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ASEAN STOCK WATCH Asean Affairs  6  November  2010

ASEAN Market Weekly Summary


Shayne Heffernan

Another strong week on the ASEAN Markets with all Exchanges now trading at Multi Year highs.

In Jakarta the JCI advanced 26.26 points, or 0.7 percent, to 3,665.31 by close of trading. About 5.6 billion shares worth Rp 52.2 trillion ($5.85 billion) changed hands. Gainers outnumbered decliners 120 to 85.

Mining stocks led the day’s gains with International Nickel Indonesia, the nation’s biggest nickel producer, rising 0.5 percent to Rp 4,750, and Ebeling Heffernan Strong Buy Aneka Tambang, the second biggest miner of the metal, closing up 3 percent at Rp 2,600.

Nickel futures jumped 4 percent on Thursday to $24,500 a metric ton in London.

The other Ebeling Heffernan strong buy Coal giant Bumi Resources was up 4.6 percent to Rp 2,275 on an Investor Daily report that its unit, Bumi Resources Minerals, planned to sell 4.3 billion shares in an initial public offering to pay off debt and fund capital spending.

Adaro Energy, the nation’s No. 2 coal producer, rose 2.3 percent to Rp 2,275.

Finance stocks also saw gains, with Bank Rakyat Indonesia, the country’s second-largest bank by assets, advancing 1.3 percent to Rp 12,100.

Consumer goods experienced sector falls, with Indofood CBP Sukses Makmur, the world’s biggest instant-noodle maker, declining 1 percent to Rp 5,200.

Astra International, the nation’s biggest automotive retailer, meanwhile, rebounded with a 2.9 percent gain to Rp 56,700.

The rupiah continued to strengthen, rising to 8,900 against the dollar, after the Central Statistics Agency (BPS) announced that the nation’s third-quarter GDP saw year-on-year expansion of 5.8 percent.

Perry Warjiyo, a director at the central bank, said fourth-quarter GDP might rise 6.2 percent.

“The rupiah is getting stronger as the dollar weakened on speculation that the US economic recovery may slow due to political factors,” said Branko Windoe, from Bank Central Asia, referring to the recent elections.

“Seeing the huge appetite from foreign investors and capital inflows, the rupiah may reach between 8,600-8,700.”

Branko said brisk inflows of foreign capital in short-term investments would cause volatility in the currency, but longer-term bets on the economy, such as foreign-direct investment, would help to keep it stable. “We have to be careful,” he added.

In Manila the Philippine Stock Exchange index fell by 48.19 points, or 1.09 percent, to 4,349.11.

A 5-percent decline in the services counter dragged down the index, negating a 1.1 percent rise by the industrial counter.

PLDT reported a flat third-quarter profit versus a year ago as slimmer margins gnawed at its revenues. Amid its lackluster financial performance, it was reported that the country’s most valuable company would cut costs by cutting around 800 jobs or about 6 percent of its total employee base.

Value turnover stood at P6.6 billion. There were 84 advancers against 59 decliners and 46 unchanged stocks.

The Losers were Cebu Air Inc., Bank of the Philippine Islands, Filinvest Land Inc., SM Prime Holdings Inc., JG Summt Holdings Inc., Megaworld Corp., Semirara Mining Corp., DMCI Holdings Inc., SM Investments Corp. and Energy Development Corp.

The Winners were: Alliance Global Group Inc., Aboitiz Power Corp., San Miguel Corp., Philippine National Bank, International Container Terminal Services Inc., Holcim Philippines Inc., Ayala Land Inc. and Atlas Consolidated Mining & Devt Corp.

The Stock Exchange of Thailand (SET) composite index gained 8.84 points or 0.96 per cent to close at 1,045.45 points on Friday’s morning session. The trade value was 57.62 billion baht.

Advanced Info Service (AIS), Thailand’s largest mobile operator, is confident of meeting its revised 2010 revenue growth target of 5%, up from 3% before, thanks to strong growth in mobile data revenue.

The growth forecast for non-voice revenue has also been revised up to 25% from 15% earlier. The new target is 16 billion baht or about 18% of earnings.

Pornrat Janejarassakul, the vice-president for marketing and planning, said AIS’s nine-month service revenue grew by 7.3% year-on-year on growth in wireless internet use and digital media.

But AIS expects to see a slowdown in the fourth quarter due to the recent flooding and the high performance in last year’s fourth quarter.

“We believe we’ll achieve our 5% revenue growth target for this year,” said Mr Pornrat.

AIS posted a third-quarter net profit of 4.89 billion baht, up by 17% year-on-year. Third-quarter service revenue rose by 10% to 27.6 billion baht.

The nine-month consolidated net profit was 14.83 billion baht (4.97 baht a share), up 14.5% from 12.95 billion (4.37 baht a share) in last year.

Top five most active values were as follows;

PTT closed at 342.00 baht, up 11.00 baht or 3.32 per cent.

BANPU closed at 806.00 baht, up 16.00 baht or 2.03 per cent.

IRPC closed at 4.70 baht, up 0.32 baht or 7.31 per cent.

SCB closed at 114.00 baht, up 4.50 baht or 4.11 per cent.

CPF closed at 22.40 baht, down 0.50 baht or 2.18 per cent.

US$600B Fed economic boost will not affect Thai Baht

Thai Finance Minister Korn Chatikavanij has said that he did not expect the US$600B injection into the US economy to have any immediate effect on the Thai currency and its capital market.

Korn said the Thai government’s existing measures remained effective enough to control the rising baht as the US Federal Reserve’s announcement was in line with the government’s earlier estimate of US$500-700B, according to local media reports.

The US Federal Reserve announced Thursday that it will buy an additional US$600B of treasuries through June next year, which could further depreciate the “Greenback”.

Central banks from China to India and Australia have raised interest rates to curb inflationary pressures at a time when Japan and the US are adding monetary stimulus to boost economic growth.

Meanwhile, Thailand’s central bank governor Prasarn Trairatvorakul has confirmed that he has discussed with other central banks in the region, which are ready to impose joint measures to curb further speculative money in-flow.

However, the Thai private sector expressed skepticism that such joint measures might be too late and too hard to carry out.

“The joint action may look promising, but execution would be tough,” said Aat Pisanwanich, director of the Center for International Trade Studies of the Thai Chamber of Commerce.

Indonesia Hot Stocks in New York, NYSE:IDX, OTC:ARWD, NYSE:TLK

Market Vectors Indonesia Index (ETF) NYSE:IDX, PT Telekomunikasi Indonesia (ADR) NYSE:TLK, Arrow Resources Development Inc. (OTC:ARWD)

Market Vectors Indonesia Index (ETF) NYSE:IDX

IDX is pretty well diversified among sectors with large allocations going towards financials (25%) and industrial materials (19.8%).

However, the fund has no securities that are engaged in the technology or health care sectors, so investors will have to achieve that international exposure elsewhere.

Indonesia has been soaring as of late due to strengthening commodity prices and one of its main components, Astra, hiking its dividends.

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.

PT Telekomunikasi Indonesia, Tbk. (TELKOM) NYSE:TLK

PT Telekomunikasi Indonesia is a telecommunication and network services provider in Indonesia.

The Company provides a portfolio of information and communication services, including fixed wireline and fixed wireless telephone, mobile cellular, data and Internet, and network and interconnection services, directly or through its subsidiaries.

The Company has four segments: fixed wireline, fixed wireless, cellular and others. The fixed wireline segment provides local, domestic long-distance and international telephone services, and other telecommunications services (including leased lines, telex, transponder, satellite and very small aperture terminal (VSAT)), as well as ancillary services.

TELKOM’s fixed wireless segment provides local and domestic long-distance code division multiple access (CDMA)-based telephone services. Its cellular segment provides basic telecommunication services, particularly mobile cellular telecommunication services.

Shayne Heffernan of Ebeling Heffernan has issued a strong buy 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 stockbroking 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.

United Overseas Bank Ltd. has entered into an agreement to purchase banknotes businesses of HSBC Holdings plc units in five Asian markets. The total consideration for the transaction is $15 million in cash, United Overseas Bank Ltd. said in a statement. Under the agreement, the HSBC Holdings plc will license to United Overseas Bank Ltd. the technology system used in connection with banknotes business in Singapore, Hong Kong, Japan, Beijing and Taiwan. Completion of the transaction is expected to take place in the fourth quarter of this year, United Overseas Bank Ltd. said.

United Overseas Bank Ltd. (UOB) announced that it has subscribed for another 456 million new ordinary shares in Evergrowing Bank Co., Ltd, China (Evergrowing Bank), at RMB3 per share in cash (Subscription), as part of the latter’s private placement to existing and new investors. Together with UOB’s purchase of 260 million shares in June 2008 and receipt of 104 million bonus shares in December 2009 from Evergrowing Bank, UOB now owns 820 million shares or approximately 12.06% of the enlarged issued share capital of Evergrowing Bank.

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.


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