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ASEAN STOCK WATCH Asean Affairs  8 November 2012

ASEAN Market Preview

The people gave Obama support for 4 more years and sent the Wall St financial markets in to shock. Dodd Frank, Volcker Rules and increased taxes paniced local and foriegn investors a like.

Wall St Tanked, and it is not over yet, the good news for us in Asia is that we are set to see an influx of investment from companies and individuals moving business and investments out of the USA.

Tokyo was 0.11 percent down by the break, Hong Kong edged down 0.55 percent, Sydney climbed 0.35 percent, Shanghai fell 0.20 percent and Seoul eased 0.10 percent.

Chinese consumers' confidence stabilized in the third quarter, due to lower inflation across all categories and double-digit disposable income growth in both urban and rural regions, research from Nielsen showed on Tuesday.
The quarterly consumer confidence index rose by 1 percentage point to 106 in the third quarter - 14 points ahead of the global average, according to Nielsen's survey. The index dropped to 105 in the second quarter, from 110 in the first quarter.
Less concern over inflation in the last quarter drove up confidence among consumers in first-tier cities, which posted a 10-point gain in willingness to spend in 2013.
United Overseas Bank, the smallest of Singapore's three banking groups, on Wednesday posted an almost 36 percent rise in third-quarter net profit, helped by strong fee and commission income and trading gains.

UOB earned S$707 million ($577.52 million) in the three months ended in September, compared to S$522 million a year earlier. The results beat the S$652 million average estimate of five analysts polled by Thomson Reuters.

The Singapore bank said net interest income in the third quarter grew 6.1 percent to S$971 million from a year earlier even though interest rate margins were weak. Trading and investment income tripled to S$173 million.

Ayala-led Globe Telecom is moving to acquire an equity stake in financially distressed Bayan Telecommunications in a bid to improve its position in the industry dominated by Philippine Long Distance Telephone Co.

In a disclosure on Tuesday, Globe said it has obtained internal approval for the acquisition of all financial obligations of Bayan, which is under corporate rehabilitation.

In separate discussions, Globe said it had reached deals with Bayan’s controlling shareholders, ABS-CBN’s Lopez family, for the acquisition of an equity stake in the company.

The planned transactions come after a recent co-use deal for radio frequencies between Globe and Bayan that allowed both firms to expand their market reach.
“Potentially combining Globe’s assets and capabilities with [Bayan] through collaborative business efforts will enable both companies to become more competitive and help accelerate the completion of Bayan’s rehabilitation,” Globe said in a statement.

Globe said it was in discussions with the Lopez group on the “price and other conditions under which the acquisition may be effected.”

The acquisition of Bayan’s obligations will involve a tender offer to purchase for cash any and all of the 13.5-percent senior notes originally due last 2006 issued by Bayan. The tender offer will push through only if creditors holding at least 70 percent of the debt agree to sell their holdings to Globe.

If the tender offer succeeds, Globe will become the major creditor of Bayan and will perform a role similar to Bayan’s creditors in respect to its rehabilitation plan, including representation in the monitoring committee.

The National Telecommunications Commission (NTC) recently approved Globe’s application for the joint use by Globe and Bayan of the frequencies 1750-1760MHz/1845-1855MHz assigned to the Lopez telecommunication firm.

The joint-use agreement will allow Globe to address increasing demand for voice, SMS and mobile data services and allow Bayan to offer its mobile telecommunications services to customers.

“Our long-term collaboration with Bayan is a strategic initiative that will enable Bayan to unlock and maximize the potential of its key business assets and capabilities,” Globe chief financial officer Albert de Larrazabal said. “I believe this is consistent with the objectives of the NTC and is in the best interests of Bayan’s stakeholders and customers.”

Dominant carrier Smart Communications earlier opposed the frequency co-use deal between Bayan and Globe. Smart, the mobile unit of PLDT, said the NTC should have recalled the Bayan frequencies instead of approving their use by Globe.

Commenting separately on Globe’s possible entry into Bayan, PLDT chairman Manuel V. Pangilinan said the transaction was expected to increase competition in the industry already struggling to keep profit margins up.

He said he expected Globe to end up with a controlling stake in Bayan and that the partnership between the Ayala group, Globe’s controlling shareholders, and the Lopezes, would likely expand to other businesses. “But this is all just speculation on my part,” Pangilinan said.

SapuraKencana Petroleum Bhd shares have hit an all-time high, closing 17 sen higher at RM2.88, following news it is taking over Seadrill Ltd’s tender rig business for an enterprise value of US$2.9bil or RM8.9bil.
The latest development is poised to help the oil and gas outfit be a major global company in this particular segment.
The counter, which reached an intra-day high of RM2.93, was among the top three gainers and most actively traded yesterday with 46.9 million shares changing hands.
Research houses responded positively to the development and a majority have revised SapuraKencana’s target price upwards.
Kenanga Research was pleasantly surprised with the news given that it expected any large acquisitions to be only after SapuraKencana received the delivery of its ongoing newbuilds.
“We are positive on the acquisition as it will strengthen its dominance on the engineering, procurement, construction, installation and commissioning market.
“We estimate that the exercise could be financed on a 57:43 debt-to-equity structure.
“Based on our assumptions, a financial year 2014 ending Jan 31 net profit accretion of 58% is on the cards for SapuraKencana.
“The proposed acquisition is still subject to due diligence and approval from clients of the rigs, and as such, there could still be changes to the financing structure of the exercise.
“Based on an implied targeted price-to-earnings ratio (PER) of 23.7 times, we are tactically raising our target price on the stock to RM3.42 from previously RM2.90,” said the reseach house that mainted an outperform call on the stock.
On Monday, SapuraKencana announced that it had entered into a non-binding memorandum of understanding to acquire Seadrill Ltd’s tender rig business for an enterprise value of US$2.9bil to be satisfied by a mix of shares and cash.

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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