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ASEAN STOCK WATCH 18  September  2010

Stock Exchange of Thailand to hit 1000 by March 2011

Shayne Heffernan

Shayne Heffernan on ASEAN, PTT, LH, Genting, Malaysia, Bakrie, PLDT, Banpu, LVS

On the Eve of the Red Shirt protests in Bangkok, Shayne Heffernan of Ebeling Heffernan has pedicted the Stock Exchange of Thailand to hit 1000 by March 2011,August and September news in supports that theory, indicators are the second half growth in Thailand will be strong.

Large local banks expect strong growth in corporate banking business for the second half, mainly from improving project finance but also mergers and acquisitions in several sectors.

Siam Commercial Bank senior executive vice-president Arthid Nanthawithaya said the telecom sector would contribute to loan growth as it prepares for third-generation (3G) mobile broadband investment. The country’s three mobile operators, Advanced Info Service, DTAC and True Corp have already secured loans for the auction of 3G licences.

In addition, Banpu should withdraw credit lines from four to five banks around September to October after it secures loans for its takeover of Sydney-based Centennial Coal Co. However, the credit facilities have not been allocated yet.

Banpu, Asean’s largest coal miner, has secured loans worth US$2 billion for the acquisition from both local and foreign financial institutions after it acquired 19.9% of Centennial for A$380 million earlier.

Mr Arthid said the bank had several M&A and project finance deals in the pipeline including internal project investment. Such deals facilitate loan expansion and create demand for other financial services. As a result, strong revenue for corporate banking both in interest and fee income is foreseen for the second half.

SCB projects corporate loan growth for this year of 11-14%, while its total loan growth is estimated at 7-10%. Fee-based income for corporate banking represents 30% of total fee revenue and it aims to increase this sector to 40%.

A banking industry source said Thai Union Frozen (TUF), the world’s second-largest tuna processor and distributor, also planned to withdraw bank loans in the second half of the year to help fund its acquisition of the Paris-based seafood canner MWBrands.

Loan withdrawals would take place in either the third or fourth quarter depending on the asset bidding, which is scheduled for November. The enterprise value of MWBrands is around 680 million or 28.5 billion baht, of which 15 billion in financing would come from local banks’ syndicated loans.

Bangkok Bank, Kasikornbank and Siam Commercial Bank agreed to lend 30% of the total amount, with the remaining 10% financed by another lender. The 15 billion baht in credit lines would be divided for two terms, with 6 billion having a six-year maturity and 9 billion an eight-year period.


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