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ASEAN STOCK WATCH Asean Affairs   4  March 2011

ASEAN to Rally

Shayne Heffernan

www.livetradingnews.com

Asean is set for another rally today. Overnight in the USA

The US stock market marked its best performance since December 1, as talk of peace in Libya sends Crude Oil prices lower. Strong economic data has also sparked buying interest from the players. The broad S&P 500 is now only down about 1 percent from its late February high. The Stock Exchange of Thailand (SET) composite index went up 2.49 points or 0.25 percent to close at 990.08 points at the end of trading session on Thursday afternoon. The trade value was 25.85 billion baht.

MCOT Plc, the listed broadcaster of Modernine TV, projects its revenue this year will rise by 10 percent from 5.64 billion baht last year in line with strong growth of its television and radio businesses.

The company’s investment budget of 800 million baht this year includes 500 million for upgrading broadcasting equipment and 200 million for satellite, mobile and broadband TV platforms.

“The establishment of the National Broadcasting and Telecommunications Commission is a challenge for us as we have to prepare ourselves in terms of more investment and internal restructuring to comply with new regulations,” president Tanawat Wansom said yesterday.

The company plans to add at least eight satellite channels this year in addition to the existing 12. It expects revenue from new media to reach 200 million baht by the end of this year. MCOT has also set a budget of 100 million baht to develop a 20,000-seat stadium on a 50-rai plot on Tiamruammit Road next to the Thailand Cultural Center.

Both PTT and Apex Plastics are planning 2011-2012 IPO’s in the petrochemical sector.

PTT Aromatics and Refinery (PTTAR) and PTT Chemicals (PTTCH) have announced a merger of operations at a press conference in Bangkok Thailand. Thailand Based Apex Petrochemicals also announced plans to expand operations and seek an IPO.

PTTAR and PTTCH combined will increase their present net value by an estimated $535 million over the next 15 years, to $1 billion in terms of sales and assets.

Apex has turnover exceeding $300m USD in 2011 the IPO should gain the interest of regional investors. The company also plans to open a 150,000 brl a day Oil Refinery.

Apex Plastics will IPO under the name Apex Petrochemicals International and is considering Singapore and Hong Kong as the primary exchange.

The Stock Exchange of Thailand SET suspended trading of G Steel and GJS shares, as they failed to meet a deadline for submitting their 2010 financial results.

A source said the delay had arisen because the companies were awaiting the conclusion of details in the ArcelorMittal transaction, which were a key to winning approval from its auditor, the Bangkok Post reported.

“We expect to get everything wrapped up by Monday, but there is a possibility of delays,” said the source.

On Tuesday, G Steel shares closed at 73 satang and GJS shares at 26 satang.

But the big news at G Steel is Representatives from ArcelorMittal will assume management control at G Steel Plc as the world’s largest steel company has agreed to provide another US$500 million to revitalise the SET-listed hot-rolled steelmaker.

The loan will bring ArcelorMittal’s total capital injection in G Steel to $750 million including its original $250-million purchase of a 40 percent stake.

The transactions represent an expansion of the Luxembourg-based steel giant’s presence in Asia, where its only other operation is in China.

Top five most active values were as follows;

PTTEP closed at 176.00 baht, down 4.50 baht (2.49 percent)

TMB closed at 2.42 baht, up 0.04 baht (1.68 percent)

BANPU closed at 712.00 baht, down 8.00 baht (1.11 percent)

PTT closed at 332.00 baht, down 2.00 baht (0.60 percent)

SCB closed at 103.50 baht, up 1.50 baht (1.47 percent)

Jakarta will break above 3500 today after a strong showing in USA unemployment numbers.

PT Bakrie Sumatera Plantations

Shayne Heffernan has upgraded PT Bakrie Sumatera Plantations to a Strong Buy with a 2012 price target of 650 Rupiah.

The company has approximately 100,000ha of plantations under its management (including plasma estates and Agri Resources BV). Approximately 20,000ha of the planted area is devoted to rubber plantations whilst the remaining land is planted with oil palms.

All of the group’s plantations operations are ISO14001 certified, which ensures stringent controls on environmental management in its estate, mills and factories. The company was also admitted as a member of the Roundtable on Sustainable Palm Oil (RSPO) since May 2007 and the RSPO principles will further guide the group’s environmental management policies.

Palm oil producer PT Bakrie Sumatera Plantations said today it recorded a 2010 net profit of 787.34 billion rupiah ($89.34 million), up 211.5 percent from 252.78 billion rupiah in 2009, as revenues were up 27 percent to 2.95 trillion rupiah from 2.32 trillion rupiah.

The largest contribution came from sales of crude palm oil (62.03 percent) that reached 1.83 trillion rupiah, up 37.6 percent from 1.68 trillion rupiah in 2009.

The company also plans to issue global bonds worth $200 million that will be used to pay debts that will mature in November.

Mandiri

Shayne Heffernan has issued a Strong Buy PT Bank Mandiri (Persero) Tbk with a Price target of 9000RP by 2012.

Bank Mandiri is the largest bank in Indonesia in terms of total assets, loans and deposits. As per 31 December 2009, it has IDR 394.6 trillion (US$42 billion) in total assets. The Bank offers a broad range of banking products and services to its customers ranging from individuals and small and medium-sized enterprises (SMEs) to large corporations and government entities.

Bank Mandiri was established and acquired ownership of the share capital of four state-owned banks on Oct. 2, 1998. The four state-owned banks legally merged on July 31, 1999 and Bank Mandiri commenced commercial operations in August 1999. The Bank serves more than 8.7 million customers, which makes it, based on number of customers, one of the largest retail banks in Indonesia.

Customers also have access to their accounts through the Bank’s network of ATMs in Indonesia through arrangements with Indonesia’s other state-owned banks via the LINK network. Bank Mandiri has one of the largest foreign exchange networks in Indonesia with four overseas branch offices, one subsidiary, one representative office and two remittance offices.

Bank Mandiri, Singapore Branch is one of the Bank’s four overseas branches. Besides Singapore, the Bank also has branches in Cayman Islands, Dili (Timor Leste), Hong Kong, a subsidiary in London, a representative office in Shanghai and two remittance office in Hong Kong and Malaysia. The Singapore branch operates under an offshore banking licence granted by the Monetary Authority of Singapore on 31 July 1999.

In Jakarta yesterday the JCI added 8.34 points, or 0.2 percent, to close at 3,494.54. About 6.5 billion shares worth Rp 4.8 trillion ($547 million) changed hands. Gainers outpaced decliners 117 to 68.

Bumi Resources, Indonesia’s biggest coal producer, jumped 4.2 percent to Rp 3,075, while Energi Mega Persada, the nation’s second-largest listed oil company, rose 1.8 percent to Rp 112. Higher oil prices boost the appeal of alternative fuels such as coal.

Consumer goods maker Unilever Indonesia gained 1.9 percent to Rp 16,500. Shares rose after the Central Statistics Agency (BPS) announced on Tuesday that annualized February inflation eased to 6.84 percent.

The rupiah gained 0.1 percent to 8,803 against the dollar on speculation the central bank will tolerate gains in the currency.

Singapore will open higher today and Singapore Banks, OCBC, UOB and DBS are strong buys.

UOB

Shayne Heffernan of Ebeling Heffernan has confirmed a strong buy issued on UOB Bank Singapore with a price target of $26 in 2011.

United Overseas Bank Limited (UOB or the Bank) is principally engaged in the business of banking in all its aspects, including the operation of an Asian Currency Unit under the terms and conditions specified by the Monetary Authority of Singapore (MAS).

The principal activities of its major subsidiaries include commercial banking, merchant banking, leasing, insurance, investment, investment management, gold/futures dealing, property, property management and travel.

The Bank provides a range of financial services through its global network of branches, offices, subsidiaries and associates, personal financial services, private banking, commercial and corporate banking, investment banking, corporate finance, capital market activities, treasury services, futures broking, asset management, venture capital management, insurance and stockbrokerage services.

In August 2009, the Bank announced that its subsidiaries, UOB.Com Pte. Ltd. and FEB Realty Company Pte Ltd commenced voluntary liquidation and since then has continued to consolidate operations.

DBS

Shayne Heffernan has issued a Strong Buy on DBS Group Holdings in Singapore with a 2011 price target of $20.

DBS Group Holdings Ltd is an investment holding company that operates through its main subsidiary, DBS Bank Ltd (the Bank).

The Bank is engaged in the provision of retail, small and medium-sized enterprise, corporate, and investment banking services. The Company’s financial businesses are organized into five sectors: Consumer Banking, Institutional Banking, Global Financial Markets, Central Treasury Unit, and Central Operations

DBS, which kicked off earnings for Singapore banks, posted a net profit of S$678 million ($530 million)in October-December against S$493 million a year earlier.

Bad debt charges declined 59 percent to S$157 million from a year ago. Net interest income however fell 2 percent to S$1.1 billion as net interest margins declined by 23 basis points 1.79 percent in the fourth quarter.

Fees and commission income was flat at S$358 million, while trading income tripled to S$164 million.

There has been market talk that DBS, which wants to increase income from outside its core Singapore and Hong Kong markets, could buy state investor Temasek’s 68 percent stake in Indonesia’s Bank Danamon.

 

Valuation Ratios

Company Industry Sector S&P 500
P/E Ratio (TTM) 25.69 11.99 22.33 18.18
P/E High – Last 5 Yrs. 31.20 28.73 142.84 84.45
P/E Low – Last 5 Yrs. 8.02 9.91 108.15 12.36
Beta 1.14 1.26 1.20 1.30
Price to Sales (TTM) 4.89 2.64 5.99 2.24
Price to Book (MRQ) 1.30 0.95 1.16 2.74
Price to Tangible Book (MRQ) 1.58 1.23 1.40 4.35
Price to Cash Flow (TTM) 18.89 2.40 7.24 7.99
Price to Free Cash Flow (TTM) 3.07 0.47 4.46 35.25
% Owned Institutions - - - -

 

Dividends

Company Industry Sector S&P 500
Dividend Yield 3.78 1.78 1.80 1.56
Dividend Yield – 5 Year Avg. 3.64 1.82 1.62 2.27
Dividend 5 Year Growth Rate 10.19 8.16 7.81 -5.62
Payout Ratio(TTM) 67.47 10.98 18.18 34.34

 

Growth Rates

Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago -1.49 5.77 12.48 10.77
Sales (TTM) vs TTM 1 Yr. Ago -15.20 6.58 16.61 11.55
Sales – 5 Yr. Growth Rate 8.62 14.96 18.37 7.90
EPS (MRQ) vs Qtr. 1 Yr. Ago 20.93 53.29 43.96 65.14
EPS (TTM) vs TTM 1 Yr. Ago -30.12 - - -
EPS – 5 Yr. Growth Rate -4.64 4.69 9.31 5.04
Capital Spending – 5 Yr. Growth Rate 12.35 10.72 10.50 4.37

 

Singapore: OCBC Bank posted a record annual net profit of $2.3 billion for the year ended Dec 31, an increase of 15 percent on 2009 earnings.

Exceptional growth in fee and commission income and other non-interest income, and a significant reduction in credit losses, were the key drivers.

The full-year results included the consolidation of Bank of Singapore (formerly ING Asia Private Bank) from Jan. 29, 2010.

Net interest income for the year increased by 4 per cent, with strong asset growth largely offset by narrower interest margins.

Loan growth was 29 per cent for the year and 5 per cent in the fourth quarter, with broad-based contributions across key geographies as well as customer and industry segments.

OCBC chief executive David Conner said in a statement that its results for 2010 ‘underscore the strengths of our customer franchise in both lending and fee-based businesses’. He added: ‘While mindful of commodity price increases and other factors causing inflationary pressures, on balance, we are optimistic for the outlook for 2011 given the healthy economic growth prospects in Asia.

 

Valuation Ratios

Company Industry Sector S&P 500
P/E Ratio (TTM) 14.40 12.99 24.28 18.25
P/E High – Last 5 Yrs. 16.78 28.45 137.94 84.73
P/E Low – Last 5 Yrs. 9.16 9.85 103.68 12.38
Beta 1.07 1.26 1.21 1.33
Price to Sales (TTM) 3.13 2.85 5.81 2.26
Price to Book (MRQ) 1.56 0.96 1.17 2.81
Price to Tangible Book (MRQ) 1.98 1.24 1.40 4.76
Price to Cash Flow (TTM) 12.50 2.41 6.18 8.05
Price to Free Cash Flow (TTM) 6.47 0.69 4.80 35.27
% Owned Institutions - - - -

 

Dividends

Company Industry Sector S&P 500
Dividend Yield 3.04 1.71 1.72 1.53
Dividend Yield – 5 Year Avg. 3.41 1.81 1.61 2.26
Dividend 5 Year Growth Rate 15.61 8.42 7.95 -5.74
Payout Ratio(TTM) 43.74 10.97 15.41 32.60

 

Growth Rates

Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago 13.24 5.51 14.40 10.30
Sales (TTM) vs TTM 1 Yr. Ago -7.54 6.95 13.83 13.76
Sales – 5 Yr. Growth Rate 10.35 15.17 18.42 7.47
EPS (MRQ) vs Qtr. 1 Yr. Ago 21.83 50.65 62.37 57.71
EPS (TTM) vs TTM 1 Yr. Ago 23.62 - - -
EPS – 5 Yr. Growth Rate 10.93 5.01 9.44 4.91
Capital Spending – 5 Yr. Growth Rate 25.88 10.89 10.53 4.34

 

In Singapore the STI ended higher yesterday as investors hunted for bargains among blue chip issues. The ST index rose 9.84 points to 3,037.35 on a volume of 1,303 million shares.

However concerns over the Middle East situation and high oil prices sidelined many investors.

Shayne Heffernan Strong Buys Wilmar which gained 9 cents to $5.16 and Golden Agri-Resources which added 1.5 cents to 70 cents led the rally. Dyna-Mac Holding rose 6.5 cents to 44 cents. Genting Singapore finished 2 cents higher at $1.95.

 

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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ASEAN  ANALYSIS

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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