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ASEAN STOCK WATCH Asean Affairs   10 July 2012

Asean Market Outlook

By Shayne Heffernan Ph.D.

Us Stocks joined a global slump as the yield on Spain’s 10- year bond rose above the threshold that prompted bailouts in Greece, Ireland and Portugal. German Finance Minister Wolfgang Schaeuble dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spanish banks.

Investors also awaited the start of the earnings season as analysts’ estimates signal the first year-over-year profit decline for S&P 500 companies since 2009.

Alcoa, the largest U.S. aluminum producer, may report an 84 percent decline in second-quarter earnings as the eighth straight year of surplus global production drives down the price of the metal. The shares fell 0.6 percent to $8.67.

Eight out of 10 groups in the S&P 500 retreated as commodity and consumer discretionary shares had the biggest losses. The Morgan Stanley Cyclical Index of companies most- dependent on economic growth dropped 0.8 percent. DuPont, a U.S. chemicals producer, slumped 2.6 percent to $47.65. Exxon Mobil fell 1.3 percent to $83.71.


PTTEP announces today (July 9,2012 )that the second wellhead platform of Vietnam 16-1 project has been successfully installed, and this is expected to increase its capacity to about 55,000 bpd by the fourth quarter this year

Mr. Tevin Vongvanich, the President and CEO of PTT Exploration and Production Public Company Limited, or PTTEP, said that the production of crude oil from the Te Giac Trang Field (the 'TGT') of Vietnam 16-1 Project is expected to increase from 41,000 to about 55,000 barrels of oil per day (bpd) by the fourth quarter this year . This reflects the continued success in the cooperation of PTTEP and the project partners with respect to this investment in the oil industry in Vietnam.

The TGT Field of Vietnam 16-1 Project is located off the southern coast of Vietnam, approximately 100 kilometers from Vung Tau Province. Oil production first commenced in August 2011 and development continued with the installation of the second wellhead platform which is expected to improve the production capacity as planned. Vietnam 16-1 Project consists of a floating production storage and offloading unit (an 'FPSO'), two wellhead platforms and the subsea pipeline system.

The Vietnam 16-1 Project is operated by Hoang Long Joint Operating Company which was established by four partners, including PTTEP Hoang Long Ltd., a wholly owned subsidiary of PTTEP, with a 28.5% share, PetroVietnam Exploration Production Corporation, or PVEP, with a 41% share, SOCO Vietnam Ltd with a 28.5% share and OPECO Vietnam Ltd with a 2% share.

Currently, PTTEP has invested in 4 exploration and production projects in Vietnam, including Vietnam 9-2 and Vietnam 16-1, which are under production phase, and Vietnam B & 48/95 and Vietnam 52/97, which are under pre-development phase.

Read more:


After the setback in Genting Malaysia Bhd's venture in Miami, the company has bounced back with a new casino development in the Bahamas worth US$24mil (RM74mil).

It was reported that the company had entered into a joint venture (JV) agreement last Friday with RAV Bahamas to open Resort World Bimini Bay, a luxury boutique casino on Bimini Island.

The 10,000 sq ft casino is set to be open in December at the Bimini Bay Resort and Marina, in north Bimini Island.

The casino will feature full-scaled table games, slots and sports betting in a venue similar to Genting's casinos in London.

Genting Malaysia plans to refurbish a structure, which was built more than five years ago. The casino will be the only one on Bimini Island which is 48 nautical miles off the South Florida coast, the United States.

Genting Malaysia's JV partner RAV Bahamas developed Bimini Bay and the Rockewell Island Beach Estates.

The casino will create at least 300 jobs for the island, and also help to boost tourism.

In May, the island's unemployment rate stood at 15% while youth unemployment was at 34%.

In January, Genting Malaysia's venture in Miami had taken a blow when the state legislature pulled a vote to liberalise gambling activities in Florida.

However, Genting Malaysia announced that it would be moving forward with plans for a luxurious mixed-use development on the bayfront.

The company, through its unit Resorts World Miami, has intended to build a US$3.8bil casino and 5,200-room hotel complex.

It had spent US$500mil purchasing real estate in Miami for the future casino. The vote has been postponed to next year due to lack of support.

Genting Malaysia had also planned to build a US$4bil convention centre at Aqueduct Racetrack in Queens, New York that would have been an extension of its existing project Resort World New York.

However, state governor Andrew Cuomo had said negotiations with the group had broken down.

Analysts believed the impact of Resort World Bimini Bay would be insignificant to the company as the outlay of US$24mil was small compared with Genting Malaysia's net cash of RM1.04bil as at first quarter ended March 31.

UOB Kay Hian Research analysts said in a report they are lukewarm to the new deal although it would be Genting Malaysia's first full-fledged casino in the United States as the Bahamian government had already approved it.

“However, we opine the value accretion to Genting Malaysia would be marginal given the small size of the casino to be built and also profits would be shared with its JV partner, RAV Bahamas,” the report said.

RHB Research analyst Hoe Lee Leng said the deal came as a surprise, as it was not mentioned by Genting Malaysia's management as part of its expansion plans.

However, it is believed that this development is part of the company's bigger plan to encourage the Miami government to vote in favour of legalising casinos.

HLIB Research said: “This news gave Genting Malaysia a little hope after disappointments from its casino expansion plans in New York and a destination resort in Miami.”

“This also further confirms our view that Genting Malaysia will be continuously seeking for other opportunities internationally,” it added.

Analysts pointed out that there might be a risk of acceptance with Bimini Island being known more for fishing activities rather than for its nightlife attractions.

According to The Miami Herald, Bahamian officials estimate the project impact at least 1,000 people indirectly.

The Bahamian government will help to provide training for the population of less than 3,000 people.

Bahamas Tourism Minister Obie Wilchcombe said he was discussion with Bahamas Air and two other major national airlines to add services to Bimini.

San Miguel

Ginebra San Miguel Inc. (GSMI), the hard liquor unit of diversifying conglomerate San Miguel Corp., is evaluating the feasibility of exporting to the United States and India, according to a filing with securities regulators.

GSMI, which offers a range of liquor products including gin, brandy, Chinese wine, rum, vodka, tequila and whisky, is looking for new markets to further widen its reach.

The major countries to which GSMI is exporting are Thailand, Taiwan, Korea, Japan, China and the Middle East.

GSMI owns one distillery, three liquor bottling plants and one cassava starch milk plant.

It also owns one bottling and distillery plant in Thailand via a joint venture with the Thai Life Group of Companies. To augment the bottling capacity of these facilities, GSMI entered into toll manufacturing agreements with third parties to produce liquor products located in San Fernando, Pampanga, Calamba, Laguna and Lucena.

GSMI sells market leading brands Ginebra San Miguel, GSM Blue Gin and Gran Matador Brandy.

The company has embarked on a program to install more distributors particularly in the southern part of the archipelago, where market penetration is low and only a few dealers covering the area. Aside from liquor products, GSMI sells non-carbonated ready-to-drink tea and fruit juices under the Magnolia brand. It recently introduced energy drinks to capitalize on the strong demand for this fastest growing segment in the non- alcoholic beverage market.

Amid the intense competition and shifts in consumer preference, GSMI incurred a net loss of P982.16 million last year, a reversal of the P913.85 million profit reported in 2010.

While its flagship Ginebra San Miguel brand held its ground and continued to be a strong contributor to the business, Gran Matador and GSM Blue trailed behind rival brands, which managed to be first to market lighter proof liquor products.

Ginebra, however, foresees a recovery this year with the launch of new products and intense marketing efforts.

Trai Thien USA (PINK:TRTH)

Announced that its six vessels are 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. Management is demonstrating a concrete ability to maintain consistent year-round revenue growth by strategically limiting the impact of seasonal factors through the diversification of cargo-related risks. By utilizing Trai Thien’s experienced staff, technology investments and capital resources, Company management has been able to maintain a low cost structure and differentiate itself from competitors through superior service and focus on profitable routes and cargo.

Trai Thien USA Inc (PINK:TRTH)

Trai Thien USA is a fast-growing Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised of six geared bulk vessels specializing in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

After China, the primary sources of future bulk demand are India, Brazil and Vietnam. The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy.

The Asia Pacific region accounts for 60% of the world’s population and almost 70% of world sea-borne trade in bulk commodities.

In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia.

The Company’s Vietnam-based operations are located in Ho Chi Minh City, which together with the surrounding areas, accounts for more than seventy percent of Vietnam’s total annual cargo traffic.

Pink Sheets TRTH

Revenue Growth 148%

Target Price 2013 $3.40

HCM Rating Strong Buy

Financial Highlights

The emerging economies of the Asia Pacific (ASEAN) region will continue their growth pattern despite the continuing financial crisis in Europe according to the Asian Development Bank.

Free Trade Agreements including ASEAN, AFTA, CAFTA, ASEAN +3 will more than triple regional trade.

   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.

   The Company is operating a 21,990 DWT fleet comprised of six geared bulk vessels specialized in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

The HCM Trade Forecast is predicting that world trade will grow by 73% in the next 15 years, with merchandise trade volumes in 2025 hitting $43.6trillion compared to today’s $27.2trillion.

Yesterday in Asia

Hong Kong tumbled 1.88 percent, or 372.55 points, to end at 19,428.09, their largest percentage loss for more than a month, while Shanghai plunged 2.37 percent, or 52.77 points, to finish at 2,170.81.

Tokyo fell 1.37 percent, or 123.87 points, to end at 8,896.88, with a set of weak figures from its domestic economy adding to negative sentiment.

Seoul slipped 1.19 percent, or 22.07 points, to close at 1,836.13, and Sydney ended 0.95 percent, or 39.5 points, lower at 4,118.3.

– Taipei fell 0.80 percent, or 58.63 points, to 7,309.96.

Smartphone maker HTC shed 5.59 percent to Tw$304.0 while Chunghwa Telecom was 0.21 percent higher at Tw$95.4.

– Wellington edged up 0.04 percent, or 1.49 points, to 3,480.19.

Telecom Corp. added 1.4 percent to NZ$2.49 and Fletcher Building was down 1.12 percent at NZ$6.20.

– Manila closed down 1.84 percent, or 98.94 points, at 5,263.74.

Lepanto Mining shed 5 percent to 1.39 pesos and Philippine Long Distance Telephone Co. fell 0.94 percent to 2,728 pesos.

– Singapore closed down 1.66 percent, or 49.47 points, at 2,929.08 points.

Singapore Telecommunications eased 1.49 percent to Sg$3.31 and DBS dropped 0.99 percent to Sg$13.95.

– Jakarta closed 1.73 percent, or 70.15 points, lower at 3,985.05.

Aneka Tambang fell 3.6 percent to 1,340 rupiah, Astra International slid 2.88 percent to 6,750 rupiah and Indofood lost 0.95 percent to 5,200 rupiah.

– Bangkok fell 1.09 percent, or 13.13 points, to 1,186.95.

Banpu dropped 1.74 percent to 452 baht, while PTT lost 2.10 percent to 327 baht.

– Kuala Lumpur edged down 0.01 percent, or 0.24 points, to 1,620.31.

Genting Malaysia and PPB Group each fell 1.9 percent to 3.61 ringgit and 15.78 respectively.

– India’s Sensex index fell 0.74 percent, or 129.14 points, to 17,391.98 on Monday, its second straight day of losses, tracking weak global markets and fears of quarterly earnings growth data from Indian firms.

Private steel maker Jindal Steel slid 2.56 percent to 443.5 rupees while India’s largest passenger car maker Maruti Suzuki fell 2.28 percent to 1,189.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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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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