ASEAN KEY DESTINATIONS
What to Own in ASEAN this Week
ASEAN Exchanges are at all time highs and this week will see them focused on Wall St News and the Currency War between the USA and China.
If you are buying in ASEAN this week stick to quality stocks that still have room for growth.
ASEAN Best Buys PTT,
PTT Plc, Thailand’s largest oil conglomerate, will speed up its overseas investment plans thanks to the baht appreciation, according to Tevin Vongvanich, the firm’s chief financial officer.
The new five-year investment plan covers this year through 2014, with funds of Bt50-60 billion.
PTT will invest more in producing liquefied natural gas (LNG) next year, and will expand its coal production capability, as there is a high level of coal reserves, and coal usually lasts longer than oil and natural gas, according to Mr Tevin.
He added that the conglomerate is currently preparing for the expanded investment schedule and will negotiate on a project-by-project basis with countries of its interest–Indonesia, Australia, Nigeria, Qatar, Papua New Guinea, and Timor-Leste (East Timor).
In addition PTT will invest in power production in Thailand’s neighbouring countries in order to convey power back for sale at home.
Initially, it will collaborate with EGAT International, subsidiary of the Electricity Generating Authority of Thailand (EGAT), with an investment plan for 2011 in Lao PDR and Myanmar. Mr Tevin said such business will help strengthen PTT’s business stability.
“PTT is ready to comply with the government’s policy that supports state enterprises to take the opportunity when the baht is strong to invest overseas,” said Mr Tevin.
He added it is a good time for state enterprises and the private sector to expand their business abroad, including importing machinery and other tools and equipment so as to lower their costs in managing their businesses.
“Our company continously expands our business, which covers construction and maintainance matters,” Mr Tevin said.
PTT will also sell debentures of Bt10 billion for periods of four and seven years by the end of this month.
Twenty per cent of the debentures will be sold to small investors through financial institutions, while the rest will go to PTT shareholders.
Shayne Heffernan has issued a strong buy rating on Bursa Malaysia listed WCT Berhad.
WCT Berhad is a Malaysia-based company engaged in the provision of engineering services.
The stock Closed at RM3.20 on Friday and the Shayne Heffernan price traget it RM7.20.
The Company operates in three segments: civil engineering and construction, which include civil engineering works specializing in earthworks, highway construction and related infrastructure works; property development, which include the development of residential and commercial properties, and property investment, which include holding of assets for capital appreciation and rental income.
Other activities include providing management services and investment holding. It has 12 direct subsidiaries, including WCT Construction Sdn. Bhd., WCT Land Sdn. Bhd., WCT Overseas Sdn. Bhd. WCT Equity Sdn. Bhd., WCT Offshore (L) Ltd. and WCT (S) Pte. Ltd.
Operations are carried out in Malaysia, Middle East, Mauritius, Vietnam and India.
PAID-UP CAPITAL (End January 2010)
Ordinary Shares of 778,049,880 at par of RM0.50 each.
Preference Shares of 36,942,177 at par of RM0.10 each.
Warrants of 139,374,777 at par at RM0.50 each
BURSA SECURITIES LISTING – MAIN MARKET
(A FBM100 Component Stock)
Market Capitalisation – RM2.0 Billion at RM2.60 per share.
Bloomberg Code – WCT MK
Reuters Code – WCT.KL
Category – Construction
Stock Number – 9679
Shares – Syariah-compliant Security approved by the Syariah Advisory Council (SAC) of the Securities Commission (See List of Syariah-compliant Securities)
LAST REPORTED (12 Months as at 31 Dec 2009)
Revenue (RM’000) – 4,666,602
Pretax Profit (RM’000) – 211,078
Profit After Tax (RM’000) – 147,098
Net Asset Per Share (RM) – 1.64
BOARD OF DIRECTORS
Dato’ Capt. Ahmad Sufian @ Qurnain bin Abdul Rashid (Independent Non-Executive Chairman)
Taing Kim Hwa (Managing Director)
Goh Chin Liong (Deputy Managing Director)
Choe Kai Keong (Executive Director)
Liang Kai Chong (Executive Director)
Loh Siew Choh (Executive Director)
Cheah Hon Kuen (Independent Non-Executive Director)
Choo Tak Woh (Independent Non-Executive Director)
WCT BHD has secured a contract from Malaysia Airports Holdings Bhd (MAHB) to develop the new low cost carrier terminal (KLIA2) integrated complex on build-operate-transfer concession.
WCT said on Friday, Oct 8 the concession is for 25 years and may be extended for a further 10 years upon expiry. The development of the complex would be undertaken by a special purpose vehicle (SPV) in which WCT and MAHB will hold 70:30 equity interest.
“The cost of the integrated complex is estimated at approximately RM486 million which the SPV will finance partly via internally generated funds and partly by bank borrowings. The construction of the Integrated Complex is expected to be completed by June 30, 2012,” it said.
Under the concession, WCT via the SPV will undertake the design, procurement, engineering, construction, completion, and thereafter, the operation, management and maintenance of the complex for the duration of the concession.
“As KLIA2 will be a dedicated terminal for low-cost carriers and in view of the expected increase in demand for low cost air travel, the prospects of the SPV are expected to be positive,” said WCT.
The integrated complex comprises of a transportation hub for taxis and buses; one building with net lettable area of approximately 437,000 sq ft and car parks with up to 6,000 parking bays.
Ebeling Heffernan Strong Buy Genting Malaysia Bhd has secured the relevant consent from the acquiree group’s creditors for the proposed acquisition of casino businesses in Britain from sister company Genting Singapore plc.
Shayne Heffernan maintains a 20RM price target on Genting Malaysia and has said that Genting will be the largest Casino operator in the world by 2020.
It told Bursa Malaysia yesterday that all conditions precedent of the proposed acquisition had been met and was now unconditional. Genting Malaysia is acquiring Genting Singapore PLC’s casino operations in Britain for £340mil (RM1.67bil) cash.
In an earlier statement, the company said the acquisition was in line with its strategy of growing its core businesses – leisure, hospitality and entertainment – internationally.
Yangzijiang Shipbuilding (Holdings) Ltd, is one of the largest shipbuilding enterprise in China with Jiansu Yangzijiang Shipbuilding Ltd. and Jiangsu New Yangzi Shipbuilding Ltd. With a shipbuilding heritage stretching back to 1956, the company is the first shipbuilding enterprise in China to enter the stock market in Singapore, becoming one the Straits Times index stocks on the Singapore Exchange. The Company covers an area of 2.2 million M2 with a wharf line of 3,000m and employs over 10,000 staff and workers.
Olam is one of the Singapore Stock Exchage’s top 40 listed companies, although until five years ago it was registered in London after starting out as a cashew trader in Nigeria in 1989.
It now boasts global leadership in many of its business fields, including cocoa, coffee, cashew, peanuts, sesame, rice, cotton and wood products.
It supplies agricultural products and food ingredients to about 11,000 customers, sourcing 20 commodities direct from farmers.
The Company is engaged in sourcing, processing, packaging and merchandising of agricultural products. Olam operates in 20 agricultural product categories across 60 countries. It organizes the products that it supplies into four segments: edible nuts, spices and beans, which includes cashews, peanuts, almonds, spices and dehydrates, sesame and beans, including pulses; confectionery and beverage ingredients, which includes cocoa, coffee and sheanuts; industrial raw materials, which includes cotton wool, wood products and rubber, and food staples and packaged foods, which includes rice, sugar, wheat, barley, palm, dairy products and packaged foods.
In January 2010, it incorporated three subsidiaries: Pan Africa Agri Ltd, Dunavant Mocambique Limitada and Olam Algodao Vale De Zambeze. In May 2010, the Company incorporated a subsidiary, Outspan Mexico SA de CV.
Last week Olam continued its growth charge snapping up about 70 per cent of New Zealand Farming Systems Uraguay (NZFSU) as part of a full takeover move.
The 16-farm South American venture covering 30,000 hectares has established NZ-style dairies, with a further 49 farm conversions on NZFSU’s drawing board.
NZFSU lost about $NZ38 million in the past two years after big land acquisition costs weighed heavily on its cash flows, but Olam has paid about $103m for its current stake in the operation and is set to launch an additional capital raising.
A year ago Olam bought a further 8000 hectares of almond plantation investments in Australia from the struggling Timbercorp managed investment scheme business.
Its other international assets range from coffee plantations in Laos, to a rice business in Thailand, wheat and sugar mills in Africa, and the US vegetable dehydrator, Gilroy Foods, acquired in July.
Gilroy is North America’s largest processor of onions, garlic, and capsicums for the soup and food ingredients industries.
Olam International Limited (“Olam”) announced during the week that its takeover offer (“Offer”) for NZ Farming Systems Uruguay Limited (“NZFSU”) has successfully closed on 24 September 2010.
Olam received acceptances representing 59.53% and now owns 190,452,137 Shares, representing 77.98% in the capital of NZFSU.
Following the completion of the Offer, NZFSU is now a subsidiary of Olam.
The total consideration paid by Olam for the additional 59.53% of NZFSU Shares from the Offer was NZ$101.8m. The Offer brings Olam’s total investment in NZFSU to NZ$120.3m, including the purchase of the initial shareholding.
It is a tough call this week, Investors face a mixed bag of news and earnings and the Exchanges are already at 2 year highs said Shayne Heffernan of Ebeling Heffernan. Best buys for Monday are BAC, C and JPM
The news schedule that matters is:
Monday: Government data on industrial production and capacity utilization for September are due before the market opens.
After the opening bell, the National Association of Homebuilders is scheduled to release its housing market index for October.
Companies reporting quarterly financial results early Monday include Citigroup (C, Fortune 500), while Apple (AAPL, Fortune 500) and IBM (IBM, Fortune 500) are up after the closing bell.
Tuesday: A report on September housing starts and building permits comes out in the morning.
Economists expect 575,000 homes broke ground in the month, down from 598,000 in August. Building permits are expected to dip to 565,000 from 569,000, according to consensus estimates from Briefing.com.
In the morning, Bank of America (BAC, Fortune 500), Coca-Cola (KO, Fortune 500), Goldman Sachs (GS, Fortune 500) and Johnson & Johnson (JNJ, Fortune 500) are schedueld to release quarterly financial statements.
Yahoo’s (YHOO, Fortune 500) results come out after the market closes.
Wednesday: The Federal Reserve will release its Beige Book report on economic conditions across the central bank’s 12 districts in the afternoon.
Results are due from Boeing, (BA, Fortune 500) Morgan Stanley (MS, Fortune 500) and Wells Fargo (WFC, Fortune 500) before the open.
Thursday: Reports on initial jobless claims, leading economic indicators and regional manufacturing activity are all on the agenda.
In addition, AT&T (T, Fortune 500), Caterpillar (CAT, Fortune 500), McDonald’s (MCD, Fortune 500) and UPS (UPS, Fortune 500) are scheduled to report results early Thursday.
Amazon (AMZN, Fortune 500) and American Express (AXP, Fortune 500) are up after the close.
Friday: There are no economic reports on the calendar, but Honeywell (HON, Fortune 500), Schlumberger (SLB) and Verizon (VZ, Fortune 500) are scheduled to report results.
On Monday at open Shayne Heffernan has said Banks are trading at a huge discount, they may take some time to bounce back but they will return to 2007 levels in 2011.
APPL may further lift the Nasdaq, if futures are lower Monday they are worth a fast trade to exit after the AAPL news.
ASEAN ETFs in New York
Here is what Ebeling Heffernan feel are the best ASEAN ETFs
iShares MSCI Malaysia Index Fund (EWM)
The Malaysia ETF is well diversified, especially for an emerging market. Four sectors account for more than 10% of total assets, and consumer goods and services receive a significant allocation. EWM is very light on energy firms, as well as health care and technology names, which combine to make up less than 1% of the total fund assets.
iShares MSCI Indonesia Investable Market Index Fund (EIDO)
EIDO is a new fund which seeks to track the MSCI Indonesia Investable Market Index, a free-float adjusted market capitalization weighted benchmark designed to measure the performance of equity securities in the top 99% by market capitalization of equity securities listed on stock exchanges in Indonesia.
iShares MSCI Singapore Index Fund (EWS)
As the most developed market in ASEAN, EWS suffered more than most from issues in Europe. The fund is well down over the past four weeks and it has seen it become the worst among ASEAN ETFs, however a US market correction will see this one leap forward. EWS is heavily focused on the finance sector which makes up just more than half of the fund’s total assets. EWS holds about 31 stocks, so it is not surprising to see that roughly 70% of EWS is concentrated in its top 10 holdings.
Market Vectors Indonesia Index ETF (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. IDX is up 6.8% thus far in 2010 despite a 10% loss over the past month.
iShares MSCI Thailand Index Fund (THD)
Despite relentless protests from the “Red Shirts” and ensuing violence in Bangkok, THD has held up surprisingly well in recent weeks.THD is more typical of an emerging market ETF, depending heavily on two sectors to make up slightly more than two-thirds of its total assets: financials and energy. THD focuses on large and giant cap corporations which make up 62% of its total assets compared to just 6% for small and micro cap securities.
Market Vectors Vietnam ETF (VNM)
Vietnam has been one of the worst performing countries in the Southeast Asian area. VNM only holds 32 companies and is highly focused on three sectors which make up almost 65% of the fund’s total assets; financials, energy, and industrial materials. This is achieved by tracking the Market Vectors Vietnam Index, which provides exposure to publicly traded companies that, predominantly, are domiciled and primarily listed in Vietnam and which generate at least 50% of their revenues from Vietnam.