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ASEAN STOCK WATCH Asean Affairs   1 February 2011

Asean Markets will post gains today

Shayne Heffernan

Shayne Heffernan's Best Buys are Tiger Airlines, PTT, Genting, Aboitiz, KTB

Indonesia, Thailand, Singapore, Malaysia and Philippines are all trading lower of late but that trend will now flatten off and the Asean markets will begin a recovery above and beyond the recent highs.

The Dow Jones industrial average was up 50.86 points, or 0.43 percent, at 11,874.56. The Standard & Poor's 500 Index was up 9.04 points, or 0.71 per cent, at 1285.38. The Nasdaq Composite Index was up 13.56 points, or 0.50 per cent, at 2700.45.

Wall Street posted its biggest one-day loss in nearly six months on Friday as the anti-government rioting in Egypt sparked a flight to less risky assets.

Stocks held gains on Monday even after technology bellwether Intel Corp fell 0.9 percent to $US21.27 after cutting its first-quarter revenue forecast by US300 million due to costs for correcting a design flaw in one of its chips.

In Manila the Philippine Stock Exchange index lost 88.87 points or 2.24 percent to 3,881.47.

The financial, industrial, and property companies led the day’s decline, respectively falling by 3.06 percent, 3.02 percent, and 2.25 percent. On such a steep fall bargain hunters will be active and Shayne Heffernan has selected Aboitiz as one to be buying.

Aboitiz stands out as a strong buy said Shayne Heffernan today.

The SN Aboitiz Power(SNAP)-Magat Inc. is set to conduct a feasibility study on the expansion of its hydroelectric generating capacity from 360 to 540 Mega Watts.

Lawyer Mike Hosillos, SNAP-Magat’s vice president for corporate communication said a Memorandum of Understanding(MOU) between the firm and the National Irrigation Administration(NIA) which has been signed in December 15 last year will push for the feasibility study this year.

SNAP-Magat, a joint venture between SN Power of Norway and Aboitiz Group operates the Magat dam and hydroelectric power based in Ramon, Isabela and Alfonso Lista in Ifugao province.

“The MOU facilitates the gathering of information to determine the feasibility of expanding the capacity of the Magat plant for an additional 90 MW to up to 180 MW,” Hosillos added.

The result of the feasibility study will enable SNAP-Magat to evaluate whether to proceed with the construction phase of the project.

The study will also focus on the feasibility of installing a pumped-storage system where water stored in an upper reservoir is released into a lower reservoir through the penstock when power from the plant is needed.

When demand for electricity is low, the turbines spin backward and pump the water back up into the upper reservoir, enabling more efficient water use.

The proposed power expansion is also designed to meet the growing demands of electricity and irrigation for farmlands in Cagayan Valley region.

Yesterday in Jakarta the JCI shed 78.44 points, or 2.3 percent, to close at 3,409.17. About 3 billion shares worth Rp 5 trillion ($555 million) changed hands, with decliners leading gainers 205 to 31. This should reverse today after better leads overnight from Wall St.

Bank Rakyat Indonesia, the nation’s second-biggest lender by assets, dropped 4.9 percent to Rp 4,850. BRI declined after Credit Suisse Group, downgraded it from “outperform” to “neutral,” citing the bank’s “limited potential for earning benefit as interest rates increase.” Bank Rakyat Indonesia looks very oversold and expect to see some recovery from this one today.

Multistrada Arah Sarana lost 1.8 percent to Rp 280 on fears that trouble in Egypt would hurt the company’s exports. This looks now to be an over reaction and Multistrada Arah Sarana should head towards 300Rp in trading today.

State coal miner Tambang Batubara Bukit Asam fell 2 percent to Rp 19,750 on forecasts of more sales. Its president director, Sukrisno, said this year’s coal sales could rise to 16.9 million tons from 12.9 million tons last year. Tambang Batubara Bukit Asam looks like a strong buy in the morning session.

The rupiah fell on speculation that Bank Indonesia will leave its key rate unchanged at a record low 6.5 percent when it meets on Friday. The currency fell to a one-week low of 9,043 against the dollar on Monday, down from 9,018 on Friday.

The FBM KLCI index lost 1.95 points or 0.13% on Monday. Today we expect to see Malaysia rally from the open on Wednesday. The market will be closed tomorrow for the Federal Territory Day and will resume trading on Wednesday for only half-a-day ahead of the Chinese New Year the next day.

SIME, Genting and CIMB look like good buys Wednesday.


Most Active include HWGB, HEXAGON-WA, KBUNAI, HWGB-WB, OLYMPIA, SAAG, HEXAGON, RAMUNIA, TANCO and OLYMPIA-WA. Trading volume increased to 1415.47 mil shares worth RM2079.53 mil as compared to Friday’s 1346.76 mil shares worth RM1976.35 mil.

The Winners were GENTING (+18 sen to RM10.66), CIMB (+7 sen to RM8.38), TENAGA (+8 sen to RM6.15), BAT (+84 sen to RM47.18) and PBBANK (+2 sen to RM13.38).

The Losers were AXIATA (-7 sen to RM4.80), GENM (-6 sen to RM3.33), DIGI (-30 sen to RM25.60), SIME (-3 sen to RM9.19) and AMMB (-3 sen to RM6.63). Market breadth was negative with 300 gainers as compared to 428 losers.

The Finance Index fell 0.20% to 13934.65 points, the Properties Index up 0.22 percent to 1091.87 points and the Plantation Index down 0.24% to 7868.73 points. The market traded within a range of 14.78 points between an intra-day high of 1520.63 and a low of 1505.85 during the session.

In Singapore the Straits Times Index plunged 49.97 points to 3,179.72, about 11 points below its end-2010 closing, a level that offers bargains for those buying early today.

Singapore Airlines, and Tiger Airlines look like buys.

The SIA Group has reported an operating profit of $509 million in the third quarter of the 2010-11 financial year, an increase of $186 million (+58%) over the same quarter last year.

Revenue at $3,841 million grew $423 million (+12 percent) year-on-year, supported by continued improvement in carriage and yields. On the cost side, Group expenditure rose $237 million (+8 percent) to $3,332 million. Expenditure on fuel before hedging increased $154 million owing to higher jet fuel prices.

Group net profit for the third quarter was $288 million, a decline of $116 million from the corresponding period a year earlier. In the quarter, a $199 million provision was made in accordance with the Singapore Financial Reporting Standards for fines imposed. While SIA Cargo has accepted the plea offer made by the United States Department of Justice, it has filed appeals against fines imposed by the European Commission and the South Korean Fair Trade Commission, and intends to contest these fines.

Shayne Heffernan Strong Buy on Tiger Airways paid early dividends for followers as the company today said its third quarter net profit rose by 60.3 percent year-on-year due to higher average passenger fares and strict cost management.

The results are a slap in the face to Tony Fernnandez’s of AirAsia, just months ago Mr. Fernnandez in reference to Tony Davis’ doing business in this region laughed about “white guys running a business in Asia”, seems he could take some pointers from them this month.

The budget carrier, which is 34.4 percent owned by Singapore Airlines, said it made a net profit of S$22.6 million in the October-December quarter, up from S$14.1 million in the year-ago quarter.

Revenue for the airline, which operates across Asia and Australia, grew 22.2 percent to S$170.4 million during the same period.

The company warned that the recent weather events on the east coast of Australia would have an adverse impact on earnings for Tiger Airways Australia in the fourth quarter.

The Stock Exchange of Thailand (SET) composite index went down 17.73 points or 1.81 percent to close at 964.10 points at the end of trading session on Monday afternoon. The trade value was 21.29 billion baht. Today the exchange should be reversing some of those losses with a focus on quality stocks.

KTB, PTT, IVL and Banpu stand as good buying along with PTTEP

Top five most active values were as follows;

PTT closed at 335.00 baht, down 7.00 baht (2.05%)

BANPU closed at 730.00 baht, down 24.00 baht (3.18%)

IVL closed at 39.00 baht, unchanged

KTB closed at 15.80 baht, down 1.00 baht (5.95%)

TRUE closed at 6.50 baht, down 0.40 baht (5.80%)


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?

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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