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ASEAN STOCK WATCH Asean Affairs   30 May 2012

Asean Market Preview

 By Shayne Heffernan Ph.D.

The S&P 500 has dropped 6.5 percent since its April peak amid signs the world’s economy may be slowing and concern Europe’s debt crisis is worsening. The benchmark measure for U.S. equities last week rose the most since April after the cheapest valuation since November lured buyers. The index added 0.6 percent to 1,326.02 at 2:04 p.m. New York time today, after data showed stabilization in the U.S. housing market and Greek opinion polls eased concern the country will leave the euro.

Singapore

The FBM KLCI index gained 10.38 points or 0.67% on Tuesday. The Finance Index increased 0.73% to 14002.27 points, the Properties Index up 1.19% to 996.61 points and the Plantation Index rose 0.34% to 8239.69 points. The market traded within a range of 13.79 points between an intra-day high of 1566.13 and a low of 1552.34 during the session.

Actively traded stocks include NICORP, OSK-CA, MTRONIC, AGLOBAL, OSK, FLONIC-OR, DSCSOL, SMI, MAS-CG and SILVER. Trading volume increased to 756.53 mil shares worth RM984.41 mil as compared to Monday’s 735.85 mil shares worth RM897.64 mil.

Leading Movers were MAYBANK (+11 sen to RM8.68), CIMB (+9 sen to RM7.36), IOICORP (+8 sen to RM5.08), SIME (+8 sen to RM9.60) and GENM (+11 sen to RM3.75). Lagging Movers were PETCHEM (-5 sen to RM6.65), GENTING (-2 sen to RM10.00), KLK (-10 sen to RM21.98), UEMLAND (-2 sen to RM1.99) and RHBCAP (-5 sen to RM7.35). Market breadth was positive with 416 gainers as compared to 284 losers.

Malaysia

The FBM KLCI index gained 10.38 points or 0.67% on Tuesday. The Finance Index increased 0.73% to 14002.27 points, the Properties Index up 1.19% to 996.61 points and the Plantation Index rose 0.34% to 8239.69 points. The market traded within a range of 13.79 points between an intra-day high of 1566.13 and a low of 1552.34 during the session.

Actively traded stocks include NICORP, OSK-CA, MTRONIC, AGLOBAL, OSK, FLONIC-OR, DSCSOL, SMI, MAS-CG and SILVER. Trading volume increased to 756.53 mil shares worth RM984.41 mil as compared to Monday’s 735.85 mil shares worth RM897.64 mil.

Leading Movers were MAYBANK (+11 sen to RM8.68), CIMB (+9 sen to RM7.36), IOICORP (+8 sen to RM5.08), SIME (+8 sen to RM9.60) and GENM (+11 sen to RM3.75). Lagging Movers were PETCHEM (-5 sen to RM6.65), GENTING (-2 sen to RM10.00), KLK (-10 sen to RM21.98), UEMLAND (-2 sen to RM1.99) and RHBCAP (-5 sen to RM7.35). Market breadth was positive with 416 gainers as compared to 284 losers.

Thailand

Kittinanth Sumruatruamphol, the chief financial officer, said the increase in operating net profit will come from expansion of commercial rental income, as the firm plans to increase rental rates by 15% this year.

The average monthly rental rate is 800 baht per square metre. SF's rental revenue contributes 80-90% of its total, with the rest coming from utilities.

Net profit is expected at 1.5 billion baht as a new accounting standard is applied this year, allowing SF to revalue its assets.

"About 1 billion of expected net profit will be earned from Megabangna's asset revaluation and the rest from other projects," said Mr Kittinanth.

The company also plans to spend 860 million baht over the next 15 months to invest in three new retail projects.

Mr Kittinanth said all are in Greater Bangkok. The company has no plans to spread upcountry.

"No need to increase equity for these projects, as we will finance these projects by internal cash, bank loans and leasing income," he said.

The three projects comprise new rental space of 30,000 sq m. Overall rental space will exceed 400,000 sq m by next year.

SF also plans another Megabangna-type project, beginning some time in the next three years.

The company recently signed a contract with Bangkok University to manage Imaging Valley, the new community mall at the university.

The company will start managing the project in October.

SF shares closed at 8.30 baht, down 10 satang, in trade worth 87.3 million baht.

Malaysia

IOI Corp., which now has 3 billion ringgit ($951 million) in cash reserves, is on the prowl to acquire more oil palm estates in Indonesia.

“We’re always looking at opportunities to increase our plantation land bank. This sizeable acquisition is likely going to be in Indonesia,” executive director Lee Yeow Chor said, declining to elaborate on the timing of the impending purchase. Lee signaled that he was optimistic about the prospects of its mainstay palm oil business, following adverse weather conditions in the last two years that resulted in challenging conditions for plantation companies.

The onset of dry conditions wrought havoc on the productivity of the country’s oil palm trees. This meant IOI, which has a matured oil palm area of about 140,000 hectares, is not experiencing much growth in oil palm fruit production in the current year ending June. This, Lee said, is having an impact on palm oil prices.

“Nevertheless, lower production will not have an effect on our financial performance because prices will more than compensate for it,” he said after a tour of the Pamol estate complex in Johor on Friday.

He said that palm oil prices had averaged around 3,100 ringgit per metric ton during the first half of this year. In the last six weeks, palm oil prices have been on the decline from a peak of 3,600 ringgit per ton. Late last week, the third-month benchmark palm oil futures on the Malaysian Derivatives Exchange closed 61 ringgit higher at 3,130 ringgit per ton.

“The spike in prices at the beginning of the year was overdone. As the market factors in the euro zone crises, we see some selldown,” Lee said.

“Based on the fundamentals, we are pretty confident that the price will recover to around 3,200 ringgit per ton. Stocks are tight, while orders are coming in for Ramadan in July. We should see price upside in the coming months,” he added.

Lee also said IOI was aggressively stepping up its plantation development program in Indonesia. The group owns a 67 percent stake in a joint venture for oil palm cultivation in Kalimantan. Since 2009, the joint venture has planted 10,000 hectares. The pace of planting is expected to pick up significantly in the coming years.

“We aim to plant at a rate of 10,000 hectares per year,” he said. IOI’s other interest in Indonesian oil palm estates is also via a 30 percent stake in Singapore-listed Bumitama Agri, which has so far planted around 120,000 hectares .

Indonesia

The Jakarta Composite Index on Friday fell 2.1 percent, its largest drop since Nov. 1. It has lost 7.6 percent since May 3, when it closed at a record high of 4,224. For the year, the index is up 2.1 percent.

Valuation in the market is comparable to those of other benchmarks across the region. The JCI’s price-to-estimated-earnings ratio is 13.3, compared to 15.1 for the Philippine Stock Exchange Index and 12.8 for the Straits Times Index in Singapore, according to Bloomberg data.

Friday’s plunge has also made some stocks attractive relative to their profit potential.

United Tractors, a unit of Astra International that sells heavy-equipment vehicles, trades at 12.9 times this year’s estimated earnings, Bloomberg data show. The company had net income of Rp 5.9 trillion ($637 million) in 2011, and profit is projected to rise to Rp 6.82 trillion this year and to Rp 8.18 trillion in 2013, Bloomberg data show. Its stock dropped 5.4 percent on Friday, bringing its decline this year to 9.3 percent.

Shares of Semen Gresik, the nation’s biggest cement maker that stands to benefit from planned infrastructure projects, fell 3.5 percent on Friday, putting its price-to-estimated-earnings ratio at 14.3.

Domestic household spending accounts for about 60 percent of Indonesia’s economic activity, which will help to cushion against global financial shocks should demand for the nation’s exports plunge.

The government has forecast economic growth at 6.5 percent this year, accelerating to a range of 6.8 percent to 7.2 percent in 2013. Its 6.5 percent expansion last year was the fastest since 1996.

Philippines

San Miguel

SMC president Ramon S. Ang said he would meet with top executives of Kirin Brewery in Tokyo this weekend to discuss ways for San Miguel Brewery Inc. to meet the PSE’s 10-percent free float requirement that listed firms have to meet by yearend.

Ang stressed, however, that San Miguel was unwilling to further reduce its stake in the beer maker below its present ownership level of 51 percent. The Japanese beer giant holds a 48-percent stake in San Miguel Brewery, while the public holds the balance of 1 percent.

“Any sell-down of shares [to the public] would have to come from Kirin because San Miguel cannot go below its level now,” he said. “If Kirin cannot go down to 38 percent from their [level of] 48 percent, I think it will be better for us to delist.”

While optimistic about finding a solution to the free float issue, Ang said Kirin seemed hesitant to have themselves diluted because they were “very happy” with their investment in San Miguel.

Ang said he would also welcome any leeway the PSE would grant to San Miguel Brewery by way of extending the free float compliance deadline while its parent firms try to find a mutually acceptable solution to the bourse’s requirement.

Meanwhile, the firm said Tuesday that sustained efforts to increase patronage of its products and enhancements in productivity and cost management have boosted its domestic and overseas volumes in 2011 and in the first quarter of the year.

At the company’s annual stockholders’ meeting, San Miguel Brewery president Roberto N. Huang said the company retained its domestic beer market leadership at 96 percent in 2011. Its contribution to the total alcoholic beverage category also exceeded targets, reaching 67 percent in 2011.

In 2011, the company posted sales volumes of 223.8 million cases, a 1.4-percent increase from the previous year. Sales revenue grew 6.4 percent to P72 billion. Operating income rose to P20 billion, up 10.4 percent from the previous year, resulting in a 28.5-percent operating margin.

Yesterday in Asian

Tokyo rose 0.74 percent, or 63.93 points, to 8,657.08, Seoul added 1.41 percent, or 25.74 points, to close at 1,849.91 while Sydney gained 1.14 percent, or 46.4 points, at 4,114,4.

Hong Kong closed 1.35 percent higher, adding 254.47 points to 19,055.46 and Shanghai rose 1.20 percent, or 28.27 points, up at 2,389.64.

– Wellington rose 0.46 percent, or 16.04 points, to 3,478.29.

Telecom was up 1.57 percent at NZ$2.58 while Fletcher Building gained 1.79 percent to NZ$6.25.

– Manila closed 1.42 percent, or 70.37 points, up at 5,023.11.

GT Capital Holdings rose 3.10 percent to 498 pesos, Universal Robina added 1.50 percent to 61 pesos and Philippine Long Distance Telephone fell 1.79 percent to 2,306 pesos.

– Taipei surged 2.89 percent, or 206.29 points, to 7,342.29.

Leading smartphone maker HTC rose 4.10 percent to Tw$432.0 while Hon Hai Precision gained 4.80 percent at Tw$89.5.

– Kuala Lumpur rose 0.67 percent, or 10.38 points, at 1,565.32.

Financial firm CIMB Group Holdings gained 1.24 percent to 7.36 ringgit, while telecommunications company Axiata Group Bhd added 0.95 percent to 5.30 ringgit.

– Singapore closed up 0.52 percent, or 14.63 points, to 2,801.85.

United Overseas Bank closed up 0.46 percent to Sg$17.44 while Singapore Airlines gained 0.29 percent at Sg$10.53.

– Jakarta was flat, up 0.01 percent, or 0.38 points, to 3,919.06.

Telkom rose 2.7 percent to 7,600 rupiah and Bank Rakyat gained 0.7 percent to 5,850 rupiah.

– Bangkok rose 1.20 percent, or 13.73 points, to 1,153.66.

Banpu gained 1.72 percent to 474 baht, while PTT added 2.96 percent to 313 baht.

– Mumbai rose 21.74 points, or 0.13 percent, to 16,438.58.

India’s third-largest software exporter Wipro rose 2.72 percent to 409.7 rupees while the world’s largest coal miner Coal India rose 1.97 percent to 321.25.

Shayne Heffernan Ph.D.  

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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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