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ASEAN STOCK WATCH Asean Affairs   27 January 2011

ASEAN to Rally Again

Shayne Heffernan

ASEAN Markets will see yet another day of gains today after an important overnight session on Wall St, Manila and Bangkok will be capped to some extent by local issues.

Shayne Heffernan's Best Buys are IVL, PTT, Ayala and PLDT.

Manila's terrorist attack and political issues in Thailand will slow those two,Indonesia, Singapore and Malaysia should post solid gains.

The Dow Jones Industrial Average vaulted over 12000 for the first time in almost three years and bounced around that milestone throughout the session, as investors cheered President Obama's State of the Union address and a unanimous decision by the Federal Reserve to stay the course on supporting the economy.

Emerging economies focus of Davos forum.

Emerging economies and new normals under new circumstances will be the focus of the upcoming annual conference of the World Economic Forum (WEF).

The five-day WEF conference starts Wednesday in the Swiss resort of Davos under the theme of “Shared Norms for the New Reality.”

Participants will debate on issues of current global importance: rise of emerging economies, debt crises and financial instability in the West, renewable energy policies and global policy agenda for Y 2011.

China, celebrating its 10th anniversary to accession into the World Trade Organization (WTO) this year, is one of the most dynamic expressions of emerging economies’ rise. Other major emerging economies including India, Brazil and South Africa are also putting on eye-catching performances.

In its report Outlook on the Global Agenda 2011, released earlier this month, the WEF said, “The World is in no state to withstand further shocks.”

The shocks refer to the global financial crisis, which began in mid-2008 on the Wall Street triggered by the US sub-prime mortgage crisis.

In Jakarta the JCI rose for the second successive day, climbing 67.8 points, or 1.98 percent, to close at 3,501.72. About 3.6 billion shares worth Rp 5.5 trillion ($610.5 million) changed hands. Gainers outpaced decliners 147 to 81.

Bank Permata, which rose 7.95 percent to Rp 1,630, and Bank Jabar, which climbed 6.09 percent to Rp 1,220, were also among the top gainers.

The infrastructure sector rose 1.48 percent. Cement producer Indocement went up 5.4 percent to Rp 14,650, while Semen Gresik rose 3.3 percent to Rp 8,250.

Shayne Heffernan Strong Buy Bank Mandiri, Indonesia’s largest bank by assets, rose 5.31 percent to Rp 5,950 after it set its rights issue price at Rp 5,000 on Wednesday. Read the Full Report on Bank Mandiri.

The rupiah strengthened against the US dollar, reaching 9,026 at the close on Wednesday from 9,033 on Tuesday.

In Manila, the Philippine Stock Exchange index shed 28.66 points or 0.73 percent to finish at 3,931.64.

“The PSE, came under pressure after Tuesday’s bus bombing” Shayne Heffernan said today.

The industrial, property and mining/oil sector took dive while the financial sector managed to stay flat.

Total turnover was high at P7.2 billion.

The Losers were Manila Electric Co., Aboitiz Power Corp., Ayala Land Inc., International Container Terminal Services Inc., Philex Mining Corp., Energy Development Corp., Metro Pacific Investments Corp., Semirara Mining Corp., Ayala Corp., DMCI Holdings Inc. and Aboitiz Equity Ventures Inc.

The Winners, Shayne Heffernan Strong Buy Philippine Long Distance Telephone Co.,Fil-Estate Land Inc., Megaworld Corp., Alliance Global Group Inc., Leisure & Resorts World Corp., Metropolitan Bank & Trust Co., Cebu Air Inc. and Cyber Bay Corp.

There were only 50 advancers as against 88 decliners while 39 stocks were unchanged.

The FBM KLCI index lost 6.43 points or 0.42 percent on Wednesday.


Trading volume decreased to 1419.50 mil shares worth RM2601.47 mil as compared to Tuesday’s 1950.64 mil shares worth RM2438.87 mil.

The Losers were SIME (-10 sen to RM9.20), MAYBANK (-8 sen to RM8.71), TENAGA (-7 sen to RM6.38), KLK (-50 sen to RM20.90) and DIGI (-36 sen to RM25.10).

The Winners were CIMB (+4 sen to RM8.34), GENTING (+8 sen to RM10.92), BAT (+62 sento RM48.20), PBBANK (+2 sen to RM13.36) and GAM (+3 sen to RM3.80). Market breadth was negative with 328 gainers as compared to 418 losers.

The Finance Index fell 0.05 percent to 13927.98 points, the Properties Index added 0.03 percent to 1079.09 points and the Plantation Index down 0.72% to 7836.44 points. The market traded within a range of 20.39 points between an intra-day high of 1525.75 and a low of 1505.36 during the session.

In Singapore the STI closed higher on Wednesday, with the benchmark Straits Times Index at 3,220.78, up 1.25 per cent, or 39.63 points.

Micron Technology was on Wednesday conferred the Distinguished Partner in Progress(DPIP) Award for significant contributions to the growth of Singapore’s electronic chip industry.

Deputy Prime Minister and Minister for Defence Teo Chee Hean presented the award to Micron’s chairman and chief executive Steve Appleton.

United States (US)-based Mr. Appleton flew in to receive it on behalf of the company. The award comes in the form of a framed citation and a trophy.

Shayne Heffernan Strong Buy Keppel Corp. The world’s biggest builder of oil rigs said net income in the fourth quarter increased 17 percent to S$403 million ($314 million) from a year earlier. Keppel gained 0.7 percent to S$11.34.

About 1.9 billion shares exchanged hands.

Gainers beat losers 326 to 177.

In Bangkok the Stock Exchange of Thailand (SET) composite index went up 18.90 points or 1.97 percent to close at 978.07 points at the end of trading session on Wednesday afternoon. The trade value was 34.59 billion baht.

Chutinush Taksinapinunt Interviews Joint Vice President of Indorama Ventures Public Company Limited, Ashok Jain.

LTN: How is the integration of SK Eurochem Sp , Grupo Arteva S. de R.L. de C.V. and Guangdong Shinda UHMWPE Co. Ltd. Proceeding, how much will those acquisitions impact the 2011 earnings.

Ashok Jain: The integration of SK Eurochem Sp , Grupo Arteva S. de R.L. de C.V. andGuangdong Shinda UHMWPE Co. Ltd. is in progress, has not been completed. It willcomplete in Q1 and will impact earning from Q2. We also plan to grow in the business, at the moment in 2010 the capacity is 3.2 MMt but we expected to 5.3 MMt by Q1’11 and 5.8 MMt by end of 2011. And further expand to at least 10 MMt by 2014.

LTN: How much of the $3.8B US$ expansion budget will be spent in 2011.

Ashok Jain: Out of $3.8B US$,

• $0.9B for transactions signed in 2H’10 and closing by 1Q’11 (either spent already or financing committed)

• Balance of $2.9B will be spent 2011 to 2014 (financed through rights issue proceeds, debt and internally generated cashflow)

• No plan for additional equity issuance

• Maintain net debt-to-equity ratio of c 1.0x (some quarter after acquisition may temporarily exceed this)

• Intend to maintain 30% dividend payout policy

LTN: What do you expect revenue to grow by in 2011.

Ashok Jain: In the current year, it should be 70% with the increasing capacity from 3.2 MMt to 5.8 MMt

LTN: Where are you focused in terms of acquisition targets, industry, and country? Are the Middle East and India still high on your list.

Ashok Jain: We will expand and grow our business in PET, 2011-2014 we have one project Greenfield in India both PET and PTA and one project Greenfield in Middle East for PET and PTA together. We will acquire some PET industry in Africa and wetry to expand PET to Mexico. For PTA we will acquire some industry in Asia.

And for Fibre, we have plan to expand in Indonesia, one acquisition in Asia and one acquisition in Europe which will be announce in Q1.

LTN: With Cotton Prices increasing around the world are you raising 2011 earnings estimates?

Ashok Jain: The share of Polyester fibre demand continues to replace cotton and other fibres. The focus of 2014, the polyester fibre demand will be 59%, cotton 29 percent and other fibre 12 percent so the increasing in polyester fibre demand in 4-5 percent p.a. and that demand is taken by polyester fibre. Polyester is profiting right now because of the cotton shortage and weather condition, cotton price is increased 162 percent for the last 6 months and polyester price was increased also by 52 percent. At the moment, the polyester price by the demand is very strong and the margin has also increase from $300 to$400 per ton. Another factor which has positively impact price, raw material for fibre is increased from $150 to $300 per ton.

LTN: How do you rate Thailand as a location to manage a Global Business?

Ashok Jain: We have everything in Thailand, manufacture, labour, raw material. We create from here and expand worldwide. Thailand is the best location.

LTN: Are you on track to dominate the industry by 2014?

Ashok Jain: We are the global polyester chain industry leader.

LTN: Do you have a revenue target for 2014?

Ashok Jain: Our goal is to grow to 10 MMt while maintain our EBITDA per tonne, improving ROCE

with only modestly higher leverage.

Our current production capacity is 3.2 MMt and 2014 goal is 10 MMt

Our current EBITDA is $0.4B and 2014 goal is $1.1B

Our current ROCE is 16 percent and 2014 goal is 20 percent

Our current Net Debt to Equity ratio is 1.2x and 2014 goal is 1.0x


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.

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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