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ASEAN STOCK WATCH Asean Affairs   15  November  2010

ASEAN Markets are in for an interesting week

Shayne Heffernan

ASEAN Markets are in for an interesting week this week after sharp falls on Friday. We expect that ASEAN Markets will recover and strong fundamentals, low valuations and comfort from Wall St and China.

Singapore’s Straits Times Index dropped 1.3 percent to 3,252 at the close Friday reducing the weekly gain to 0.4 percent.

At the close, the average P/E ratio of the index was 15.9, compared with about 17.4 times at the beginning of the year.

Crude palm-oil futures declined 1.7 percent in Kuala Lumpur Friday, after an impressive five-day advance.

This looks to be an over reaction and we expect Palm Oil and Palm Oil Producers to bounce back 4-5% this week.

On the Palm Oil Hot List are

First Resources Ltd., an Indonesian palm-oil producer, dropped 4.1 percent to S$1.40.

Golden Agri-Resources Ltd. , the world’s second-biggest palm-oil producer, retreated 4 percent percent to 73 Singapore cents.

Indofood Agri Resources Ltd., the palm-oil unit of Indonesia’s biggest noodle maker, fell 4.6 percent to S$2.69.

Many are touting Wall Street's rally is running out of steam as the S&P 500 retreats from a 2010 high and the resistance at Key levels looks too much for the market to absorb.

The index so far has been unable to move above 1,228, the key resistance level, and the chart is starting to form a classic double-top formation, one of the most bearish signals possible.

I have bought ahead of a data-heavy week that I feel will give investors hard evidence to justify a rally that lifted the S&P 500 16.8% from its August 31 close to the 2010 closing high it hit last week.

The data should be sufficient to see 1228 fall and a new rally begin. Such a rally will fuel a Commodities Super Cycle the Paul Ebeling has noted this weekend ahead of Mondays open.

At this point there is no doubt the market is very susceptible to a pullback, the market looks set to go a little lower, however some clarity on US Fiscal policy and data reflecting even a mild recovery will see a change in investor sentiment.

Last week, the Dow Jones industrial average and the Standard & Poor's 500 index each fell 2.2 percent. The Nasdaq Composite index lost 2.4 percent.

The S&P 500 hit the 61.8 percent retracement of its slide from the historic highs in 2007 to the low in March 2009.

This was the second time the index moved away from the resistance at 1,228 and its chart could be drawing the dreaded bearish double top formation.

The last retreat from that level, in April, was the start of a correction that took the S&P to its 2010 low in July. Needless to say, it is a dangerous week coming.

The S&P 500 fell below the 20-day moving average for the first time since September 1 but managed to rally and close above the line in a sign that that level, just above 1,194, has strong technical support, that combined with positive news and investor sentiment could push the Index over 1228.

On the big news list this week is the meeting Thursday between U.S. President Barack Obama and congressional leaders to discuss policy and tax cuts.

Republicans have vowed to force a full extension of all tax cuts enacted during the administration of President George W. Bush. Otherwise, the tax cuts expire at the end of 2010.

Most of Obama's Democrats favor extending tax cuts only for the first $200,000 of income of individuals and $250,000 for families. It is estimated that the Tax Cuts added significantly to USA GDP, anything but a full extension will hurt the market, for now.

In January the Republicans become a major power player in US policy and it may be back on the tabe.

The big numbers this week are abundant, from manufacturing to leading indicators to retail sales, and, perhaps most importantly, inflation will return Wall St investors' attention to market fundamentals.

Producer prices are expected to have risen 0.8 percent in October when released on Tuesday, could add to concerns following September's rise, which was twice what analysts expected.

With no ability to pass on costs to consumers, businesses may have to swallow any price hikes, weakening margins and profits.

The CPI is due on Wednesday; it is widely expected to show a fall to 0.7 percent from 0.8 percent in September when food and energy prices are excluded.

To start the week, on Monday we expect data will show retail sales gained in October, while a separate report on September inventories may detail supply piling up at businesses.

Federal Reserve Chairman Ben Bernanke could provide a signal on the strength of the Fed's bond-buying commitment in remarks in Frankfurt on Friday.

This week I will be a buyer on market dips, but, I will keep a close eye on the 1194 support level for the S&P. As always in a dangerous market I will be buying quality companies that have a P/E ratio under 13 or a strong history of dividends.

Dividend Hot List
Keep these stocks on your watch list, they are all great buys on market dips.
Giant Interactive Group (GA)
Price/Share*: $6.94 Annual Dividend: $0.72 Dividend Yield: 10.37%
Pay Date: 05/10 Ex-Dividend Date: 04/22 Record Date: 04/26
Telecom Corp. of New Zealand Ltd. (NZT)
Price/Share*: $8.45 Annual Dividend: $0.84 Dividend Yield: 9.94%
Pay Date: 12/10 Ex-Dividend Date: 11/16 Record Date: 11/18
Anworth Mortgage (ANH)
Price/Share*: $6.93 Annual Dividend: $0.92 Dividend Yield: 13.28%
Pay Date: 10/27 Ex-Dividend Date: 10/06 Record Date: 10/11
BGC Partners (BGCP)
Price/Share*: $7.66 Annual Dividend: $0.56 Dividend Yield: 7.31%
Pay Date: 11/30 Ex-Dividend Date: 11/12 Record Date: 11/16
Chimera Investment (CIM)
Price/Share*: $4.05 Annual Dividend: $0.72 Dividend Yield: 17.78%
Pay Date: 10/28 Ex-Dividend Date: 09/30 Record Date: 10/04

Wall St Hot Stocks

Chimera Investment Corporation


With a P/E of 6.26 and a Dividend yield of 17.78% it is hard to find a hotter stock to buy in a falling market.

Chimera Investment Corporation is a specialty finance company that invests, either directly or indirectly through its subsidiaries, in residential mortgage-backed securities (RMBS), residential mortgage loans, real estate-related securities and various other asset classes. The Company is externally managed by Fixed Income Discount Advisory Company (FIDAC).

The Company's targeted asset classes and the principal investments it expects to make includes RMBS comprising agency and non-agency RMBS, residential mortgage loans consisting of prime mortgage loans, jumbo mortgage loans, and Alt-A mortgage loans and other asset backed securities (ABS) consisting of debt and equity tranches of collateralized debt obligations (CDOs), commercial mortgage backed securities (CMBS) and consumer and non-consumer ABS.


Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 6.26 18.99 29.09 18.06
P/E High - Last 5 Yrs. NA 0.10 0.78 19.89
P/E Low - Last 5 Yrs. NA 0.01 0.17 5.14
Growth Rates
Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago 58.81 25.43 35.82 9.41
Sales (TTM) vs TTM 1 Yr. Ago 159.66 21.04 120.11 8.74
Sales - 5 Yr. Growth Rate -- 21.16 20.96 9.98

Q3 2010 Highlights As of September 30, 2010

•Core EPS of $0.16 per average share

•Chimera owned $7.2 billion in gross assets, $2.9 billion in net assets

•Annaly and its subsidiaries managed $98.0 billion in gross assets and $21.7 billion in net assets

•Core return on average equity of19.12%

•Dividend of $0.18 per share

•Leverage stood at 1.3:1

•Recourse Leverage stood at 0.5:1

Giant Interactive Group Inc


Giant Interactive Group Inc. (Giant Interactive) is an online game developer and operator in China. The Company focuses on massively multiplayer online (MMO) games that are played through networked game servers, in which a number of players are able to simultaneously connect and interact. The Company’s three MMO games include ZT Online, ZT Online PTP, a pay-to-play game based on the ZT Online free-to-play game, and Giant Online. ZT Online, ZT Online PTP, ZT Online Green, ZT Online Classic Edition and Giant Online together had 1,572,000 quarterly peak concurrent users and 474,000 quarterly average concurrent users during the year ended December 31, 2009. In addition, it launched two free-to-play games, ZT Online Green and My Sweetie, and introduced King of Kings III, or K III, XT Online and The Golden Land in 2009. In December 2009 and January 2010, the Company acquired two licenses to operate Elsword and Allods Online, two three dimensional-MMO games, in mainland China.

Giant Interactive Group Inc announced that it has implemented a share repurchase plan, authorizing the Company to repurchase up to USD150.0 million of its ADSs. To date, the Company did not repurchase any shares under the plan, which would expire on August 30, 2010. In August, 2010, the Board of Directors decided to extend the term of the plan for one additional year, unless further extended or shortened by the Board of Directors, as under the board resolution and as defined by SEC regulations. The Company expects continued top-line growth in the third quarter of 2010. According to Reuters Estimates, analysts on an average are expecting the Company to report revenues of $52.99 million for the third quarter of 2010.


Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 14.30 23.53 23.71 18.06
P/E High - Last 5 Yrs. NA 1.07 1.49 19.89
P/E Low - Last 5 Yrs. NA 0.29 0.37 5.14

Viacom, Inc.


There are 2 classes of Viacom Stock, NYSE:VIA has voting rights, NYSE:VIA.B does not, normally I would always go with the voting stock, however this week a gap opened between VIA and VIA.B that makes VIA.B attractive as that gap, historically has never lasted.

Viacom Inc. (Viacom) is an entertainment content company. The Company engages audiences on television, motion picture, Internet, mobile and video game platforms, through the entertainment brands. Viacom operates in two segments: Media Networks and Filmed Entertainment. Its Media Networks segment provides entertainment content for consumers. It creates and acquires programming, video games and other content for distribution to its audiences.

The Filmed Entertainment segment produces, finances and distributes motion pictures and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, MTV Films and Nickelodeon Movies brands. The Filmed Entertainment segment also releases certain pictures under the DreamWorks brand. In October 2009, the Company acquired the global rights to the Teenage Mutant Ninja Turtles. In February 2010, Viacom acquired the remaining 51% interest in DW Funding, which owns the DreamWorks live-action film library.

VIA has been posting strong gains while VIA.B has been struggling and then fell, VIA.B is at least undervalued by 13% at the Friday close, and given the strong growth of VIA it makes great buying.

Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 13.29 18.62 12.30 18.06
P/E High - Last 5 Yrs. 24.44 20.71 0.23 19.89
P/E Low - Last 5 Yrs. 5.85 4.46 0.06 5.14


Profitability Ratios
Company Industry Sector S&P 500
Gross Margin (TTM) 46.98 34.87 12.16 32.66
Gross Margin - 5 Yr. Avg. 44.94 34.22 24.44 29.16
EBITD Margin (TTM) 25.96 --
-- --
EBITD - 5 Yr. Avg 24.22 16.08 10.47 18.54
Operating Margin (TTM) 23.11 15.44 -5.96 --
Operating Margin - 5 Yr. Avg. 21.33 12.34 5.49 16.38
Company Industry Sector S&P 500
Revenue/Employee (TTM)1 1,205,536 1,041,612 21,641,280 674,027
Net Income/Employee (TTM) 158,571 -8,928 1,088,333 84,519
Receivable Turnover (TTM) 6.52 5.83
18.19 10.38
Inventory Turnover (TTM) 8.57 17.14 4.40 6.71
Asset Turnover (TTM) 0.63 0.57 0.38 0.55

Management Effectiveness
Company Industry Sector S&P 500
Return on Assets (TTM) 8.22 5.75 1.74 5.91
Return on Assets - 5 Yr. Avg. 6.90 4.58 3.56 5.74



Golden Agri-Resources Ltd


Golden Agri-Resources Ltd (GAR) is an investment holding company. The Company’s primary activities include cultivating and harvesting oil palm trees, processing fresh fruit bunches into crude palm oil (CPO) and palm kernel (PK) and refining CPO into industrial and consumer products, such as cooking oil, margarine and shortening.

GAR operates in two segments: Indonesia Agri-business, which is engaged in the ownership and cultivation of oil palm plantation, ownership and operation of mills and refineries and producer of consumer cooking oil and margarine in Indonesia and China Agri-business, which is engaged in refinery, port, storage and oilseed crushing operations in China.

In December 2009, GAR, through its wholly owned subsidiary, Asia Palm Oil Investment Pte. Ltd., acquired Enterprise Capital Corporation. In April 2010, the Company incorporated a wholly owned subsidiary, Golden Assets International Finance Limited.

Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 9.87 42.40 27.57 18.06
P/E High - Last 5 Yrs. -- 1.08 0.97 19.89
P/E Low - Last 5 Yrs. -- 0.35
0.39 5.14
Management Effectiveness
Company Industry Sector S&P 500
Return on Assets (TTM) 9.31 2.38 3.02 5.91
Return on Assets - 5 Yr. Avg. 19.01 7.97 7.92 5.74
Return on Investment (TTM) 10.39 3.35
4.48 7.59



Univanich Palm Oil Public Company Limited

Symbol UVAN Key Developments:
Exchange  Bangkok
This company has been widely overlooked in the broad based Thai Stock Exchange Rally
Current Price B85.75
52 Week High/ Low 71.75 – 93.50 Demand for Univanich products will grow from Free Trade Agreements AFTA and CAFTA
Dividend Yield 5.04%
Market Cap (in $ mn) B8,389.50 Strong Dividend history
P/E Ratio 13.43 Palm Oil Prices are set to remain high
Production base is expanding


Ebeling Heffernan Price Target B110 in 2011.

Strong Post AFTA growth as the company expanded sales within the ASEAN Region

Sales and revenue Growth to Continue

Palm Oil and the other Oils produced by Univanich have seen strong demand and strong price increases.

Biodiesel demand in the region will double in 2 years


Arrow Resources Development Inc. (OTC:ARWD)

Arrow Resources provides corporate operating structure, financial operations, sales and marketing activities and the financial administrative infrastructure for the commercial development of land and natural resources in Indonesia.

The land to be developed has been categorized as environmentally “critical land” by the Indonesian government due to deforestation by local farmers and predatory logging companies. Arrow and their partners undertake every project in a manner that is sensitive to the local environment and social structure, blending economic growth with socially conscious development. All current and future operations utilize the existing natural resources in a sustainable, renewable and responsible manner.

With its strategic partners, Arrow has begun the development of plantation/farming operations and ethanol production facilities in Indonesia on 3 million hectares (ha) of land on the islands of Kalimantan and Sulawesi. Arrow is working closely with its group of Indonesian partners to initiate operations in Konawe, South East Sulawesi.

The necessary approval has been granted by the local government (Bupati Konawe Selatan (Regent Government Officer in Charge of a Regency), H. Imran) to commence operation at two sites totaling 162,000 ha. The mapping, surveying and planning for these first sites have been completed and all necessary information has been filed with the local and national government offices.

The profit generated (70%) from all operations are to be invested in three trust funds for the retirement of the local farmers, the education of the local Farmer’s children and the expansion of the operations of GMPLH. The Company will select internationally recognized trust managers to oversee the distribution of proceeds.

Each project includes funding for the construction of local schools, field hospitals, farmer housing and the technical education of the farmers.



Shayne Heffernan of Ebeling Heffernan has put a Price Target on Yee Lee Corp. $1.50 in 2011. Yee Lee has seen a strong run forward since 2009, based on the low P/E this stock should rally back toward $1.50.

This is an International Award Winning Company.

Palm Oil and the other Oils produced by Yee Lee have seen strong demand and strong price increases.

Diversification in to the other retail and industrial products has set a secure future.

Yee Lee Corporation Bhd group (YLC) began its core business as an edible oil repacker in Malaysia in 1968. Since then it has grown into a fully integrated manufacturer and distributor. YLC group of companies are involved in various sectors such as manufacturing, marketing and distribution of fast moving consumer products, plantation and eco-tourism.

Today YLC has an established marketing and distribution network servicing both local as well as international customers. YLC products include food, bottled water, oral care, household cleaners and industrial products. It also manufactures corrugated cartons, gloves and PET bottles for a wide range of customers.

YLC was listed on the Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange) in 1993. Yee Lee Corporation Bhd (YLC) is a Malaysia-based investment holding company. The Company, through its subsidiaries, operates in four segments: manufacturing, which includes cooking oils, margarine, shortening, corrugated paper cartons, crude palm oil, kernel and general line tin cans; trading, which includes edible oils, kernel and other consumer products; plantation, which includes tea and palm oil, and others, which include tourism related services and investment holding.

Its direct subsidiaries are Yee Lee Trading Co. Sdn. Bhd., Yee Lee Palm Oil Industries Sdn. Bhd., Yee Lee Edible Oils Sdn. Bhd., South East Asia Paper Products Sdn. Bhd., Canpac Sdn. Bhd., Intanwasa Sdn. Bhd. and Yee Lee Marketing Sdn. Bhd. In addition, the Company also has seven indirect subsidiaries.


Symbol UVAN Key Developments:
Exchang   Kuala Lumpur
Yee Lee Corp. Bhd has been able to grow revenues from 507.9M to 694.1M.
Most impressively, the company has been able to reduce the percentage
of sales devoted to selling, general and administrative
costs from 6.45% to 5.41%.
Current Price RM0.93
52 Week High/ Low 1.33 – 0.46 This was a driver that led to a bottom line growth from 10.3M to 17.4M.
Shares Outstanding (in mn) 175.57M
Market Cap (in $ mn) RM164.16 Growing Regional Market with AFTA and CAFTA providing additional growth.
P/E Ratio 7.58


Ebeling Heffernan Price Target $1.50 in 2011.

Yee Lee has seen a strong run forward since 2009, based on the low P/E this stock should rally back toward $1.50.

This is an International Award Winning Company.

Palm Oil and the other Oils produced by Yee Lee have seen strong demand and strong price increases.

Diversification in to the other retail and industrial products has set a secure future.


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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