah,” said Joanna Tan, a regional economist at Forecast Singapore. “Definitely we will see good growth numbers for the second quarter.”

The rupiah rose 0.1 percent to 8,943 per dollar as of the stock market’s close after touching 8,905 earlier in the day, the strongest level since June 2007. It has appreciated 11 percent in the past 12 months.

The central bank was likely to intervene if it passed 8,900 to support exports, Tan said.

Bank Indonesia Deputy Governor Hartadi Sarwono said last week the central bank would continue to guard against excessive gains in the currency.

Overseas investors on Monday bought $11.4 million more Indonesian stocks than they sold, boosting net purchases for the year to $1.4 billion.

They pumped $541 million into securities last month, the most since April 2007.

The Malaysia stock market ended higher here on Tuesday.

The Kuala Lumpur Composite Index (KLCI) was at 1,363.83 up 0.23 points or 0.02 percent, and the Emas was at 9,232.79 down 9.08 points or 0.09 percent.

Turnover increased to 1.10 billion shares valued at 1.46 billion ringgit Malaysia (4634.92 million U.S. dollars), compared with 963.78 million shares valued at 1.28 billion ringgit Malaysia (404.94 million U.S. dollars) on Monday

KFC Holdings (M) Bhd plans to add at least 20 new outlets next year with a total investment of about RM45mil.

Of the 20 outlets nationwide, 12 will be under the drive-thru concept, managing director Jamaludin Ali said at the KFC Hot & Spicy Shrimp launch here today.

Currently, KFC Holdings has 495 outlets nationwide with 32 drive-thru concept outlets.

SCC Holdings Bhd, made its debut on Bursa Malaysia today with a premium of 12.5 sen at 90.5 sen over its offer price of 78 sen. Its managing director, Francis Cher Sew Seng, said the strong performance was a reflection of the public’s confidence in the group, which planned to further expand regionally to ensure growth. “SCC may acquire companies in the same industry in the region if the opportunities arise.

The group currently has operations in Indonesia, China and Brunei,” he told a media briefing after the listing ceremony here today. SCC and its subsidiaries, Anitox Malaysia Sdn Bhd and SCC Corp Sdn Bhd, have been involved in the animal health product business for about 38 years.

Currently, the group has two business segments namely, animal health products and food service equipment, which accounted for 51% and 49% respectively of its total revenue. SCC is a supplier of non-antibiotic animal health products to local livestock farms and feed millers, particularly those in the poultry and swine livestock industry. The group also supplies and distributes a wide range of food service equipment like rapid cooking ovens, pressure fryers and popcorn ingredients.

Its clients include Charoen Pokhand Group, Emivest Bhd, KFC Malaysia, Golden Screen Cinemas and Giant Hypermarkets. Cher said SCC expected to raise RM8.7mil from the listing which it would use for capital expenditure, programme development, working capital and listing expenses. He said the group planned to expand into Vietnam and Cambodia through strategic alliances.

“Currently, the group is in discussions with some of our existing customers, who are expanding regionally, to supply their overseas ventures in Vietnam and Cambodia,” he said. Cher said SCC has also identified aquaculture feed additives as a new target market. “The sector is lucrative and growing and this presents the group with an avenue to increase its market share,” he said

Last week Shayne Heffernan of Ebeling Heffernan put a target on the Thailands SET of 1000pts by March 2011. Today the Stock Exchange of Thailand (SET)composite index moved up 1.30 points, or 0.15 percent, to close at 864.48 points on Tuesday.

Some 8.99 billion shares worth 32.72 billion baht (about 1.02 billion U.S. dollars) changed hands.

The SET composite index moved up 7.35 points, or 0.86 percent, to close at 863.18 points on Monday.

The SET gained 18 percent this year, overtaking Indonesia today as the best performer among the region’s biggest markets, as surging exports limited the impact of the political turmoil. Companies including Bangkok Bank Pcl and Siam Cement Pcl reported higher-than-expected profit in the second quarter amid the nation’s deadliest unrest in almost two decades.

Overseas investors bought a net 8.1 billion baht ($252 million) of Thai shares in the past six trading sessions, the largest six-day purchase in almost four months, according to data compiled by Bloomberg. Foreigners sold 58.7 billion baht of domestic stocks in May, a record monthly selloff.

PTT Exploration & Production Pcl rose 1.3 percent to 153 baht, a three-month high. Land & Houses Pcl climbed 4.4 percent to 6 baht, the most in one month.

Following Indonesia

Indonesia’s Jakarta Composite Index last month became the first benchmark in the region to enter a bull market since the peak of the European debt crisis in May.

Thailand’s finance ministry said last week it expects the economy, Southeast Asia’s largest after Indonesia, to grow 8 percent in the second quarter, even after clashes between troops and anti-government protesters in April and May claimed 89 lives in the nation’s worst political violence in 18 years.

“There is optimism that foreigners will buy more Thai shares after companies reported strong earnings growth and the political situation became more stable,” said Songyos Kulvichien, senior executive vice president at Country Group Securities Pcl, the nation’s second-biggest stock brokerage by trading volume.

Thailand’s exports jumped 47.1 percent in June from a year earlier to a record $17.9 billion, the central bank said on July 30. Automakers Ford Motor Co., General Motors Co. and Mitsubishi Motors Corp. all announced plans to build factories in Thailand in the past month.

Emergency Decree

The benchmark SET Index may rise to 890 this year, said MFC’s Supakorn. That would be the highest level since November 2007. Supakorn’s MFC Islamic Long Term Equity fund has risen 27 percent this year, the fourth-best performer among 228 stock funds based in Thailand, according a data compiled by Bloomberg.

Thai government spokesman Panitan Wattanayagorn said today that the government will allow peaceful protests that only last for a short period of time, signaling it may soon lift a state of emergency imposed in Bangkok about four months ago.

The emergency decree, in force in 10 of Thailand’s 76 provinces, gives authorities immunity and lets them close media outlets, freeze bank accounts and detain suspects for 30 days without charge. It also prohibits gatherings of five or more people.

Thailand ‘Under-Owned’

Investors should buy the “under-owned” stock markets after India led foreign investment into Asian emerging markets, according to Credit Suisse Group AG analysts led by Sakthi Siva.

“If we aggregate net foreign buying over the past three months, Thailand appears to be the most under-owned market,” followed by Taiwan and Korea, said Siva, the top-ranked strategist in Institutional Investor’s 2010 Asian poll.

Thailand has seen overseas investors withdraw a net $311.6 million this year, the only net outflow in Asia, according to data compiled by Bloomberg.

Bangkok Bank, the nation’s largest commercial lender, last month said second-quarter net income rose 41 percent to 6.83 billion baht. Siam Cement, the third-biggest publicly traded company by market value, had a 6.6 percent increase in quarterly profit to 7.29 billion baht.

The following were among the most active on the exchange:

Delta Electronics (Thailand) Pcl (DELTA TB), a Thai maker of electronics parts, gained 0.9 percent to 26.75 baht, its highest close since April 2004. The company was raised to “outperform” from “neutral” at KGI Securities by equity analyst Aungkana Tungwikromkrai.

Halcyon Technology Pcl (HTECH TB), a maker of diamond cutting tools, jumped 10 percent to 3.48 baht, the steepest gain since Sept. 24. The company’s net income more than doubled to 29.4 million baht ($913,498) in the second quarter from 12.1 million baht in the same period a year earlier.

Thai Tap Water Supply Pcl (TTW TB), a water producer, climbed 5 percent to 5.25 baht, the highest level since Aug. 6, 2008. The company will raise its daily output by 38 percent to 440,000 cubic meters this month after completing a new facility, Kao Hoon reported, citing Managing Director Sompodh Sripoom. The increased production will boost earnings in the second half, the report said. Sompodh wasn’t immediately available for comment.

The Philippine market finished 0.83 percent higher on Tuesday.

The bellwether Philippine Stock Exchange index rose 28.68 points to 3,484.08. The broader all-share index increased by 0.59 percent or 12.97 points to 2,210.93.

Trading volume reached 825.5 million shares worth 3.06 billion pesos (67.5 million U.S. dollars). There were 78 issues that ended higher, 51 declined while 48 stocks closed flat.

Vietnam’s stock market index, the VN-Index, closed at 491.9 points on Tuesday, up 0.29 points, or 0.06 percent, against the previous trading day.

A total of 42.36 million shares worth 1.26 trillion Vietnamese dong (VND) (66.19 million U.S. dollars) changed hands at the Ho Chi Minh City Stock Exchange. Prices of 75 stocks went up, 128 dropped while 52 remained unchanged.

The HNX-Index, index of Vietnam’s Hanoi Stock Exchange, went down 0.9 points, or 0.59 percent, to 150.48 points


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