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ASEAN STOCK WATCH Asean Affairs   15 November 2012

ASEAN Market Preview

Wall St hit the lowest levels since late July on Wednesday, driven by uncertainty over budget negotiations and an escalation of violence in the Middle East.

President Obama pressed for his proposal to have the wealthy pay more in taxes as a way to tame the federal deficit, taking a hard line in his opening bid before he begins fiscal talks with U.S. lawmakers later in the week.

"We should not hold the middle class hostage while we debate tax cuts for the wealthy," Obama said in his first press conference since winning re-election on November 6.

Brent oil prices rose more than 1 percent toward $110 a barrel on Wednesday, snapping a two-day slide as Israel launched a major offensive against Palestinian militants in Gaza, exacerbating concerns about Middle East tensions.

Hamas's military chief was killed when his car was hit by an Israeli air strike, the Palestinian Islamist group said, as multiple Israeli attacks rocked the Gaza Strip.

An Israeli official said the attack on Hamas's top commander was not the end of the assault on the coastal territory and more strikes would follow.

- China's job market is feeling the pressure from the country's economic downshift, as new job growth slows and more people become unemployed, a senior employment official said Monday.

"The impact of economic slowdown on the job market is starting to emerge," said Vice-Minister of Human Resources and Social Security Yang Zhiming at a press conference on the sidelines of the 18th National Congress of the Communist Party of China, which opened on November 8.

The growth of newly added jobs in cities has been narrowing since April, while job vacancies have dropped with higher registered unemployed number, Yang said.

"China will continue to face the problem of labor oversupply for a long time," he told reporters.

China's job market is under great pressure this year as nearly 7 million college graduates have entered the job market, while migrant workers and unemployed urbanites still have difficulty getting full employment, said Yang.

China's urban registered unemployment rate stood at 4.1 percent at the end of September, unchanged from the second quarter of 2012, according to official figures. It was lower than the officially set ceiling of 4.6 percent this year.

The country created 10.24 million new jobs in urban areas in the first nine months, exceeding the annual target of 9 million for this year.

Yang said the government will boost labor-intensive industries as well as strategic emerging industries to bring job growth along with economic development.

He said the government will encourage college students to work in the central-western regions or start their own businesses, facilitate the development of small- and medium-sized enterprises and offer better training for rural workers.

Shayne Heffernan Best Buys are San Miguel, Keppel Corp, PTT, Bakrieland, Tanjung Offshore



Bakrieland Development, a property developer unit of the Bakrie Group, plan to sell some of its infrastructure projects, and MNC Group and Jasa Marga are prospective buyers.

Yudy Rizard Hakim, chief corporate affairs officer at Bakrieland, said that the company will announce the sale of its toll-road projects at the end of the month.

“There are some investors bidding [on the projects], but none of them are final,” Yudy said.

Meanwhile, a source close to the subject said that Bakrieland had settled on one investor.

“All of Bakrie’s toll-road projects will be sold. Later, Bakrieland Development will no longer have any stake at Bakrie Toll Road,” the source said, adding that MNC Group, the conglomerate controlled by businessman Hary Tanoesoedibjo, had closed the deal with Bakrieland.

Harry reportedly wants to buy all of Bakrieland’s toll-road projects, such as the 34-kilometer Kanci-Pejagan project, the 57-kilometer Pejagan-Pemalang and the 75-kilometer Batang-Semarang roads.

Jasa Marga, the state-controlled toll-road operator, is also interested in some of Bakrieland’s projects, like the Batang-Semarang toll road. Jasa Marga seeks to take over Bakrie Toll Road’s 60 percent stake in that project. Separately, David Wijayanto, corporate secretary of Jasa Marga said that the negotiation is still in progress and nothing firm has been reached.

The government officials are yet to receive any notice about the matters. Gani Ghazali, head of the Toll Road Regulatory Agency at Ministry of Public Works, said he has not received any report about any transaction about toll road project owns by Bakrie Toll Road.

News on the acquisition sent the Bakrieland’s shares up in Jakarta trading on Tuesday.

Bakrieland rose 3.5 percent to Rp 59, while Bhakti Investama, the investment company of MNC Group, fell 1.9 percent to Rp 520.

The Bakrie Group, which has interests ranging from coal mines to property and palm oil plantations, has been trying to improve its financial structure by reducing debt and interest payments, Bobby Gafur, the president director of its investment company, had said in June.

Bakrieland Development reported a net loss of Rp 133 billion ($14 million) in the first nine months this year compared with a profit of Rp 129.2 billion a year earlier.

If materialized, that would the first foray for MNC Group to enter infrastructure projects. MNC Group is the holding of media company. It controls among others free-to-air broadcaster Rajawali Citra Televisi Indonesia, Global TV and MNC TV.

Indonesia’s government has vowed to spend trillions of rupiah to build infrastructure projects such as seaports, toll raods and power plants this year and in the coming years. Poor infrastructure has hampered economic growth in Indonesia. Indonesia’s $820 billion economy expanded 6.2 percent in the third quarter this year from a year earlier, driven by investement and private consumption.

Bumi Resources, a Bakrie Group, has been the center of investors’ attention in the past few months due to a dispute with Bumi Plc co-founder Nat Rothschild.



A total of 70 million shares of Tanjung Offshore Bhd was transacted in several off-market deals on Wednesday at a premium of 15 sen above the market price.

Stock market data showed the shares, which account for a 23.8% stake in Tanjung Offshore -- based on its paid-up of 293.31 million shares -- were transacted at prices ranging from 44.5 sen to 44.9 sen.

The last block of 14 million shares was transacted at 44.9 sen, or 5.9 sen or 15.1% above the market price of 39 sen.


PTT Pcl, Thailand's top energy firm, posted its biggest rise in quarterly net profit in more than a year, boosted by robust gas sales, higher income from its upstream unit, and rising profits from its refinery and petrochemical businesses.

PTT's gas sales hit a quarterly record in July-September due to Thailand's rising demand for the fuel. Asia-Pacific's third-biggest oil and gas firm by market value is likely to enjoy strong earnings growth next year, with analysts forecasting a 4-6 percent rise in gas demand over the next two years.

State-controlled PTT posted July-September net profit of 36.1 billion baht ($1.2 billion), up 68 percent from a revised 21.47 billion a year earlier, and higher than the average 34.6 billion baht forecast by 11 analysts polled by Reuters.

The profit growth was the highest since the second quarter of 2011 when it posted a 91 percent rise.

PTT's third-quarter revenue climbed 5.8 percent from a year earlier to 686 billion baht, with gas sales rising to a record 4.611 billion cubic feet per day, up 8.5 percent on year.

Increased demand for gas in Thailand has prompted PTT to secure more supplies from domestic and regional fields, including Myanmar, and beyond to Africa and the Gulf.

A company official told Reuters this month that PTT is looking to invest heavily in energy assets in Myanmar, excluding acquisitions, through 2020 as the country opens up after decades of military rule. It is also eyeing investments in the power business in Laos.

PTT has also unveiled plans to buy liquefied natural gas from Qatar Liquefied Gas Company Limited from 2015, and last month won approval to build the second phase of an LNG receiving terminal.

The company's upstream unit, PTT Exploration and Production (PTTEP), saw its third-quarter net profit more than double, mainly due to higher sales volumes and rising prices.


Keppel Offshore & Marine Ltd's (Keppel O&M) subsidiaries, Keppel Subic Shipyard, Inc. (Keppel Subic Shipyard) in the Philippines and Keppel Verolme BV (Keppel Verolme) in the Netherlands, have secured contracts totalling S$160 million.

Keppel Subic Shipyard has been awarded a contract from Shell Philippines Exploration BV (SPEX) to build a Depletion Compression Platform (DCP) to support the recovery of natural gas from the Malampaya gas field near Palawan Island, in the Philippines.

When completed, the DCP will be deployed next to an existing shallow water production platform. The DCP is designed to maintain the current availability and deliverability of natural gas from the Malampaya field through regulating the gas export pressure and flow rates.

Keppel Subic Shipyard will be responsible for the fabrication of the entire DCP, integration of the topside modules as well as the fabrication of the link bridge connecting the DCP to the shallow water platform. The DCP comprises gas compression facilities mounted on a barge deck, supported by four tubular legs on base footings.

Mr Michael Chia, Managing Director (Marine), Keppel O&M, said, "Over the years, Keppel Subic Shipyard has established a creditable track record in ship repair and major fabrication work. This DCP project is a good platform for us to further enhance our competencies for complex offshore work.

"With a 1,500 tonne gantry crane, various other cranes and worksite facilities which are being set up in conjunction with this project, we are positioning our yard with stronger capabilities to offer better services, take on more onshore and offshore fabrication projects as well as handle conversion work for Floating Production Storage and Offloading (FPSO) vessels, including the fabrication of topside modules.

"Keppel Shipyard in Singapore, which has extensive experience in offshore production modules, is supporting Keppel Subic Shipyard on its work scope. Keppel Subic Shipyard will work closely with all stakeholders to ensure that the project is delivered to the highest quality, in a safe and timely manner."

Mr Sebastian Quiniones, Managing Director of SPEX and Malampaya Asset Manager, said, "Keppel Subic Shipyard has demonstrated that it is one of the most comprehensive yards in the Philippines and a natural choice for us for this project. We are confident that with Keppel's experience and competencies, the yard will be able to deliver the project to our highest satisfaction and enable us to support the Philippine government's goal towards energy security."

The development of the DCP forms Phase 3 of the Malampaya Deep Water Gas-to-Power project, which is jointly undertaken by government agencies and private companies. The Philippine Department of Energy leads in this project, and is supported by a consortium comprising the Malampaya project operator, SPEX, and its joint venture partners, Chevron Malampaya LLC and the Philippine National Oil Company-Exploration Corporation (PNOC-EC).

Over in the Netherlands, Keppel Verolme has secured a contract from its repeat customer Heerema Marine Contractors Nederland B.V. (HMC) for the drydocking survey of the deepwater construction vessel (DCV) Balder. One of the largest crane vessels in the world, Balder measures 154 metres (m) in length and 86m in width, and is capable of lifting 6,300 tonnes.

The yard's work scope for this project includes the painting of the hull, bracings and cranes. It will also undertake steel renewals, as well as the maintenance and repairs to the tanks, including piping and conservation works. The vessel is expected to be delivered in 1Q2013.

This is Balder's second visit to Keppel Verolme; in 2001, it underwent an extensive conversion programme at the yard. The project work scope included the construction of facilities to receive the 120m-high pipe-laying tower and accompanying components.

Another project recently completed by Keppel Verolme for HMC was the life extension of the DCV Thialf, HMC's largest such unit. Over the years, Keppel Verolme has undertaken several major projects for HMC.

Mr Harold Linssen, Managing Director of Keppel Verolme, said, "Keppel Verolme is pleased to be of service to our repeat customer Heerema Marine Contractors again and look forward to delivering yet another high quality project to them safely, on time and within budget. We pride ourselves on our ability to respond swiftly to our customer's needs with innovative and cost-effective solutions."

The above contracts are not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.


San Miguel saw net income jump 60.67% jump to P19.2 billion as of September from the P11.95 billion earned in the same nine months last year, the disclosure read. “Consolidated net income attributable to equity holders of the parent company surged 61% to P19.2 billion as a result of higher gains from other investments and favorable exchange rates,” the conglomerate said.

While San Miguel’s financial statement was not immediately available, the company’s investor briefing presentation disclosed to the stock exchange yesterday showed that net income before minority interest gained 31% to P26.4 billion from P20.2 billion in the same comparative periods.

Third-quarter data were not available either.

Consolidated net sales totaled P509.2 billion, up 29.42% from P393.5 billion as most of its business units rode on a combination of bigger volumes and “favorable” selling prices.

The presentation also gave a snapshot of the conglomerate’s units:

• Beer manufacturer San Miguel Brewery, Inc. generated net sales of P53.85 billion, 3.4% more than P52.08 billion in 2011, even as volumes dropped 1.09% to 164 million cases from 165.8 million cases.

• Food and beverage firm San Miguel Pure Foods Co., Inc. saw revenues grow 7.87% to P69.35 billion from P64.29 billion last year.

• San Miguel Packaging Group’s net sales rose 1.13% to P17.93 billion from P17.73 billion on sale of metal cans, composites and plastic segments, coupled with sustained expansion of its plastic leasing operations.

• SMC Global Power Holdings Corp. grew net sales 7.14% to P57.35 billion from P53.53 billion as generation sales rose 8.57% to 11.65 gigawatt-hours (GWH) from 10.73 GWH last year.

• Refinery Petron Corp.’s net sales rose 52.20% to P307.34 billion from P201.93 billion, even as operating income fell 51.34% to P6.54 billion from P13.44 billion due to the impact of volatility in global oil markets.

• Liquor unit Ginebra San Miguel, Inc. saw revenues drop 5.13% to P10.92 billion from P11.51 billion last year, in line with a 7.29% drop in volume to 17.8 million cases from 19.2 million cases in 2011.

Meanwhile, flag carrier Philippine Airlines (PAL) -- wherein San Miguel holds a 49% interest -- is poised for further growth, the disclosure read. “The execution of identified growth strategies for newly acquired PAL continues,” San Miguel said.

Beginning Nov. 30, PAL will be flying non-stop from Manila to Toronto using brand-new Boeing 777-300ER airplane capable of seating 350 passengers for the 17-hour flight. PAL also earlier acquired 65 Airbus planes to be delivered in the next few years in line with its re-fleeting and expansion programs.

Yesterday in Asia

Tokyo was 0.12 percent higher, Hong Kong added 0.20 percent, Sydney gained 0.16 percent, and Seoul eased 0.10 percent.

Shanghai was flat as dealers looked to the end of the Communist Party’s latest congress, which will anoint the country’s next leaders and provide an indication of future economic policy.

Mumbai was closed for a public holiday.

Regional markets have suffered big losses since last week’s re-election of US President Barack Obama, with dealers fearing a stand-off in Congress in addressing the fiscal cliff of tax hikes and spending cuts that are due to come in on January 1.

The benchmark Philippine Stock Exchange index (PSEi) lost 4.83 points or 0.09 percent to close at 5,451.09 even as the all-shares index gained 2.27 percent or 0.06 percent.

Shayne Heffernan Ph.D.  
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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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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