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ASEAN STOCK WATCH 9  October  2010

Asean Markets Weekly Summary

Shayne Heffernan

In Singapore the Straits Times Index at 3,153.34, down 0.42 per cent, or 13.31 points.

China’s XinRen Aluminum Holdings plans to raise as much as S$205 million ($157 million) by selling 24 percent of its enlarged share capital in a Singapore initial public offering, according to a term sheet seen by Reuters.

It has set an indicative price of between S$0.54 to S$0.78 a share and is offering 263 million shares to investors, the term sheet said.

Norway-listed marine oil storage and production vessel operator BW Offshore (BWO.OL) said on Friday the dual listing of its shares on the Singapore Exchange is expected in the first half of 2011.

“We expect that to happen within the first half of the year (2011),” Carl Arnet, chief executive of BW Offshore, told reporters when asked about the timeframe of the listing.

He also said the firm, part of the BW Group, has picked Norway’s DnB NOR (DNBNOR.OL) as its primary banker for the planned listing and may name more banks to assist the firm at a later date.

About 1.81 billion shares exchanged hands.

Losers beat gainers 244 to 221.

In Kuala Lumpur the Bursa Malaysia ended flat at 1481.41 points on Friday.

The Finance Index fell 0.01 percent to 13497.63 points, the Properties Index climbed 0.66 percent to 946.72 points and the Plantation Index rose 0.13 percent to 6920.71 points.

The market traded within a range of 5.17 points between an intra-day high of 1484.48 and a low of 1479.31 during the session.

Actively traded stocks include KBUNAI, TALAM, MALTON, DIALOG, CIMB, TIME, HWGB, SAAG, ASIAPAC and AXIATA. Trading volume increased to 1075.15 mil shares worth RM1657.25 mil as compared to Thursday’s 841.88 mil shares worth RM1523.02 mil.

Lagging Movers were TNB (-6 sen to RM8.86), MISC (-8 sen to RM8.69), BAT (-94 sen to RM49.00), CIMB (-2 sen to RM8.17) and MAXIS (-4 sen to RM5.32).

Leading Movers were AXIATA ( 7 sen to RM4.57), GENTING ( 6 sen to RM10.26), SIME ( 3 sen to RM8.59), PUBLIC BANK ( 2 sen to RM12.58) and PPB ( 10 sen to RM17.50). Market breadth was positive with 397 gainers as compared to 332 losers.

Integrated petrochemicals producer Petronas Chemical Group Bhd will not likely sell its shares at RM5 or above a piece under its initial share sale, as the company’s future price/earnings (PE) multiple is expected to be in its lower teens, said analysts.

An analyst with a local brokerage said the suggested price of RM5 per share was on the higher range and that the company would probably consider pricing its shares below RM5 each.

On Thursday, a local business daily cited sources as saying that Petronas Chemical would tentatively price its shares at RM5 a piece and could potentially raise in excess of US$3bil (RM9.2bil) if the shares were priced between RM5.20 and RM5.60.

The report went on to say that the price would be revised, depending on the outcome of an investor roadshow next month.

“An estimated PE multiple for Petronas Chemical is 13 times,” said the analyst, who declined to be named.

The analyst added that the offer price for the share would probably reflect a lower PE multiple of 10 to 11 times.

While its Thai peer PTT Chemical Pcl is currently trading at a PE multiple of 19.37 times due to the recent strengthening of its share price, another analyst said petrochemical companies usually trade in their mid teens.

Petronas Chemical is an umbrella company for Petroliam Nasional Bhd’s (Petronas) 22 petrochemical-related companies.

It has a total production capacity of over 11 million tonnes a year and operates mainly in Malaysia and the Asia-Pacific.

The group is mainly involved in manufacturing and selling a range of petrochemical products such as olefins, polymers, fertilisers, methanol, and other basic chemicals and derivative products.

For the financial year ended March 31 (FY10), Petronas Chemicals posted a 25% decline in net profit to RM2.59bil, after the cyclical nature of the industry, economic conditions and higher feedstock costs affected earnings.

With an authorised capital of 15 billion shares and paid-up capital of RM1.5bil, a back-of-the-envelope calculation would mean the company’s earnings per share (EPS) stood at 17 sen for FY10.

If analysts’ future PE estimates of mid-teen multiples are used as a guidance, this would place the proposed initial public offering (IPO) price well below RM5.

Petronas Chemical is the second Petronas-owned company to list on the Main Market following the scheduled listing of Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) at the end of this month.

MMHE expects to raise RM2bil from its IPO, the largest share sale in the country this year.

According to MMHE’s prospectus released on Wednesday, its retail price of RM3.61 per share represents a historical PE of 21.8 times at an EPS of 17 sen. This is based on its net profit of RM279.2mil for financial year ended March 31.

Petronas’ other listed companies, Petronas Dagangan Bhd, is trading at a PE multiple of 14.41 times while Petronas Gas Bhd is trading at a PE of 20.56 times.

SET index closed at 963.19, down 7.71 or 0.79% in trade worth 28.60 billion baht on Friday.

Central Department Store Co (CDS) is moving further into online shopping to expand its services to a wider customer group nationwide.

Mrs Yuwadee admires one of the floral displays set up to help Central celebrate its 63rd anniversary.

As well, the company plans to spend 500 million baht to stimulate sales in the peak retail period from October to December.

President Yuwadee Chirathivat said CDS would start providing services via from Oct 15. It has invested 50 million baht in the online venture.

Initially, the site will offer 5,000 products in eight categories including beauty, gifts, men’s and women’s clothing, watches, houseware, shoes and bags, and children’s goods. The target customers for online shopping are mainly people aged 25-34 years who are heavy internet users, as well as more affluent consumers in the 35-49 age range.

CDS will deliver products via the delivery service TNT without any charge for a minimum purchase of 5,000 baht.

The company expects to earn 350 million baht from online shopping next year.

Online shopping is expected to help broaden Central’s reach in the provinces. The company has 14 department stores but only four are outside Bangkok, in Hat Yai, Chiang Mai, Pattaya and Phuket.”We cannot open our services in all provinces even though they have huge demand,” said Mrs Yuwadee. “Online shopping will help us reach new customers upcountry in both big and small provinces.”

The company expects the site to have 1,800 unique visits per day, initially, rising to 3,000 by the end of this year and 5,000 by the end of next year.

“In the retail business, something exciting needs to be created every day,” she said. “Apart from online shopping, we will continue to create new things every year from store improvement and product merchandise, to store design and new services.”

To celebrate its 63rd anniversary, CDS is spending 120 million baht to stage the Central Anniversary Flower Extravaganza from Oct 28 to Nov 1 as well as on marketing and promotion campaigns from Oct 28 to Nov 14. The company expects at least 2 billion baht in sales from the 18-day event.

Sales of CDS are expected to reach 28 billion baht this year, up 4% from last year.

Stocks with most active value were as follows:

PTT increased to 302.00 baht, up 2.00 baht.

PTTEP decreased to 164.50 baht, down 2.00 baht.

BANPU decreased to 730.00 baht, down 10.00 baht.

CPF decreased to 23.50 baht, down 0.20 baht.

STA increased to 22.70 baht, up 0.70 baht.

In Jakarta the JCI lost 39.23 points, or 1.1 percent, to close at 3,546.95. About 6.4 billion shares worth Rp 5.42 trillion ($607 million) changed hands. Decliners outnumbered gainers 122 to 85.

The index closed just lower for the week, losing less than one point for its first weekly loss since the week that ended on Aug. 27.

As of Wednesday, the JCI has gained 17 percent over the previous five weeks, and set a record high on nine consecutive days before declining on Thursday.

Haryajid Ramelan, an analyst at Capital Bridge Indonesia, said the market needed a significant pullback in order to regain momentum for another push back into unprecedented heights toward the end of the year.

“It’s a fair correction for Indonesian stocks,” Haryajid said.

“This profit-taking action is temporary and will continue for some days ahead, to slow down stocks before they get ready for a better rally until the end of the year, when they will probably touch the 4,000 level.”

Among losers, the nation’s biggest nickel producer, International Nickel Indonesia, fell 1.5 percent to Rp 4,900. Timah, the largest tin producer, slid 1.5 percent.

Nickel for three-month delivery declined 3.6 percent to $23,900 a metric ton in London yesterday, the steepest drop since July 1. Tin futures, meanwhile, lost 2.5 percent to $25,600 a metric ton, falling from a record.

Coal miner Bumi Resources rose 3.4 percent. One of the firm’s directors, Dileep Srivastava, said one of its ventures was interested in buying a 7 percent stake in Newmont Mining’s local unit.

Indofood CBP Sukses Makmur, the country’s largest instant-noodle maker, dropped 4.2 percent on its second day of trading, as wheat futures for December delivery rose 0.2 percent on the Chicago Board of Trade on Thursday, when Indofood gained 10 percent in its first day of trading.

The rupiah slipped 0.1 percent this week to trade at Rp 8,933 against the dollar, as of the stock market close on Friday.

The rupiah appreciated 5.1 percent against the dollar this year as the yield premium offered on the nation’s assets and the expanding economy lured funds.

“The central bank has been active in the market, smoothing flows,” said Gundy Cahyadi, an economist at Singapore’s Oversea-Chinese Banking.

Lindawati Susanto, head of foreign-exchange trading at Bank Resona Perdania in Jakarta, said the central bank was “guarding the bid price in order to avoid the strengthening of the rupiah.

Indonesia’s foreign-exchange reserves climbed by $5.2 billion last month to a record $86.55 billion — the biggest increase since April, Bank Indonesia reported on Thursday.

Policymakers intervene by buying and selling currencies to influence exchange rates.

BI Governor Darmin Nasution said last month that a “stable rupiah was expected to damp pressure from higher commodity prices and pave the way toward lower inflation expectations.”

In Manila Philippine Stock Exchange index shed 8.07 points or 0.19 percent to close at 4,236.98.

The decline was led by the mining/oil and property counters, which tumbled by 2.26 percent and 1.8 percent, respectively. On the other hand, the industrial counter managed to rise by 1 percent.

Value turnover amounted to P5.74 billion. There were 56 advancers as against 77 decliners and 42 unchanged stocks.

Trading was mixed among actively traded stocks, with issues of SM Investments Corp., Universal Robina Corp., Aboitiz Power Corp., DMCI Holdings Inc., Semirara Mining Corp., JG Summit Holdings Inc., International Container Terminal Services Inc. and APC Group Inc. trading favorably.

On the other hand, there was profit-taking on shares of Philippine Long Distance Telephone Co., Megaworld Corp., Banco de Oro Unibank Inc., Alliance Global Group Inc., Metro Pacific Investments Corp., Philippine National Bank, Energy Development Corp., Lepanto Consolidated Mining “A,” Filinvest Land Inc., First Gen Corp., Atlas Consolidated Mining & Development Corp.

The lackluster trading at the local bourse reflected the similarly cautious trading across Asian markets, which were mostly jittery ahead of a key jobs report due in the U.S.

Sentiment was likewise sluggish on Wall Street as the Dow Jones Industrial Index lost 19.07 points or 0.17 percent to close at 10,948.58.


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