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ASEAN STOCK WATCH 29  October  2010

ASEAN Markets Bound for Inflows

Shayne Heffernan

ASEAN Markets look set for another day of gains and record breaking after Wall St bounced off lows to recover near the close in a show of strength. ASEAN will see an uptick in inflows over the next few weeks adding some pressure to exchange rates across the region, however as the destination of these inflows will be the regional exchanges valuations will move to new record levels.

Best Buys today PTTEP, AYALA, Arpeni, CIMB, IVL, PTT

In Wall St News new claims for unemployment benefits fell unexpectedly in the latest week, and this more encouraging reading on the labor market, along with the weak dollar, gave stocks an early boost.

Dow Jones 11,109.71 -16.57 (-0.15%)

S&P 500 1,183.67 +1.22 (0.10%)

Nasdaq 2,507.37 +4.11 (0.16%)

SET index closed at 987.23, up 3.27 or 0.33% in trade worth 28.28 million baht on Thursday.

Gross domestic product (GDP) growth in the third quarter of the year is projected at 7.4 per cent on the back of the expansion in exports, domestic consumption and private investment, director of Bureau of Macroeconomic Policy at the Fiscal Policy Office Boonchai Charassangsomboon said on Thursday.

Mr Boonchai forecast that the economy would grow by 7.3 per cent this year, in line with the office’s previous projection.

He said the impacts of the baht’s appreciation and the current floods had been taken into account in the forecasting process.

The strengthening baht would affect economic growth by 0.1 per cent, while the estimated total flood-related damage of about 22 billion baht would trim GDP growth by 0.2 per cent, said Mr Boonchai.

Stocks with most active value were as follows:

ADVANC decreased to 90.25 baht, down 1.25 baht or 1.37%.

PTT increased to 302.00 baht, up 2.00 baht or 0.67%.

STEC increased to 13.80 baht, up 0.40 baht or 2.99%.

BANPU increased to 784.00 baht, up 6.00 baht or 0.77%.

PTTEP increased to 171.00 baht, up 2.50 baht or 1.48%.

Ebeling Heffernan Strong Buy, PTT Exploration and Production Plc (PTTEP) said its net profit in the third quarter doubled to 10.53 billion baht from a year earlier on higher oil prices.

Shayne Heffernan of Ebeling Heffernan has issued a strong buy on PTT Exploration and Production Pcl PTTEP with a 310Baht price target in 2011 the stock is trading at 170Baht at the time of issue.

PTTEP increased to 171.00 baht, up 2.50 baht or 1.48%

The upstream unit of the national oil conglomerate PTT saw promising sales and net profit in the quarter, said Anon Sirisaengtaksin, president and CEO.

“Although the baht appreciated by 8% on average during the period to 31.96 baht from 34.31 a year earlier, rising sales volume and global oil prices more than offset those losses,” said Mr Anon.

Sales in the third quarter rose 26% year-on-year to 38.9 billion baht from 30.77 billion, with net profit doubling to 10.53 billion baht from 5.26 billion.

For the first nine months, sales rose 29% to 111.17 billion baht. Consolidated net profit was 31.62 billion baht (9.54 baht a share), an increase of 80.7% from 17.5 billion (5.29 baht a share).

Its sales volume in the third quarter rose 15% to 262,000 barrels of oil equivalent per day (boed) from 228,314 boed, with additional production of gas and condensate in the Malaysia-Thailand Joint Development Area Block B17, the North Arthit and Bongkot fields.

Average selling prices rose 28% to US$44.37 a barrel in the nine-month period from $34.58 a year earlier.

PTTEP also gained 1.37 billion baht from insurance claims from the accident in its Montara gas field in Australia.

“We have mitigated our risk with the strengthening baht by hedging oil prices,” added Mr Anon.

In the third quarter, PTTEP hedged petroleum products using Brent crude as a reference. The contract from July to December covered 1.11 million barrels at a guaranteed price range between $72 and $101.20 per barrel.

PTTEP has completed a feasibility and conceptual study at Montara and expects to resume production in the second half of 2011. Reconstruction of the topside production platform will start in February to replace the one damaged by the fire.

The company now has 42 oil and gas projects worldwide, and plans to spend 429 billion baht between 2010 and 2014 to increase output.

“We sense that the firm is likely to start investing in unconventional oil projects, such as a floating LNG facility in Australia, oil sands in Canada or heavy oil in Latin America, due to the increasing scarcity of conventional oil reserves,” Bualuang Securities said last week.

Next year PTTEP expects to build a production facility for floating liquefied natural gas (FLNG) in Montara to import LNG for Thailand’s power market.

PTTEP shares closed yesterday on the SET at 168.50 baht, down 2.50 baht.

There is record demand for initial public offerings in Asia, companies from China to Malaysia and India are coming to market with more equity than ever.

Heffernan Holdings is expanding operations this month bringing to the team some of Asia’s best and brightest from UOB, Ayudhya and Kasikorn as they set about building and international team to manage the financial needs of corporations in the region.

Currently the Heffernan Holdings extended group of companies is covering 2 US IPO’s, 3 restructures, 2 Take Overs, and has a number of IPO’s lined up for 2011. Also coming to market are, a global trading platform and an extension of Asian based financial services.

And the market is growing, Jiangsu Rongsheng Heavy Industry Group Co., Petronas Chemicals Group Bhd. and QR National Ltd. are preparing to sell more than $10 billion of shares as soon as next month, adding to the $134 billion raised in 2010. Hong Kong’s AIA Group Ltd. and Coal India Ltd. raised almost the same amount this month as all U.S. deals this year as the share of American IPOs dwindled to 11 percent.

Investors are paying 24 times next year’s profits, twice the average for U.S. equities, because revenues for newly listed Asian companies are forecast to increase five times as much.

IPOs in India are on pace to eclipse the all-time high of $8.2 billion in 2007, led by Kolkata-based Coal India’s record sale this month. The government raised $3.4 billion after investors bid for more than 15 times the shares available.

Asian economies will expand 6.6 percent next year, according to the Washington-based International Monetary Fund. In the U.S., where at least 54 companies have postponed or withdrawn IPOs this year, economic growth will slow to 2.3 percent in 2011, IMF estimates show.

The shares prices in Singapore rose 5.12 points or 0.16 percent on Thursday with the benchmark Straits Times Index ( STI) closing at 3,129.5 points.

The overall volume stood at 3.28 billion shares worth 1.95 billion Singapore dollars (about 1.5 billion U.S. dollars).

Sabana REIT, is thinking big.

The company announced it plans to raise about 600 million Singapore dollars (US $459 million) in an initial public offering on the Singapore Stock Exchange, according to The Wall Street Journal.

If successful, this would be the first Shariah-Compliant listing in Singapore.

Once floated, Sabana REIT is expected to be the largest certified Shariah-compliant REIT in the world, financial sources in Singapore tell the WSJ.

Singapore has been pushing the development of Islamic finance in the city-state, encouraging companies to offer a range of Shariah-compliant products such as bonds and other investments, including REITs.

Shariah REITs only differ from conventional REITs in the type of assets held by the trust.

Sabana REIT’s initial portfolio will comprise properties in Singapore that have no connection to activities such as gambling or to products such as alcohol or pork, the WSJ reports.

The REIT plans to acquire a portfolio of properties valued at about 850 million Singapore dollars (US $650 million). The company already has received a conditional eligibility-to-list letter from the Singapore Exchange.

Office buildings with warehouses, logistics warehouses and chemical warehouses may form part of its holdings.

HSBC, United Overseas Bank and Daiwa Capital Markets are advising Sabana on the deal. HSBC is also the sole financial adviser.

Sabana’s logistics business, Freight Links Express Holdings Ltd., said it plans a $192.95 million sale in Singapore dollars, and lease-back of five properties to its unit Sabana Investment Partners, which own Sabana REIT.

Freight Links, through its 51% shareholding equity interest in Sabana Investment Partners, said it will participate in Sabana REIT’s IPO.

An international consortium backed by the Singapore government Thursday launched ten research projects to develop technology for “next-generation” vehicles.

The Capabilities for Automotive Research 11-member consortium, which includes industry heavyweights such as German smart phone chipmaker Infineon, will work on areas such as anti-collision steering systems and wireless charging of electronic cars.

“The automotive sector today faces many challenges and therefore presents many opportunities,” said Lim Chuan Poh, the chairman of state-backed Agency for Science, Technology and Research.

“The car of the future has to be increasingly intelligent and connected,” he said, adding the consortium’s work aims to “solve these increasingly complex and multi-disciplinary problems as well as to testbed some of these solutions.”

Toyota Tsusho, part of Japanese auto giant Toyota, is also a member of the group and will be providing technical expertise on installing batteries that can be wireless charged onto a golf buggy-shaped car.

he proposed merger between the Singapore Stock Exchange (SGX) and the Australian Stock Exchange (ASX) will not affect the performance and competitiveness of Bursa Malaysia.

In Manila, the Philippine Stock Exchange index fell by 24.38 points or 0.57 percent to 4,260.69.

The exchange was held lower on mining/oil and industrial stocks of 1.95 percent and 1.54 percent, respectively. The financial and services counters also traded in the red.

There were only five advancers for every nine decliners. Value turnover amounted to P5.59 billion.

The Losers Cebu Air Inc., Banco de Oro Unibank Inc., First Philippine Holdings Corp., Atlas Consolidated Mining & Development Corp., Metropolitan Bank & Trust Co., Aboitiz Power Corp., SM Prime Holdings Inc., Energy Development Corp., Philippine Long Distance Telephone Co., Philex Mining Corp., and Alliance Global Group Inc.

The Winners: JG Summit Holdings Inc., Ayala Land Inc., DMCI Holdings Inc., Metro Pacific Investments Corp., Bank of the Philippine Islands, Philippine National Bank, International Container Terminal Services Inc., SM Investments Corp. and Semirara Mining Corp.

In Kuala Lumpur, the Bursa Malaysia rose 0.02% to close at 1499.44 after breaking 1500 intraday.

The market traded within a range of 6.02 points between an intra-day high of 1501.57 and a low of 1495.55 during the session.

Actively traded stocks include KBUNAI, SAAG, HWGB, JOTECH, HWGB-WB, JADI-WA, MKLAND, JADI, CIMB and AXIATA.

The Winners were AMMB (+10 sen to RM6.29), CIMB (+4 sen to RM8.19), TNB (+4 sen to RM8.87), Ebeling Heffernan Strong Buy DIGI (+20 sen to RM25.20) and MAXIS (+5 sen to RM5.30).

The Losers were GENM (-10 sen to RM3.40), GENTING (-8 sen to RM10.28), MISC (-9 sen to RM8.67), MAS (-7 sen to RM2.23) and AXIATA (-1 sen to RM4.42). Market breadth was negative with 350 gainers as compared to 427 losers.

The Finance Index added 0.25% to 13646.23 points, the Properties Index eased 0.15% to 981.27 points and the Plantation Index fell 0.18% to 7588.53 points.

Trading volume declined to 1137.31 mil shares worth RM1634.77 mil as compared to Wednesday’s 1169.58 mil shares worth RM1636.53 mil.

In Jakarta the Index managed to post gains on Thursday, rising 14.36 points, or 0.4 percent, to close at 3,638.83.

Jakarta Stocks look set to manage a 3.9 percent rally in October, its fifth monthly gain.

About 5.7 billion shares worth Rp 4.9 trillion ($541.9 million) changed hands. Gainers outnumbered decliners 149 to 71.

Arpeni Ocean Pratama, the nation’s second-largest shipping company by assets, surged 34 percent to Rp 145, the steepest increase since its June 2005 trading debut.

The day before, an Indonesian court rejected a bankruptcy petition filed by Korea Securities Finance Corp. against the Arpeni.

The stock resumed trading on Thursday after a suspension dating back to Sept. 20.

Astra Agro Lestari, Indonesia’s biggest listed plantation company, declined 1.4 percent to Rp 25,450. It said its nine-month net income had slid to Rp 1.228 trillion from Rp 1.248 trillion a year earlier.

Cigarette-maker Bentoel Internasional Investama rose 6.3 percent to Rp 840, its biggest increase since Sept. 28.

Bentoel said it swung to nine-month net income of Rp 212.9 billion from a loss of Rp 19 billion a year earlier.

Medco Energi Internasional, the nation’s largest listed oil company, advanced 4.4 percent to Rp 4,125.

Raden Priyono, head of the nation’s oil and gas regulator BPMigas, said the government plans to grant a 20-year contract extension today for Medco to operate a gas block in Aceh.

The rupiah weakened to its lowest level in more than a month on concern the central bank would cap appreciation to protect exporters. The currency fell for a third day, its longest losing streak in three weeks.

The rupiah dropped 0.1 percent to 8,938 against the dollar as of the stock market’s close. It earlier reached 8,965, its lowest level since Sept. 24.

Bank Indonesia sees the rupiah’s fundamental level at 8,900 to 9,300 against the dollar, Governor Darmin Nasution said on Wednesday.

The overriding factor for the firmer dollar is that the market is scaling back on expectations of the size of the next quantitative monetary easing from the Fed, said Joanna Tan, a regional economist at Forecast Singapore.

She said BI would probably protect the 8,900 level, but if the rupiah stayed within 8,900 to 9,300, it may not intervene too aggressively.

The rupiah has gained 5 percent this year and touched 8,896 on Tuesday, the strongest since June 2007.


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