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ASEAN STOCK WATCH Asean Affairs   23  February 2011

Buying Day in ASEAN

Shayne Heffernan

As we predicted the USA had a negative day and today is the day to be buying Asean Equities, PTT, Ayala, CapitaLand, Noble Group, Wilmar, Olam and Golen Agri are my best buys for today.

Overnight in the USA

The Dow Jones industrial average dropped 142.81 points, or 1.15 percent, to 12,248.44. The Standard & Poor's 500 Index dropped 22.32 points, or 1.66 per- cent, to 1320.69. The Nasdaq Composite Index dropped 62.07 points, or 2.19 cent, to 2771.88.

Libyan leader Muammar Gaddafi used tanks, helicopters and warplanes to quell a growing revolt and scoffed at reports he was fleeing after four decades in power.

The CBOE Volatility Index, Wall Street's so-called fear gauge, rose 25 per- cent to 20.62.

US consumer confidence rose in February to a three-year high on improved optimism about the economy and income prospects, according to the Conference Board, a private group.


A once relevant Moody’s Investors Service has downgraded PTT’s issuer and foreign currency bonds from AAA to Baa1 while saying the company’s financial status and earnings remain strong. But a Moody’s rating is not what it used to be, questions remain on how ratings are established, what compensation Moody’s receive and from where.

The ratings agency is maintaining an outlook of “stable” on the company’s credit rating, equal to that of the country.

Moody’s explained the revision on the rising financial burden of PTT and subsidiary PTT Exploration and Production amid high investment exposure.

All three rating agencies are facing new rules that could change how they operate in the U.S.

Under an overhaul of financial regulation being debated by Congress, investors could sue rating agencies for assigning recklessly high ratings. In the past, courts have held that credit ratings are constitutionally protected free speech.

The agencies also would be forced to register with the Securities and Exchange Commission. It addition, they would have to disclose more information about how they determine their ratings and how accurate they’ve proved over time. The SEC could revoke the registrations of rating agencies that consistently assign inaccurate ratings.

To address the conflict-of-interest issue, a bill passed by the House would require agencies to disclose their relationships with banks.

PTT posted a net profit of 61.4 billion for the first nine months of 2010 against a full-year figure of 59.6 billion for 2009.

It expects good results for the fourth quarter on soaring prices of crude and related products.

Tevin Vongvanich, PTT’s chief financial officer, said both companies are operating under strict financial discipline, and the investment exposure will generate good returns.

He said this latest revision will therefore have no affect on PTT’s existing financial costs.


Ayala Corp. is into property (Ayala Land, Inc.), banking (Bank of the Philippine Islands), telecommunications (Globe Telecom, Inc.), utilities (Manila Water Co.,Inc.), power generation exploration (Michigan Power, Inc. under a joint venture with Diamond Generating Asia Ltd. of Mitsubishi Corp.), electronics (Integrated Microelectronics, Inc.), car dealership (Ayala Automotive Holdings Corp.), business process outsourcing (LiveIt Solutions, Inc.) and international investments (AG Holdings, Ltd.).

In Manila Ayala Corp.,the Philippines oldest conglomerate, has approved a 20% stock dividend and an increase in authorized capital by more than half to P56.2 billion to ensure flexibility in fund-raising.

Ayala’s new funding will allow expansion into power and infrastructure, the listed company said in a disclosure yesterday.

Following a special meeting of Ayala Corp, the board of directors approved the declaration of a 20 percent stock dividend to holders of its common shares.

It also approved an increase of the authorized capital stock from P37 billion to P56.2 billion.

The Ayala board approved the increase in the number of its common shares to 900 million from 596 million at a par value of P50 per share.

The firm plans to create “40 million Series C preferred shares, with a par value of P100 per share and the same basic features as our Series A and B preferred shares.”

Ayala Corp., in an e-mail, said Series A and B preferred shares are redeemable, cumulative and non-participating, non-convertible, non-voting, and do not have pre-emptive rights.

Meanwhile, the Securities and Exchange Commission will finalize the record date for the stock dividend.

The stock dividend will increase the company’s outstanding common shares to 583 million from 485 million, or an additional P33.418 billion based on the closing price of P341.00 per share yesterday.

The company last declared a 20 percent stock dividend in 2008 and has consistently paid regular cash dividends of P4.00 per share.


Singapore listed CapitaLand the largest property developer in Asia by market capitalisation posted a net profit of S$522.1 million in the fourth quarter of its financial year ended December 31, 2010.

This doubled analysts’ expectations of S$231.3 million.

The strong result for the quarter was due to one-off gains from the divestment of properties.

CapitaLand sold a majority stake in its Shanghai project Raffles City Changning, as well as 28 serviced residence properties to Ascott.

CapitaLand’s last quarter revenue came in at S$1.137 billion, a 36 per cent year-on-year increase.

For last year, the company posted net profit of S$1.2731 billion, a 21 per cent increase year-on-year, which was due to strong volumes of home sales in China,Singapore, Vietnam and Australia.

In Singapore, CapitaLand’s key residential projects D’Leedon and The Interlace also saw brisk sales.

D’Leedon has sold 61 per cent of its 470 units launched to date, while The Interlace has sold 70 percent of the 900 units launched to date.

The Interlace was launched in September 2009 while D’Leedon was launched in December last year.

CapitaLand will release 1,700 housing units in Singapore and 4,000 in China, in 2011.


The Indonesian government said this month that Singapore listed Wilmar International would invest $900 million to build factories in Indonesia to produce palm products such as soap and margarine.

Wilmar has a total area of more than 235,000 hectares in the country and also plans to develop a 200,000-hectare sugar plantation in Papua.

The benchmark May crude palm oil contract on the Malaysia Derivatives Exchange hit a near three-year high at 3,967 ringgit ($1,307) last week on worries about the impact of rains on output.

Prices have gained about 50 percent over the last six months and

Indonesia exported 15.6 million tons of palm oil products in 2010, with byproduct exports at 6.8 million tons and crude palm oil at 8.7 million tons, according to the Association of Indonesian Palm Oil. Global palm output is 45 million tons.

Indonesia outpaced Malaysia to become the top palm oil producer in 2007, though the move toward the downstream comes as firms may now face slower upstream expansion as a planned two-year moratorium on forest clearance aims to curb greenhouse gas emissions from rampant deforestation.

This is despite a series of property cooling measures, which have caused housing unit prices in both Singapore and China to moderate.

In the fourth quarter of 2010, Singapore’s private residential prices rose 2.7 percent from the previous three months, compared with a 2.9 percent increase in the previous quarter.

Property unit prices in 100 Chinese cities rose 1 percent in January, the largest gain in six months.


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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