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ASEAN STOCK WATCH Asean Affairs   8  November  2010

ASEAN Weekly Outlook


Shayne Heffernan

Shayne Heffernan Global Market Outlook, JP Morgan NYSE:JPM, Hatteras Financial Corp NYSE:HTS, Teekay Tankers NYSE:TNK, Bangkok:UVAN, Singapore:NEPS, Malaysia:YLEE, NYSE:NLY, NYSE:AIB

ASEAN Markets will see some pressure from the currency wars this week but the outlook remains bullish.Wall Street delivered the rally and volatility we expected this week despite the 3 big challenges, elections, the U.S. Federal Reserve meeting and the Unemployment data. Earnings during the week were also solid and market closed the week with gains.For the week, the NYSE composite climbed 3.8% and the S&P 500 3.6%. The Dow and Nasdaq advanced 2.9% each.

This week Earnings Season will wind down and the economic calendar is not as significant, traders will not start the week with a focus on any particular event and direction will be based on sentiment.There has been a 16 percent rally on the S&P 500 since the start of September and many commentators are calling a pullback after the big news week.

But there is still plenty of money on the sidelines to fund a rally.The CBOE Volatility Index, a good indicator of market sentiment, has gone below 19 and the action Friday points to a market getting ready for more gains.Given the Fed “low interest rates for the long term” statement cash and bonds look much less attractive, which will see money head towards dividend stocks around the world. Even if the general market falls during the week, this is a good week to be buying dividends.


The Fed will be supporting the USA markets through the QE-2 $600B, this is certain to see US rates very low for quite some time.That will stimulate borrowing and make Mergers and Acquisitions, and Expansion more attractive.The Fed and QE-1 were evident in Friday’s jobs data, which showed the fastest USA payroll growth in the private sector since April.

Rally Time?

The Fed $600b stimulus, strong corporate earnings and unemployment on the mend is a good case for a continued rally this week.Given the new outlook for low long term rates, stocks that have a strong history of consistent dividends look like great buying with a 12 month to 2 year view.

Traders did not miss the implications of the cheap money and Financials climbed higher on Friday, the KBW Bank index up 2.2 percent, on talk the Fed may allow stronger banks to increase dividends.

They could continue to climb as they have underperformed the rally since September.Options indicator a further jump in financial stocks Friday as the Call volume in the Financial Select Sector ETF SPDR fund surged, option traders exchanged about 618,000 contracts in the XLF on Friday, led by the trading of 480,000 call options.

The overall options volume was three times greater than its average daily turnover, according to Ebeling Heffernan research.A dip in the market might still occur, though. A number of indicators suggest the market is in position to consolidate, if it does, buy, and buy quality financials.The 14-day RSI is at 88.5.

Anything above 70 usually indicates an overbought condition, however, this is not uncommon in a rally.The S&P 500 will see strong resistance at around 1,228, key retracement of the benchmark's slide from its historic high in 2007 to the 12-year low in March 2009.

The first attempt at piercing that level in April failed and preceded a decline that took the S&P to its 2010 low in early July.Falling US Dollar values and the general momentum all point to a continuation of the rally this week, with the possibility of a few low days. Remember, buy low sell high.

Dividend Hot List

Keep these stocks on your watch list, they are all great buys on market dips.

Hatteras Financial Corp (HTS)

Price/Share*: $29.95 Annual Dividend: $4.40 Dividend Yield: 14.69%
Pay Date: 10/22 Ex-Dividend Date: 09/28 Record Date: 09/30
Teekay Tankers (TNK)

Price/Share*: $12.64 Annual Dividend: $1.36 Dividend Yield: 10.76%
Pay Date: 11/30 Ex-Dividend Date: 11/12 Record Date: 11/16
Kohlberg Capital (KCAP)

Price/Share*: $6.92 Annual Dividend: $0.68 Dividend Yield: 9.83%
Pay Date: 10/29 Ex-Dividend Date: 10/06 Record Date: 10/08
Resource Capital (RSO)

Price/Share*: $6.66 Annual Dividend: $1.00 Dividend Yield: 15.02%
Pay Date: 10/26 Ex-Dividend Date: 09/28 Record Date: 09/30
Annaly Capital (NLY)

Price/Share*: $17.91 Annual Dividend: $2.72 Dividend Yield: 15.19%
Pay Date: 10/28 Ex-Dividend Date: 09/30 Record Date: 10/04
Universal Insurance Holdings (UVE)

Price/Share*: $4.69 Annual Dividend: $0.40 Dividend Yield: 8.53%
Pay Date: 11/05 Ex-Dividend Date: 10/20 Record Date: 10/22

Wall St Hot Stocks

Allied Irish Banks, plc. (ADR)


Allied Irish Banks, p.l.c. together with its subsidiaries (collectively referred to as the AIB Group or the Group), conducts retail and commercial banking business in Ireland. It also provides corporate lending and capital markets activities from its head office at Bankcentre and from Dublin’s International Financial Services Centre. The Group also has overseas branches in the United States, Germany, France and Australia, among other locations. The business of AIB Group is conducted through four operating divisions: AIB Bank Republic of Ireland division, Capital Markets division, AIB Bank UK division, and Central & Eastern Europe division.

Not a star performer of late, with losses and management changes but it does look like Allied Irish is back on track. While the losses have been horrendous, the price to book makes this one worth buying with a long term view.

Valuation Ratios

Company Industry Sector S&P 500
P/E Ratio (TTM) -- 16.76 28.90 18.36
P/E High - Last 5 Yrs. NA 1.89 1.67 25.41
P/E Low - Last 5 Yrs. NA 0.41 0.35 6.26
Beta 2.70 1.23 1.19 1.27
Price to Sales (TTM) 0.21 3.80 6.68 2.17
Price to Book (MRQ) 0.04 1.11 1.34 2.74
Price to Tangible Book (MRQ) 0.04 1.39 1.57 17.47

AIB has new cash

M&T Bank Corporation (M&T) held by it (M&T Shares). Following receipt of shareholder approval at Allied Irish Banks' Extraordinary General Meeting on November 1, 2010, the 26,700,000 contingent mandatorily exchangeable notes (Notes) which Allied Irish Banks sold at $77.50 per Note have been mandatorily exchanged for the M&T Shares and the net proceeds of the Notes offering have been released to Allied Irish Banks. Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. acted as underwriters and joint bookrunning managers for the Notes offering.

AIB is still a BBB+ Standard & Poor's Ratings Services downgraded long-term rating for Allied Irish Banks, plc to BBB+ from A- with the negative outlook.

JPMorgan Chase & Co. NYSE:JPM

JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company. JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association with United States branches in 23 states, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Firm’s credit card-issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities Inc. (JPMorgan Securities), its United States investment banking firm. Its activities are organized into six business segments: Investment Bank, Retail Financial Services (RFS), Card Services (CS), Commercial Banking (CB), Treasury & Securities Services (TSS) and Asset Management (AM). Its wholesale businesses comprise the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments. Its consumer businesses comprise the Retail Financial Services and Card Services segments.

Earnings Per Share

# of Estimates Mean High Low 1 Year Ago
SALES (in millions)
Quarter Ending Dec-10 9 24,253.10 25,094.00 23,353.00 24,646.00
Quarter Ending Mar-11 2 24,801.00 24,893.00 24,709.00 26,389.00
Year Ending Dec-10 11 102,212.00 103,668.00 98,705.00 104,137.00
Year Ending Dec-11 11 100,812.00 106,789.00 97,739.00 111,556.00
EARNINGS (per share)
Quarter Ending Dec-10 23 1.00 1.13 0.85 0.95
Quarter Ending Mar-11 12 1.05 1.17 0.89 1.12
Year Ending Dec-10 25 3.85 4.04 3.67 3.30
Year Ending Dec-11 26 4.60 5.00 4.09 5.04
LT Growth Rate (%) 5 8.00 10.00 6.00 10.80
Sales and Earnings Figures in U.S. Dollars (USD)


Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 11.41 16.76 28.90 18.36
P/E High - Last 5 Yrs. 139.55 1.89 1.67 25.41
P/E Low - Last 5 Yrs. 9.28 0.41 0.35 6.26
Beta 1.14 1.23 1.19 1.27
Price to Sales (TTM) 1.61 3.80 6.68 2.17
Price to Book (MRQ) 0.97 1.11 1.34 2.74
Price to Tangible Book (MRQ) 1.45 1.39 1.57 17.47
Price to Cash Flow (TTM) -- 2.09 9.40 8.30
Price to Free Cash Flow (TTM) -- 0.62 5.01 30.87
% Owned Institutions -- -- -- --



Company Industry Sectortd> S&P 500
Dividend Yield 0.49 1.61 1.66 1.63
Dividend Yield - 5 Year Avg. 2.89 1.92 1.63 2.48
Dividend 5 Year Growth Rate -31.84 8.53 8.37 -6.50
Payout Ratio(TTM) 5.53 12.29 20.28 35.08
Management Effectiveness
Company Industry Sector S&P 500
Return on Assets (TTM) 0.76 0.27 0.80 5.43
Return on Assets - 5 Yr. Avg. 0.67 0.87 1.57 5.78
Return on Investment (TTM) -- 0.00 0.75 6.99
Return on Investment - 5 Yr. Avg. -- 0.00 1.32 7.48
Return on Equity (TTM) 8.94 3.28 4.32 16.96
Return on Equity - 5 Yr. Avg. 7.90 12.55 11.73 9.61



Ebeling Heffernan has issued a strong buy on Neptune Orient Lines with a 2011 price target of SGD$4.20.

Neptune Orient Lines Limited (NOL) is an investment holding company. The Company is engaged in the ownership and charter of shipping vessels, as well as participation in ventures related to these activities and the principal activities of its subsidiaries.

The Company operates in three segments: Container Shipping, Logistics and Terminals.

Its Container Shipping is engaged in global container transportation operations. The Company is a global logistics provider with a network of facilities and services.

The range of services include consolidation, warehousing, global freight management (ocean, air, truck and rail), domestic distribution networks, international deconsolidation and information technologies that provide information to manage supply chain activities.

Its Terminals segment is engaged in the operation of container terminals and provision of other related services.

On the 19th of October 2010 NOL Group reported net earnings of US$282 million for the third quarter of 2010, a US$421 million turnaround from the US$139 million net loss in the third quarter of 2009. NOL said revenue in the third quarter improved 55% to US$2.4 billion.

The Group has now reported net earnings of US$283 million through three quarters of 2010. It lost US$530 million during the same period last year.

“Strong demand and an improved rate environment have helped us turn around our performance,” said Group CEO Ronald D. Widdows. “Our emphasis at this point is on operating efficiency and cost containment to ensure that we maintain our momentum.”

The Group’s Core EBIT (Earnings Before Interest and Taxes) for the third quarter was US$319 million compared to a Core EBIT loss of US$115 million in the same quarter a year ago. For the first three quarters in 2010, Core EBIT was US$359 million compared to a Core EBIT loss of US$468 million for the first three quarters of 2009.


YTD10 YTD09 Change % 3Q10 3Q09 Change %
Revenue (US$m) 6,648 4,496 48 2,429 1,564 55
Core EBIT (US$m) 359 (468) nm 319 (115) nm
Net profit/(loss) (US$m) 283 (530) nm 282 (139) nm


Univanich Palm Oil Public Company Limited
Symbol UVAN
Exchange Bangkok
Current Price B89.75
52 Week High/ Low 71.75 – 93.50
Dividend Yield 5.04%
Market Cap (in $ mn) B8,389.50
P/E Ratio 13.43


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 5584
Exchange Kuala Lumpur
Current Price RM0.94
52 Week High/ Low 1.33 – 0.46
Shares Outstanding (in mn) 175.57M
Market Cap (in $ mn) RM164.16
P/E Ratio 7.58


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