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ASEAN STOCK WATCH Asean Affairs  6 December 2012

ASEAN Market Preview
 

ASEAN may expect a rise in foreign direct investments over the next two years as the Asia-Pacific becomes the preferred business destination due to the positive outlook on the economies in the region, according to Multilateral Investment Guarantee Agency (Miga).

A unit of the World Bank Group that provides guarantees to investments in developing countries, Miga said the more encouraging growth performance of developing countries vis-?-vis advanced economies would allow the former to register double-digit growth in FDIs.

It projected that total FDIs to developing countries would reach $697 billion next year—up by 17 percent from the estimated $594 billion this year.

Economic growth, a growing consumer base, the availability of natural resources, and ongoing improvements in investment climates “will continue to improve the attractiveness of developing countries as investment destinations,” Miga said.

The estimated $594 billion worth of FDIs to developing countries in 2012 marks a decline of about 7 percent from last year’s nearly $639 billion.

The drop in this year’s FDIs has been blamed on investor’s risk aversion brought on by the crisis in the eurozone and the sluggish growth of the United States.

Global FDIs are estimated to have dropped by 10.5 percent to $1.7 trillion by end-2012 from last year’s $1.9 trillion.

Thailand

A conglomerate controlled by Thailand's richest man has bought a minority stake in China's Ping An Insurance for $9.38 billion from global bank HSBC, a bold move that ranks as Asia's second-largest deal this year.

Dhanin Chearavanont's Charoen Pokphand Group (CP Group) bought the 15.6 percent stake in a deal that marks a departure from its core food businesses, such as poultry and animal feed, but appears to strengthen the 73-year-old's ties to Beijing.

HSBC , which announced the transaction on Wednesday under its recovery plan to sell non-core assets, said CP Group's purchase was being partly financed by state-run China Development Bank.

Dhanin - worth $9 billion according to Forbes magazine - already has major business interests in China ranging from agriculture to retail to auto manufacturing.

Singapore

UEM Land Holdings Bhd says more investments from Singapore are expected to flow into Iskandar Malaysia in the coming years as the economic growth corridor progresses.

Managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim said Singaporean investors had now realised that Iskandar Malaysia offered good prospects for them.

He said in the early days of the corridor's inception, many Singaporeans were adopting the “wait and see” attitude as they wanted to see whether the economic growth corridor would take off as planned.

“But six years down the road, their perception has changed and now they are looking at investing in Iskandar Malaysia,'' Wan Abdullah told a press conference after signing a joint-venture agreement with Singapore's FASTrack Autosports Private Ltd to develop Motorsports City in Gerbang Nusajaya.

The 70:30 joint-venture between FASTrack Autosports and UEM Land, valued at over RM3.5bil, will see both parties establishing the Motorsports City masterplan as well as the development and marketing strategies of the project.

Wan Abdullah said work on the project would take place within six months and expected to be completed in 2015 or 2016.

“The first phase of Iskandar Malaysia is more on laying the foundation and now is to create more job opportunities and economic spills-over,'' he said.

The 109.26ha Motorsports City located at Gerbang Nusajaya, just metres away from the Second Link crossing, is an integrated mixed commercial development with a proposed 4S (sales, services, systems and spare) facilities.

It will be equipped with a F1-compliant test track, car showrooms, service centres, system enhancements and upgrades, Continental and Asian spare parts hub, bonded warehouses/garages, retail and al fresco spaces with food and beverage outlets and an entertainment hub.

At the heart of development is the 4.5km long test track dubbed the “Nurburgring of Iskandar Malaysia” to be designed by an internationally-acclaimed F1 track designer.

There is also a proposed international race-certified 1.5km long go-kart track, Asian-based motor sport R&D facilities, office spaces and the project will create 5,000 new job opportunities.

The person behind the multi-billion project is Singapore billionaire Peter Lim, the major shareholder of FASTrack Autosports.

“This project (Motorsports City) is something that I like to do. The cost of doing business in Singapore is higher and Iskandar Malaysia seems attractive to me,'' said Lim.

He said he was looking at developing two more integrated mixed development projects within Iskandar Malaysia.

The time was “right” for to invest in Iskandar Malaysia due to the good growth prospects and opportunities offered by the economic growth corridor, Lim said, adding that one of the property projects was an intergrated mixed development in the Stulang Laut area just few metres away from the Bangunan Sultan Iskandar Customs, Immigration and Quarantine Complex near here.

Separately, UEM Land also signed a Memorandum of Understanding with Chinamall Holdings Pte Ltd to develop China Mall, a trade and exhibition centre in Gerbang Nusajaya.

The 1.4 million sq ft gross floor area on a 12.94ha site worth RM562mil will house 3,000 merchants from China offering products such as textiles, gifts, souvenirs, furniture, electrical and household appliances, jewellery and toys.

Malaysia

Astro Malaysia Holdings Bhd reported net profit of RM118.08mil in the third quarter ended Oct 30, 2012 from RM103.52mil a year ago, boosted by unrealised foreign exchange (forex) gains.

The pay-TV operator said on Wednesday there was an unrealised forex gain of RM30.6mil versus an unrealised forex loss of RM47.4mil a year ago, which was offset by a decline in earnings before interest, tax, depreciation and amortisation (EBITDA) of RM14.3mil and higher depreciation of RM45.6mil.

It said revenue rose 8.3% to RM1.078bil from RM995.31mil a year ago. Earnings per share were 5.20 sen. It declared an interim dividend of 1.5 sen per share.

Astro said the higher revenue was mainly due to the increase in subscription revenue of RM74.5mil.

"The increase in subscription revenue is attributed to both an increase in ARPU for Pay-TV residential subscribers of RM4.90 (from RM87.40 to RM92.30) and an increase in number of Pay-TV residential subscribers from 3,013,500 to 3,213,100," it said.

However, it said group earnings before interest, tax, depreciation and amorisation fell by RM14.3ilm from a year ago mainly due to higher installation, marketing and distribution costs. These were in relation to customer acquisition as well as higher B.yond boxes swap out, higher content costs, staff related costs and impairment of receivables.

As for its cashflow, it said cash and cash equivalents increased to RM927.4mil from a year ago mainly from proceeds from the shares issuance, net of issuance costs of RM1.387bil. However, this was offset by lower operating cash flows of RM69mil and payment of dividend of RM366.0mil.

For the nine-month period ended Oct 30, 2012, the earnings fell 29% to RM334.84mil from RM472.04mil.

"The decrease in net profit is mainly due to higher depreciation of RM113.2mil, decrease in EBITDA of RM46.6mil, and increase in finance costs of RM70.1mil, which is partly offset by increase in finance income of RM33.6mil and lower taxation of RM57.7mil," it said.

Its revenue rose 11.5% to RM3.133bil from RM2.811bil mainly due to the increase in subscription and advertising revenue of RM269.4mil and RM52.2mil respectively.

On the outlook, it said Astro TV expected subscriber net additions, ARPU and adex to continue to contribute to its revenue growth.

"The conversion of residential subscribers to Astro B.yond set-top boxes is progressing according to plan and is expected to complete by the next financial year. This will continue to drive higher take-up of value added services such as high definition, recording services and Video-On-Demand, which are the primary drivers of ARPU growth.

"However, this is expected to impact the group EBITDA and net profit for the remainder of this financial year. The group continues to have good visibility in respect of content costs which are in line with its expectation," it said.


Indonesia

State-controlled construction company Waskita Karya has received a surge of interest from investors keen to get a stake in the company, with demand for shares more than double the amount set to be sold at next week’s offering, a government official said on Tuesday.

Pandu Djajanto, an official at the State Enterprises Ministry, said that the oversubscription was based on a recapitulation from joint lead underwriters Mandiri Sekuritas, Bahana Securities and Danarekasa. This indicates that both foreign and local investors are eager to get their hands on Waskita shares, said Pandu, who on Tuesday signed a pricing arrangement on the shares being sold in the initial public offering.

Waskita plans to sell 3 billion shares, or 35 percent of its enlarged total, in an IPO next week. The company is estimated to raise up to Rp 1.2 trillion ($125 million) from the IPO. The company will offer the shares to investors from Dec. 12 to Dec. 14 and plans to list them on the Indonesia Stock Exchange (IDX) on Dec. 19.

Waskita may price the stake sale between Rp 333 and Rp 400 a share, media reports said last month.

State Enterprises Minister Dahlan Iskan on separate occasions has said the government expects the IPO to raise as much capital as possible. Dahlan, however, refused to disclose the intended Waskita offer price.

The minister said the government plans to stop using foreign-owned securities companies to handle IPOs for government controlled companies.

“We only use the three state-owned securities firms. We must have faith in the capability of our own firms,” he said.

Waskita has talked to potential investors in Indonesia, Singapore and Hong Kong.

Waskita first announced the plan to conduct an IPO in 2010, but delayed it for several reasons, including unfavorable financial conditions.

The government has injected Rp 475 billion into the company to cover misstatement in the company’s 2004 to 2007 financial reports. Since then, the company has been put under the management of Perusahaan Pengelola Aset, a state agency tasked with restructuring mismanaged state enterprises like Waskita. Waskita’s net income was Rp 37.1 billion during the first six months of 2012, while revenue stood at Rp 2.7 trillion. Its assets were valued at Rp 5.6 trillion at the end of June.

Waskita would be one of several state-controlled companies to tap funds in the local equity market and be listed on the Indonesia Stock Exchange.

Philippines

PLDT revenue will rise as  California-based Apple Inc. announced that the new Apple iPhone 5 will hit Philippine shores on Dec. 14, just in time for Christmas.

The world’s most valuable company in a post on its website said the Philippines was included in a list of more than 50 countries where the new smartphone would be launched this December.

The first on the list would be South Korea, where the new iPhone will be available starting Dec. 7.

The following week, the device will become available in countries such as the Philippines, Brazil and China.

Spokespersons from Smart Communications and Globe Telecom, the country’s major networks, declined to release details on availability as of press time.

The new iPhone, the sixth released by Apple despite the name, is thinner and lighter than previous models. It also features a four-inch screen, a departure from the 3.5-inch screens that all previous models had.

Apart from improved hardware, the iPhone 5 comes with iOS 6, Apple’s newest operating system for mobile devices. The new software comes with over 200 new features including: Shared Photo Streams, Facebook integration, all-new Maps app, Passbook organization, and voice-based personal assistant Siri.


Yesterday in Asia

Tokyo ended 0.39 percent, or 36.38 points, up at 9,468.84, Sydney was 0.37 percent, or 16.8 points, higher at 4,520.4 and Seoul climbed 0.61 percent, or 11.86 points, to 1,947.05.

Hong Kong added 2.16 percent, or 470.94 points, to end at 22,270.91, while Shanghai surged 2.87 percent, or 56.77 points, to 2,031.91 after this week hitting its lowest level since January 2009. Dealers were also lifted by speculation that the Chinese government will soon unveil new plans for the economy.

 Singapore’s Straits Times Index closed up 0.45 percent, or 13.80 points, at 3,075.92.

Olam International sank 5.31 percent to Sg$1.52 while City Developments added 1.80 percent to Sg$11.87.

– Taipei rose 0.63 percent, or 48.07 points, to 7,649.05.

Smartphone maker HTC rose 1.62 percent to Tw$283.0 while chip giant TSMC was 0.31 percent higher at Tw$96.9.

– Manila eased 0.33 percent, or 18.56 points, to 5,687.72.

SM Prime fell 3.6 percent to 16 pesos, BDO Unibank added 1.9 percent to 73.40 pesos and Megaworld was up 2.3 percent at 2.68 pesos.

– Wellington fell 0.21 percent, or 8.45 points, to 4,007.25.

Fletcher Building lost 0.8 percent to NZ$7.85, Fonterra shed 2.2 percent to NZ$6.60 and Chorus rose 0.4 percent to NZ$2.79.

– Kuala Lumpur shares edged up 6.18 points, or 0.38 percent, to close at 1,613.79.

UEM Land Holdings gained 2.4 percent to 2.13 ringgit, while British American Tobacco rose 1.9 percent to 57.70. Tenaga Nasional lost 0.1 percent to 6.94 ringgit.

– Jakarta ended up 17.19 points, or 0.4 percent, at 4,286.84.

Paper maker Pabrik Kertas Tjiwi Kimia rose 6.25 percent to 2,125 rupiah, retailer Ramayana Lestari Sentosa climbed 3.85 percent to 1,350 rupiah, while food manufacturer Indofood Sukses Makmur slid 1.67 percent to 5,900 rupiah.

– Mumbai’s Sensex index rose 0.23, or 43.74 points, to 19,391.86 points.

Tata Motors was up 1.33 percent at 274.90 rupees and Infosys was down 1.94 percent at 2,382.30 rupees.

– Bangkok was closed for a public holiday.

 

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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