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ASEAN STOCK WATCH Asean Affairs   19 November 2012

ASEAN Market Preview

Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.

As the fiscal cliff drama plays out, it will be worthwhile to watch the CBOE Volatility Index, or VIX  Wall Street's favorite barometer of investor anxiety.

The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.

Although stocks ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P 500 was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.
The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax increases and spending cuts that could take the U.S. economy back into recession.

Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the U.S. Thanksgiving holiday on Thursday.


Thai Airways

Thai Airways International revenue up 5% – financial highlights for three months ended 30-Sep-2012:

    Total revenue: THB52,431 million (USD1674 million), +4.9% year-on-year;

    Total costs: THB50,519 million (USD1613 million, +6.6%;
        Fuel: THB19,139 million (USD611.0 million, -4.4%;
        Labour: THB7505 million (USD239.6 million), +16.0%;

    Profit before tax: THB1912 million (USD61.0 million), -26.2%;

    Net profit: THB1750 million (USD55.9 million), -28.5%;

    Total assets: THB291,553 million (USD9307 million), +6.2% when compared to period ended 31-Dec-2011;

    Cash and cash equivalents: THB18,237 million (USD582.2 million), +9.4% when compared to period ended 31-Dec-2011;

    Total liabilities: THB223,692 million (USD7141 million), +6.0% when compared to period ended 31-Dec-2011.

The company expects revenue to grow by 11-12 per cent to between Bt230 billion and Bt240 billion, from Bt202 billion this year, thanks partly to the acquisition of 17 new aircraft. The additional seats are expected to drive business growth, Sorajak said after a board meeting chaired by Ampon Kittiampon.

The board confirmed that THAI's three airline brands would each have a clear business position. Thai Airways offers premium service, while Thai Smile, which will fly throughout the region, provides more economical service.

Nok Air, held 49 per cent by THAI, is a low-cost carrier with ''quality service'', which covers part of the region. It is expected to be listed on the Stock Exchange of Thailand next year. However, THAI does not known exactly what its stake in Nok Air will be after its initial public offering.

CapitaLand

CapitaLand has said its growth in China remains on track amid slowing economy and leadership transition in the country.

It still expects China to account for 45 per cent of the company's assets in the next three to five years.

CapitaLand's outgoing CEO Liew Mun Leong said the company is also in a good position to compete with state-owned enterprises in China.

Lim Ming Yan will take over from Mr Liew as president and CEO from 1 January next year.

The S$4 billion Chao Tian Men mixed-use development is one of CapitaLand's projects in China.

In the past few years, it has grown its presence in the Chinese real estate market.

Assets in China now account for 38 per cent of CapitaLand's portfolio, and this is set to grow to 45 per cent within the next five years.

Speaking at the sidelines of the CapitaLand International Forum, Mr Liew said rapid urbanisation in China will help to boost its business.

He does not expect the new Chinese leadership to implement changes that will overly affect the real estate sector, as it contributes up to 15 per cent of China's gross domestic product (GDP).

CapitaLand believes it has the ability to compete against well-capitalised state-owned enterprises there.

Guan Chong

Cocoa processor Guan Chong Bhd’s net profit rose 5.6% to RM27.41mil in the third quarter ended Sept 30 compared to the same quarter a year ago supported by a 5.9% increase in sales volume and improved profit margin.

The company said in a filing with Bursa Malaysia that revenue declined 4.7% to RM348.47mil due to lower average selling prices of cocoa ingredients and the drop in cocoa bean prices.

In a separate announcement, it declared an interim dividend of 2 sen per share, bringing the total dividend payout to 9 sen per share or RM31.8mil for the current financial year.


Blue Bird

Blue Bird Group, the country’s first taxi operator, plans to sell shares in an initial public offering next year, as it is trying to capitalize on rising investor confidence in the local equity market.

Blue Bird would be the second taxi operator to be listed on the local bourse after Express Transindo Utama, a taxi operator controlled by conglomerate group Rajawali Corpora. Express made a stellar trading debut early this month.

Officials at Jakarta-based Blue Bird are talking to domestic and global investment banks to help it arrange the IPO. The company plans to sell between 20 and 40 percent of its total equity in the local market in the first half of next year, Bisnis Indonesia reported, citing Sigit P. Djokoseotono, vice president for operations at the company.

Sigit did not disclose other terms of the IPO, like the price range and total proceeds from the planned offering.

Blue Bird Group, established in 1972, has taxi operations in major cities in Indonesia including Jakarta, Bali, Bandung, Banten, Lombok, Semarang, Surabaya, Yogyakarta, Medan, Manado and Palembang.

The company was established in a garage. Back then it was known as Chandra Taksi, a car rental service catering to journalists and other visitors to the country, according to its website.

The company currently operates combined fleets of 21,000 taxis. Its plans to add 10,000 more units next year.

Blue Bird operates regular and the premium taxi service Silver Bird. Silver Bird, which began operations in 1993, has a fleet of 900, the company said on its website. It operates Mercedes Benz C & E Class, Toyota Vellfire, Toyota Alphard and Toyota Camry Altise models.

Blue Bird is jumping onto the bandwagon after Express Transindo Utama made a stellar debut in its IPO early this month. Express, Blue Bird’s main competitor, expects to boost its fleets to 15,000 units within the next three to four years. It currently has 8,035 taxi units.

Express raised Rp 588.7 billion ($6 million) from selling 49 percent of its stake in an IPO in late October.

Express’s IPO and Blue Bird Group’s next year would help the management of the Indonesia Stock Exchange (IDX) to meet its IPO target. The Jakarta bourse expects a 20 percent rise in initial public offerings next year, with more companies poised to tap funds from the equity market.

Ito Warsito, the exchange’s president director, said in October that the IDX aims to have 30 initial public offerings in 2013, up from 25 this year.

Hoesen, a listing director at IDX, also said last month that this year’s IPOs are expected to raise a combined total of Rp 10 trillion. The estimated value is much lower than the total Rp 19.6 trillion from 24 IPOs in 2011.

The exchange is home to 458 listed companies with a combined market capitalization of Rp 4,100 trillion ($426 billion).

The Jakarta Composite Index, the benchmark stock measure, has gained around 14 percent so far this year. Foreign investors account for about 40 percent of daily trading so far this year.


Philex

 Philex Mining Corp. was honored with the best mining forest award in this year’s annual National Mine Safety and Environment Conference here.

The company did not win the mines safety award as it had in the past, having been automatically disqualified because of the accident, said Rodolfo Saguid, Philex department manager for environment quality monitoring and enhancement at the company’s Padcal mine in Itogon, Benguet, where the spill took place.

“We want to show that mining is not only all about extraction but is also for environmental protection. We do programs on reforestation and water and air quality monitoring. While it is true that something happened, we are doing all we can to mitigate it,” Saguid said.

Since 1987, the company has been planting pine trees in more than 2,000 hectares of its Padcal mine property, which straddles the towns of Tuba and Itogon, Saguid said. Philex has planted eight million saplings.

But Vergel Aniceto, a member of party-list group Katribu and spokesperson of the Benguet Mining Alert Action Network (BMAAN), did not find Philex deserving of the award.

“We have to clarify that we are not against mining but we are against destructive mining,” said Aniceto. “In the Philippines, the extraction of minerals has always been destructive to the environment.”

Sen. Allan Peter Cayetano, the conference’s keynote speaker, reminded the industry that it should not let public opinion perceive it to be “the bad guy.”

“If you allow yourself to be cast as the bad guy, you’ve lost already,” Cayetano told the country’s top mining executives on Thursday. “Imagine the power and muscle of the mineral resources in the Philippines. But why is [the industry that harnesses these resources] being bullied? Because you are focused on your work in the community … Many things that the government wants you to do—like corporate social responsibility—you are already doing. The problem is it’s not in the news.”

In his speech, Cayetano said the mining industry needed to properly express to the people that it balances the extraction of minerals with activities that help sustain the environment.

“It’s OK to be antimining if it is inherently wrong. [But] prove it to me. If you are antimining, stop using products brought about by mining such as computers and cellular phones,” he said.



Shayne Heffernan Ph.D.  
 
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
Sales@Heffcap.com
 
Singapore
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email : info@heffcap.com
 
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Suite 53 Athenee Tower
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THAILAND Email : info@heffcap.com
 
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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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