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ASEAN STOCK WATCH Asean Affairs 10 January 2013

ASEAN Equity Preview

ASEAN Markets will be mixed today after the excitement surrounding Alcoa's earnings subsides. Best buys today are San Miguel,  Ciputra, Mudajaya, SSI, Trai Thien.

On Wall St

Overall, corporate profits are expected to beat the previous quarter's meager 0.1 percent rise. Both earnings and revenues in the fourth quarter were expected to grow by 1.9 percent, according to Thomson Reuters data.

The lowered expectations also leave room for companies to surprise investors even if their results are not particularly strong.

The session's rise was the first of the week after the market retreated from the S&P 500's highest point in five years, hit last Friday. Worries about a weak earnings season kept the markets down earlier in the week.

Shares of Alcoa Inc (AA.N) were trading flat after early gains, following the company's earnings release after the bell on Tuesday. The largest U.S. aluminum producer said it expects global demand for aluminum to grow in 2013.

Traders have been cautious as the current quarter was shaping up like the previous one, with companies lowering expectations in recent weeks.

In China

A Chinese central bank official has called for less restrictions on interest rates against a backdrop of worsening asset quality and shrinking profit growth among most lenders.

To free up interest rates, China could raise or even remove its upper limits on banks' deposit rates, said Sheng Songcheng, head of the central bank's statistics department, in an article published in Caixin Magazine last week.

"It could further expand or even remove the officially set floating range of medium- and long-term deposits, and then gradually expand the upper limit of short-term and small-sum deposits, until caps on such deposits are abolished," he said.

Guo Tianyong, a professor at Central University of Finance and Economics, applauded the plan. "The path is reasonable and could fend off risks because long-term and big-sum deposits are relatively more stable funds for banks," he said.

The People's Bank of China, the central bank, has been making efforts to liberalize interest rates as it promotes reform of the financial system and allows market forces to play a bigger role in determining the price of capital.

In 2004, the bank removed its lower limit on bank deposit rates and permitted lending rates among lenders to be 10 percent lower than the benchmark rates.

In June 2012, it allowed banks' deposit rates to be 10 percent higher than the benchmark rates, while cutting the lower limit of lending rates to 80 percent of the benchmark. In July, it further reduced the limit on lending rates to 70 percent.

Major banks could play a role in stabilizing interest rates, and China could use Western banking practices as a model, Sheng said. "We need to form a reference interest rate that could be efficiently regulated by the central bank through open-market operations, and has a strong impact on the market," he said.


Trai Thien USA Inc (PINK:TRTH) Singapore Subsidiary will Triple Capacity

Trai Thien USA Inc (OTC Markets:TRTH), through its subsidiary Trai Thien Logistics, announced that it is planning to establish Singapore as a new Shipping and Trade Hub for the Company to expand ahead of the formation of the ASEAN Economic Community (“AEC”) in 2015. The AEC is ASEAN’s most resolute step to date to transform the region into a single market and production base by 2015.

The Port of Singapore is the busiest in the world, surpassing Rotterdam and Hong Kong. In addition, Singapore’s port infrastructure and skilled workforce, due in part to the success of the country’s education policy in producing skilled workers, is also fundamental in providing easier access to markets for both importing and exporting.

Trai Thien currently has six vessels operating at full shipping capacity. The six vessels realized 26 trips in the first quarter 2012, and are projected to make a total of 120 intra-regional voyages for the 2012 fiscal year. When factoring in down time for scheduled maintenance and repairs, a TRTH vessel completes a commercial voyage every 18 days on average. The full operational capacity status reflects the ability of Company management to fulfill its long-term plan of becoming a key player in inter-ASEAN cargo shipping.

Year-end 2011 revenues increased over 20.9% as compared to the previous fiscal year, from $12,232,991 in 2010 to $14,794,939 in 2011.

Income from Operations increased over 148% from 2010 to 2011, from $1,051,543 to $2,615,000.

Net Income increased from a loss of $539,452 in fiscal 2010 to a positive $1,377,391 in 2011.


Kitichai Taechangamlert Remains Upbeat on Sahaviriya Steel

Yesterday Kitichai and myself presented a Metastock Webinar in Thailand, over the last few weeks I have been discussing Kitichai’s latest hot pick, SSI, Sahaviriya Steel.

Kitichai makes a strong case on both fundamentals and technicals for Sahaviriya Steel, so much so that we are going to acquire ourselves a position in the company and have upgraded the out look for SSI to an ASEAN 2015 Must Own.

Here are the main points as to why we upgraded SSI

Strong local demand forecast for steel
SSI has just entered the booming Thai Auto Sector as a steel supplier
2015 will deliver new markets for SSI
Thailand manufacturing and construction outlook remains strong
SSI is nearing a capacity level where it will become profitable
Competition in the sector is limited


 Mudajaya Group Bhd is making its foray into the independent power business in Myanmar. Mudajaya said on Wednesday its unit had signed a memorandum of understanding (MoU) with the government of Mandalay and IJM Corp Bhd co-founder Datuk Koon Yew Yin for the proposed IPPs.

Mudaya and Koon plan to set up a special purpose vehicle (SPV) -- wherein it would hold a 70% stake and 30% by Koon - to undertake the projecty.

The first IPP would be a coal-fired plant and the second, a solar-powered IPP in the Mandalay region and other suitable areas.

"Mudajaya will prepare a feasibility report/proposal and submit to government of Mandalay within nine months from the date of signing of this MoU. The MoU will expire at the end of 12 months from the date of the MoU unless an extension period is agreed by all the parties," it said.

Ciputra Development enlarged its capital spending plan for 2013 by 33 percent, most of which will go into the Ciputra World “super block” on Jalan Dr. Satrio in Kuningan, South Jakarta.

“We plan to accelerate the development of some projects to take advantage of the strong [economic] growth momentum,” Tulus Santoso, the president director of Ciputra Development, said on Monday.

He said half of the spending funds would come from bank loans and the other half from internal cash.

Tulus declined to name any lenders that have been approached by the company, but said the property giant plans to take out the loan in the second half of 2013.

Ciputra Development is part of Ciputra Group, a property conglomerate with projects spread across 33 cities, including Jakarta, Surabaya, Malang, Makassar, Yogyakarta and Manado.

The company’s multitrillion-rupiah super block known as Ciputra World is its latest project in the nation’s capital.

Super block refers to mixed-use properties that often include shopping centers, office towers, art galleries, exhibition halls and apartment buildings.

The company aims to accelerate revenue and net income growth by 50 percent in 2013. Last year, Ciputra’s net income is estimated to have reached Rp 450 billion ($47 million), up 37 percent, while revenue was set to grow 38 percent to Rp 3 trillion.

In the January to September 2012 period, the company’s net income rose 57 percent to Rp 361 billion from the same period last year, while revenue increased 46 percent to Rp 2.24 trillion.

Brokerage OSK Nusadana Securities estimated Ciputra’s net income could grow to Rp 716 billion in 2013 and Rp 927 billion next year.

The brokerage expected Ciputra to boost its recurring income, especially with the help of 10 big projects being worked on this year, including budget hotels and a resort area by its Ciputra Property unit.

OSK puts a “buy” recommendation on Ciputra Development, which is traded on the Indonesia Stock Exchange (IDX) under the ticker symbol CTRA.

OSK’s price target for CTRA shares is pegged at Rp 1,100. Ciputra Development’s stock was down 2.4 percent to Rp 830 in Tuesday trading on the IDX.


San Miguel Corp. targets to push forward this year plans to list its power-generation unit and to start mobilizing resources to put up coal-fired power plants in Luzon and Mindanao.

San Miguel Corp. president Ramon S. Ang confirmed to the Inquirer that the company was looking to finally list SMC Global Power Holdings at the local bourse in 2013, more than a year after its original listing target.

SMC Global Power was originally planning to list its shares in the fourth quarter of 2011, with expectations of raising P36.6 billion. Based on a previous filing, SMC Global wanted to offer up to 519.7 million in primary and secondary shares.

Meanwhile, Ang said that San Miguel was hoping to start construction of its power plants in Luzon and Mindanao within the year. It was not clear which of the proposed projects will be prioritized by the company.

Ang earlier disclosed that the company was looking at initially building a 1,200-MW power plant in Luzon, a 600-MW facility in the Visayas and another 600-MW plant in Mindanao, or a total of 2,400 MW.

But based on data from the Department of Energy, San Miguel, through SMC Global Power, had six planned facilities under its proposed power-generation portfolio. These plants may be fueled by either coal, compressed natural gas (CNG) or liquefied natural gas.

The company is looking to build in Cavite a power plant that can generate 1,200 MW, a 600-MW power generating facility in Bulacan and another plant in Leyte, also with a 600-MW capacity. In Panay, a 150-MW power plant is being considered as well.

In Mindanao, SMC Global targets to put up a 300-MW power plant in Davao del Sur and a 150-MW facility in South Cotabato, where San Miguel acquired in 2010 three coal mines that have resources capable of powering a 750-MW facility over the next 25 years.

San Miguel is among the biggest power players in the country with an installed capacity of about 3,000 MW. The company’s plans to further shore up electricity supply in the country bode well with the thrust of the Philippine government to have new plants installed over the next several years.

Yesterday in Asia

Tokyo closed up 0.67 percent, or 70.51 points, at 10,578.57, Sydney ended 0.38 percent higher, adding 17.9 points to 4,708.1 and Hong Kong ended up 0.46 percent, adding 107.28 points to 23,218.47.

However, Seoul lost 0.31 percent, or 6.13 points, to close at 1,991.81.

And Shanghai ended flat, dipping 0.73 points to 2,275.34 owing to caution ahead of the release of key Chinese economic data later this week.

– Singapore added 0.46 percent, or 14.89 points, to 3,220.41.

Agribusiness group Wilmar International gained 3.15 percent to Sg$3.60 and Singapore Airlines, which recently asked its captains to volunteer for unpaid leave amid a travel slowdown, rose 0.18 percent to Sg$11.00.

– Bangkok gained 0.43 percent, or 6.13 points, to 1,423.46.

Siam Cement lost 1.35 percent to 440 baht, while power giant Electricity Generating Public Co. added 0.66 percent to 151.50 baht.

– Kuala Lumpur inched up 1.02 points to 1,689.93.

IOI Corp. rose 1.4 percent to 5.12 ringgit while Genting gained 1 percent to 9.80. UMW Holdings lost 1 percent to end at 12.34 ringgit.

Jakarta slipped 0.79 percent, or 34.62 points, to 4,362.93.

– Tin miner Timah dropped 3.43 percent to 1,690 rupiah and cement maker Indocement Tunggal Prakarsa slid 0.90 percent to 21,900 rupiah, while paper maker Pabrik Kertas Tjiwi Kimia rose 1.01 percent to 2,000 rupiah.

– Taipei rose 0.22 percent, or 16.98 points, to 7,738.64.

Hon Hai Precision added 0.92 percent to Tw$87.8 while TSMC was 0.3 percent higher at Tw$100.0.

– Manila closed 0.70 percent higher, adding 42.28 points to 6,091.18.

Metropolitan Bank and Trust surged 2.22 percent to 105.70 pesos, while Philippine Long Distance Telephone added 0.08 percent to 2,648 pesos.

BDO Unibank gained 0.47 percent to 75.50 pesos.

– Wellington rose 0.32 percent, or 13.17 points, to 4,103.54.

Contact Energy fell 2.3 percent to NZ$5.17 while Telecom was up 3.1 percent at NZ$2.32 and Fletcher Building ended unchanged at NZ$8.45.

– Mumbai slid 0.38 percent, or 75.93 points, to 19,666.59 points.

Tata Steel, the world’s seventh largest steel maker, fell 2.54 percent to 422.7 rupees and motorbike maker Bajaj Auto fell 1.96 percent to 2,155.6 rupees.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

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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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