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ASEAN STOCK WATCH Asean Affairs  12 October 2012

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The Organization for Economic Cooperation and Development, which provides analysis and policy guidance for 34 countries, said that economic growth eased to a quarterly rate of 0.2 percent in the three months from April through June.

The first quarter rate was 0.4 percent, an OECD statement said.

“Private consumption, which contributed 0.1 percentage point to [gross domestic product] growth, compared with 0.3 percentage point in the previous quarter, was the main driver for the overall slowdown,”.

A breakdown of the data showed that the Canadian economy had expanded by 0.5 percent in the second quarter, the same rate as in the first three months of the year.

At the other end of the spectrum, Italian economic activity contracted by 0.8 percent in the second quarter, also the same rate as in the first.

Britain was the second-worst performer among the Group of Seven most industrialized economies, with a contraction of 0.4 percent in the second quarter, slightly worse than the 0.3 percent first quarter contraction.

Robinson Dept Store

Robinson Department Store Public Company Limited operates department stores under the name ‘‘Robinson’’. The Company currently has 25 branches around the country, comprising 9 branches in Bangkok and 16 provincial branches.

In 2Q12, overall Thai economy expanded well. This was mainly due to expansion of private consumption since 1Q12. The government's stimulus policies also supported domestic spending sentiment. Moreover, private investment and tourism sector grew well compared to last year.

Currently, the Company has operated 27 stores, comprising of 10 stores in greater Bangkok and 17 stores in upcountry. In 2Q12, the Company performance remained grow at decent level, both net sales and other income, as well as efficiency of cost management although the expenses increased due to store expansion expenses and increasing minimum wage policy. The net profit amounted to Baht 474 million, a 21.8% increase from the same period of last year. The details are as follows:


In 2Q12, the Company had total income of Baht 5,428 million, increasing by Baht 967 million or 21.7% from the same period of last year. The increase was the results of;

    Net sales was Bath 5,004 million, increasing by Baht 912 million or 22.3% from the same period of last year. This was a result of successful merchandising management strategy, which was to focus on offering products that meet customer needs. The Company also kept introducing new brands and new collections to customers. Moreover, the Company launched effective marketing activities and sales promotion to customers, particularly member customer to stimulate their spending, Consequently, the Company was able to maintain its strong same stores sales momentum from the previous quarter. Also, the new stores achieved their targeted sales.</li>
    Investment income amounted to Baht 281 million, increasing by Baht 35 million or 14.1% from the same period of last year mainly due to rental income from new stores.</li>
    Other income was Baht 143 million, an increase of Baht 20 million or 16.4% compared to the same period of last year. This was due to an increase in sales promotion income and income related to rental areas.</li>

Cost of Sales of Goods (COGS)

COGS was Bath 3,762 million, increase by Baht 671 million or 21.7% from the same period of last year. The COGS to sales decreased from 75.5% in 2Q11 to 75.2% in this quarter because of the efficiency of cost and promotion management. Hence, the Company's gross profit was Baht 1,242 million, increasing by Baht 241 million or 24.1% compared to the same period of last year.

Selling and Administrative Expenses (SG&amp;A)

SG&amp;A expenses totaled Baht 1,130 million, an increase of Baht 225 million or 24.9% from the same period of last year. This was primarily due to pre-opening expenses as well as selling and administrative expenses of the new stores. Moreover, this increase was also an impact of increasing minimum wage policy.

Share of Profit of Associates

The share of profit of associates was Baht 102 million, increasing by baht 17 million or 20.5% compared to the same period of last year. This good performance was from their store expansion and their profitability improved.

<strong>Net profit</strong>

The net profit totaled Bath 474 million,increasing by Baht 85 million or 21.8% from the same period of last year. The growth was due to success in business management and benefit from the corporate income tax reduction policy. Excluding the share of profit of associates, the net profit from core business would be Baht 372 million, increasing by Baht 67 million or 22.1% from the same period of last year.

Overview 1H12 Performance

The Company had net sales in the amount of Baht 10,075 million, increasing by Baht 1,880 million or 22.9% from the same period of last year. The net profit amounted to Baht 1,038 million, increasing by Baht 264 million or 34.1% from the same period of last year. This was a result of continued increasing sales from the existing stores and new store expansion, efficient cost management, improving performance of the associates, and benefit from the corporate income tax cut policy.

Financial Status (As of 30 June 2012 compared to 31 December 2011)


Asset amounted to Baht 14,250 million, a decrease of Baht 14 million or -0.1% from 31 December 2011 due to a decrease of Baht 1,068 million in cash and cash equivalents. However, the fixed assets related to the stores expansion increased by Baht 689 million. The investments in associates also increased by Baht 227 million.

Liabilities and Shareholders’ Equity

The total liabilities amounted to Baht 4,801 million, decreasing by Baht 394 million or -7.6% from the 31 December 2011. This was due to the payment to trade accounts payables and construction payables. Also, income tax payable decreased because of the corporate income tax reduction policy.

The shareholders' equity amounted to Baht 9,449 million, increasing by Baht 380 million or 4.2% from 31 December 2011 as a result of increasing in retained earnings due to net profit for the period.

Capital Structure

As of 30 June 2012, the Company’s capital comprised of total liabilities of Baht 4,801 million and total equity of Baht 9,449 million; therefore, the Company had liability to equity ratio equal to 0.5 times, decreasing from 0.6 in 31 December 2011 due to a decrease in trade accounts payables. Currently, the Company had no financial debts.

Expansion plan

In 2Q12, the Company launched one new store "Robinson Mega Bangna", which was the second new store in this year. In addition, the store expansion plan is on schedule. The Company expects to launch 5 new stores in 2012.

Mr Charoen was deemed to have an interest in 33.17 per cent of F&amp;N - up from 31.22 per cent - after a series of on-market and married transactions made last week.

Last week's share acquisitions had been carried out by TCC Assets Ltd, the vehicle through which Mr Charoen had made his $8.8 billion offer at $8.88 per share.

On Monday as well, M&amp;G Investment Management Ltd (MAGIM) - a fund manager that is ultimately held by Prudential Plc - reported a reduction in its deemed F&amp;N stake on the Singapore Exchange.

Through a series of open market transactions last Thursday, MAGIM's stake had been pared down from 5.2162 per cent to 4.4933 per cent - a reduction of about 10.3 million shares.

Late last month, the Thai consortium through which Mr Charoen holds his F&amp;N interests blocked F&amp;N's proposed capital reduction at a shareholders' meeting.

This capital reduction would have meant returning $4 billion of the $5.6 billion proceeds from the sale of the company's stake in Asia Pacific Breweries (APB) to shareholders.

At the same meeting, shareholders had voted overwhelmingly to sell F&amp;N's interests in APB to Heineken.

Last week, as Mr Charoen steadily built up his stake in F&amp;N on the open market, the group's share price stayed in line with his offer price. It closed unchanged yesterday at $8.88.

Alam Maritim

Alam Maritim Resources Bhd has secured a RM69.22mil contract to provide a workboat to a local oil and gas company.

It said on Thursday its unit Alam Maritim (M) Sdn Bhd had recently accepted the contract which was for a primary period of one year with an extension option for another year.

"The contract is for a value of up to RM69.22mil (if the client engages the workboat for the full duration, inclusive of the optional period)," it said.

Alam Maritim said the risks associated with the contract were mainly operational risks such as accidents and unexpected breakdown of vessels.

To mitigate the risks, it had developed a programme maintenance schedule according to the International Safety Management standards to maintain the performance and seaworthiness of all its vessels

Multi Terminal Indonesia

MTI was spun off from Pelabuhan Indonesia II, known simply as Pelindo II, in 2002. It handles logistics, container terminals and multipurpose terminals for customers using the port at Tanjung Priok.

Pelindo II controls a 99 percent stake in MTI, with the remainder owned by a cooperative of Tanjung Priok port employees.

“MTI needs Rp 300 billion in funds for its expansion next year. The funds are expected to be secured from an IPO,” Mulyono, the finance director of Pelindo II, told Investor Daily on Tuesday.

He added that the IPO is slated for the second half of 2013. However, if the IPO falls through, Pelindo II will allow MTI to separately sell bonds.

As for Pelindo II itself, the company has announced a plan to sell up to Rp 3.5 trillion worth of bonds to help finance its expansion.

“The proceeds [from the bonds sales] will be used to help finance the [first] phase [of] construction of the Kalibaru terminal, as well as [raise] working capital for the company in general.

Mulyono had said on Sept. 20 that the port operator needs $4 billion to build the Kalibaru Port, also known as the “New Priok Port,” which is situated seven kilometers west of Tanjung Priok in North Jakarta.

The company will divide investment spending into two phases: $2.5 billion for the first phase and $1.5 billion for the second.

The construction of the first section is expected to be completed in 2014, while the second phase will begin in 2018 and is expected to be completed in 2022.

Investment for the first stage will cover a plan to build thee container terminals with a combined capacity of 4.5 million twenty foot equivalent units (TEUs), two fuel oil terminals and a gas terminal with a combined capacity of nine million tons per year.

Once the second phase is completed, four more terminals will be added, bringing the total container handling capacity of the New Priok Port to 12.5 million TEUs.

Pelindo II wants to increase its port handling capacity in Tanjung Priok Port, the busiest port in Indonesia that it operates, since strong domestic economic growth has fueled a rapid boom in the container handling business, with more goods flowing through the port.

With faster processing and a greater capacity, businesses are expecting to cut logistics costs while the operator can also increase revenue and contribute to the state through taxes.

Trai Thien USA Inc (OTC Markets:TRTH)

Control here is now evenly split between Vietnam and Singapore and we expect a move soon a both parties seek clear control.

Trai Thien USA Inc (OTC Markets:TRTH), through its subsidiary Trai Thien Logistics, announced that it is planning to establish Singapore as a new Shipping and Trade Hub for the Company to expand ahead of the formation of the ASEAN Economic Community (“AEC”) in 2015. The AEC is ASEAN’s most resolute step to date to transform the region into a single market and production base by 2015.

The Port of Singapore is the busiest in the world, surpassing Rotterdam and Hong Kong. In addition, Singapore’s port infrastructure and skilled workforce, due in part to the success of the country’s education policy in producing skilled workers, is also fundamental in providing easier access to markets for both importing and exporting.

Trai Thien currently has six vessels operating at full shipping capacity. The six vessels realized 26 trips in the first quarter 2012, and are projected to make a total of 120 intra-regional voyages for the 2012 fiscal year. When factoring in down time for scheduled maintenance and repairs, a TRTH vessel completes a commercial voyage every 18 days on average. The full operational capacity status reflects the ability of Company management to fulfill its long-term plan of becoming a key player in inter-ASEAN cargo shipping.

Year-end 2011 revenues increased over 20.9% as compared to the previous fiscal year, from $12,232,991 in 2010 to $14,794,939 in 2011.

Income from Operations increased over 148% from 2010 to 2011, from $1,051,543 to $2,615,000.

Net Income increased from a loss of $539,452 in fiscal 2010 to a positive $1,377,391 in 2011.

The Company is operating a 21,990 DWT fleet comprised of six geared bulk vessels specialized in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

The new Singapore Hub is expected to add to the capacity of Trai Thien beginning in late 2012 and early 2013.

San Miguel

The Office of the Ombudsman has been asked to determine whether any laws were violated in the conversion of the government’s 24 percent stake in San Miguel Corp. (SMC) into preferred shares, resulting in a possible revenue loss of P16 billion.

The conversion could be a violation of Republic Acts 3019 (Anti-Graft and Corrupt Practices Act), 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees), and 7080 (An Act Penalizing the Crime of Plunder), and other pertinent laws, said leaders of coconut farmers groups and private citizens in a complaint affidavit.

The complainants also asked the Ombudsman to determine the culpability of the government officials of the previous Arroyo administration who had a hand in the conversion.

Sequestered in 1986

The 24 percent government stake in SMC consisted of more than 753 million common shares in the name of the Coconut Industry Investment Fund (CIIF) and its holding companies, which were established for coconut farmers during the Marcos regime.

The shares were sequestered in 1986 by the Presidential Commission on Good Government (PCGG) after the first Edsa People Power Revolution, on the basis that the shares were illegally bought using money from the coconut levy fund.

In September 2009, the Supreme Court granted a motion from the then Arroyo administration to convert the government’s SMC common shares into Series 1 preferred shares.

The high court held that the conversion was “advantageous to the public interest or will result in clear and material benefit to the eventually declared stock owners, be they the coconut farmers or the government itself.”

With the conversion, the SMC was given the option to redeem the preferred shares at P75 each any time it wanted, with holders of the preferred shares getting only an assured eight percent dividend in exchange for converting their shares.


On Oct. 5, 2012, SMC exercised this option, and opted to redeem 753,848,312 Series 1 preferred shares at the price of P75 per share, for a total of approximately P56.5 billion.

On the same day, however, PCGG Chairman Andres Bautista announced that the PCGG was looking for legal remedies to undo the grossly disadvantageous conversion of these 24 percent stake during the incumbency of his predecessor, Camilo Sabio.

In its “Preliminary Report for the Truth Commission,” the new PCGG described the conversion as “a questionable decision/agreement.”

Anomalous transaction

An audit made by the current PCGG leadership of all past transactions and deals entered into during the Sabio administration showed the conversion of the government’s SMC shares as “one of the biggest, multi-billion anomalous transactions” made by their predecessors.

According to Bautista, the primary issue with the conversion was the lock-in price of the government’s preferred shares Series 1, which it can now only sell for P75 per share.

“The government is estimated to have lost billions from the conversion, especially in view of the recent upsurge in the share price of SMC, which has been pursuing an aggressive diversification move under its president and chief operating officer Ramon Ang,” according to the complaint-affidavit.

Ang is the right-hand man of SMC chairman and chief executive officer Eduardo Cojuangco Jr., who was appointed by the late dictator Ferdinand Marcos as the administrator of the coco levy funds, which were the proceeds of a tax that the dictator imposed on the coconut industry.

Missed windfall

The complaint said that at the P159.50 share price of the common shares, the government would have reaped a windfall of more than P120.23 billion if the shares had been sold at that price.

With the conversion into preferred shares, which the SMC could redeem anytime at the lock-in price of P75, the government only stands to earn P56.53 billion from the 24 percent SMC shareholding.

“The determination that the conversion was advantageous to the national government on a purely financial standpoint has, in the light of subsequent events, proven to be mistaken,” the PCGG audit report said.

The complaint said the previous PCGG leadership committed grave abuse of discretion when it approved the conversion.

Yesterday in Asia

Tokyo slipped 0.58 percent, or 49.45 points, to 8,546.78, with the territorial spat between Japan and China continuing to sit heavily on confidence.

Sydney fell 0.16 percent, or 7.2 points, to 4,483.5 and Seoul lost 0.78 percent, or 15.13 points, to 1,933.09.

Shanghai finished down 0.81 percent, or 17.07 points, to 2,102.87 but Hong Kong bucked the regional trend, rising 0.38 percent, or 79.45 points, to 20,999.05.

– Taipei fell 1.85 percent, or 140.29 points, to 7,451.72.

Hon Hai Precision fell 3.7 percent to Tw$86.0 while TSMC shed 1.84 percent to Tw$85.5.

– Wellington slipped 0.12 percent, or 4.84 points, to 3,883.30.

Telecom fell 0.21 percent to NZ$2.33, Fletcher Building added 1.1 percent to NZ$7.24 and Fisher &amp; Paykel Appliances was flat at NZ$1.23.

– Manila slid 0.30 percent, or 16.13 points, to 5,353.47.

Philippine Long Distance Telephone fell 0.95 percent to 2,698 pesos while shopping center developer SM Investments dropped 1.70 percent to 780 pesos.

– Singapore closed down 0.04 percent, or 1.15 points, to 3,032.66.

Singapore Airlines shed 0.57 percent to Sg$10.52 and Singapore Telecommunications fell 1.26 percent to Sg$3.14.

– Jakarta closed up 0.12 percent, or 4.95 points, at 4,284.96.

Indocement rose 0.48 percent to 20,850 rupiah, Gudang Garam added 0.48 percent to 51,850 rupiah, while Aneka Tambang lost 0.78 percent to 1,280 rupiah.

– Kuala Lumpur fell 0.24 percent, or 3.93 points, to close at 1,655.47.

Tenaga Nasional lost 0.1 percent to 6.99 ringgit, while Axiata Group fell 1.9 percent to 6.58. Telekom Malaysia inched up 0.3 percent to 6.29 ringgit.

– Bangkok edged up 0.43 percent, or 5.55 points, to 1,294.90.

Coal producer Banpu dropped 0.75 percent to 395 baht, while Siam Cement added 1.98 percent to 360 baht.

– Mumbai rose 0.93 percent, or 173.65 points, to 18,804.75.

Infosys gained 1.09 percent to 2,531.49 rupees while real-estate firm Unitech jumped 17.49 percent to 27.2 rupees.

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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