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ASEAN STOCK WATCH 22  September  2010

ASEAN Stock Exchange News, Genting, Bumi, PTT, PLDT

Shayne Heffernan

Genting, Bumi, PTT, PLDT, Noble were strong performers on the ASEAN Exchanges Tuesday, the Philippines set another all time high, Jakarta remains over 3000 and Thailand is moving towards 1000.

A solid performance by Wall St overnight will help lift ASEAN Exchanges today. The Federal Reserve said it’s willing to ease monetary policy further to spur growth and support prices while refraining today from expanding its holdings of securities.

Singapore stocks rose on Tuesday, helped by a strong overnight performance on Wall Street and a jump in Noble Group (NOBG), but analysts see little upward momentum in share prices.

Shares of Singapore-listed commodities firm Noble Group (NOBG) rose as much as 7.3 percent after it agreed to acquire a U.S.-based energy retailer for $317 million.

Noble was up 6.7 percent at S$1.91 at the midday break with turnover of more than 85 million shares.

Noble Group Ltd., a Hong Kong-based commodities trader, agreed to buy a retail energy unit from a joint venture between Royal Bank of Scotland Group Plc and Sempra Energy for $317 million.

The sales of remaining stakes in the venture are being negotiated, San Diego-based Sempra said today in a statement. Noble Group is paying cash and will assume about $265 million debt for the unit, which markets energy to commercial and industrial customers in 16 U.S. states, Sempra said.

Sempra, the owner of the largest U.S. natural-gas utility, expects to get about $1 billion from asset sales, Chief Executive Officer Donald Felsinger said during a conference call with investors on Aug. 3.

Royal Bank is being forced to sell the unit to comply with European Union state-aid rules after getting 45.5 billion pounds ($70.9 billion) in the biggest bailout of a U.K. bank. The lender bought a controlling stake in the Sempra venture in April 2008 as banks expanded commodity trading operations, driven by rising investor interest in gold, oil and other raw materials.

On July 1, Sempra and Royal Bank completed a $1.6 billion sale to JPMorgan Chase & Co. of the venture’s metals, oil and European power and gas business for $1.6 billion.

Sempra rose 32 cents to $53.40 as of 4:15 p.m. in New York Stock Exchange composite trading. Royal Bank, based in Edinburgh, gained 2.5 percent to 49.02 pence in London. Noble Group’s trading in Singapore was halted at S$1.79.

The Stock Exchange of Thailand (SET) composite index on Tuesday gained 14.15 points or 1.53 per cent to close at 937.21 points. The market value was 32.54 billion baht, with 4.09 billion shares traded.

Ebeling Heffernan Strong Buy PTT Plc remains confident that its revenue this year will reach its target of 2 trillion baht, even though the impact of the strengthening baht is significant, says president and CEO Prasert Bunsumpun.

The majority state-owned energy group earned 2 trillion baht in revenue in 2008, when global oil prices surged to a record of $147 a barrel, nearly double what they are today. Revenue fell to 1.62 trillion a year later in line with lower oil prices.

PTT this year set its target at 2 trillion baht, counting on higher production output of petrochemical and petroleum products as well as natural gas output. The forecast for 25% growth was seen as optimistic, given the decline in petrochemical products prices.

Top five most active values were as follows;

BANPU closed at 670.00 baht, up 22.00 baht or 3.40 per cent.

SCC closed at 322.00 baht, up 9.00 baht or 2.88 per cent.

KTB closed at 15.50 baht, up 0.40 baht or 2.65 per cent.

PTT closed at 287.00 baht, up 3.00 baht or 1.06 per cent.

CPF closed at 25.75 baht, up 0.75 baht or 3.00 per cent.

The Jakarta Composite Index fell 5.95 points, or 0.2 percent, to close at 3,365.04. Volume was heavy, with 13.3 billion shares worth Rp 6.4 trillion ($714 million) changing hands. Gainers outnumbered decliners 121 to 100.

The currency has gained 0.9 percent this month as global funds pumped $534 million into domestic equities, boosting net purchases for the year to $2.16 billion.

It touched a three-year high of 8,905 on Aug. 3 and has appreciated 4.7 percent this year.

Foreigners have increased holdings of the nation’s debt by 64 percent this year, attracted by the highest interest rates among Asia’s 10 biggest economies.

Bank Mandiri, the nation’s largest lender by assets, dropped 3.8 percent. Bank Rakyat Indonesia, the second biggest, lost 2.5 percent.

Financial shares were also hit over the past two days by news on Friday that Bank Indonesia would require lenders to publicize their prime rates as part of efforts to boost competition and lower lending rates.

Mining and plantation stocks gained for a second day. Astra Agro Lestari, the country’s largest listed plantation company by market value, gained 0.7 percent, while BW Plantation jumped 3.5 percent.

Ebeling Heffernan Strong Buy Bumi Resources, Asia’s top coal exporter, surged 7.4 percent. Tambang Batubara Bukit Asam, the state-owned coal producer, advanced 3.6 percent.

Bob Kamandanu, chairman of the Indonesian Coal Mining Association (Apbi), said on Tuesday that India might import 70 million metric tons of Indonesian coal in 2011, up from 40 million tons this year. He said coal may rise to $100 a ton by year-end.

Meanwhile, the rupiah strengthened the most in a week, rising 0.2 percent to 8,965 against the dollar.

Kuala Lumpur, Bursa Malaysia rose 0.43% to close at 1475.99 points on strong support in big companies, powered by gains in Ebeling Heffernan Strong Buy Genting Malaysia.

The Finance Index fell 0.12% to 13331.80 points, the Properties Index increased 0.16% to 876.84 points and the Plantation Index gained 0.53% to 6923.08 points.

The market traded within a range of 8.56 points between an intra-day high of 1479.59 and a low of 1471.03 during the session.

Actively traded stocks include GENM-CL, KNM, TEJARI, GENM, GENS-C8, ASIAEP, BJCORP, KENCANA, TIMECOM and AXIATA. Trading volume increased to 1049.62 mil shares worth RM1513.98 mil as compared to Monday’s 850.80 mil shares worth RM1381.68 mil.

Leading Movers were GENM (+41 sen to RM3.64), GENT (+18 sen to RM10.36), SIME (+4 sen to RM8.34), IOI (+3 sen to RM5.72) and BAT (+86 sen to RM46.50). Lagging Movers were CIMB (-3 sen to RM8.28), AXIATA (-2 sen to RM4.51), PPB (-18 sen to RM17.48), PUBLIC BANK (-2 sen to RM12.68) and PETD (-22 sen to RM10.98). Market breadth was positive with 368 gainers as compared to 345 losers.

Genting Bhd, which holds a 52% stake in Genting Singapore PLC, has been re-rated to a stong buy by Shayne Heffernan of Ebeling Heffernan based on an impressive second-quarter profit performance of S$396.5mil, compared with a loss a year earlier.

Shayne Heffernan put a RM 20 price target on the stock at M8.18, today it closed over 20% higher.

Genting Singapore’s (formerly Genting International Public Ltd) revenue surged to S$979.3mil in the three months to June 30, compared with S$120.1mil previously boosted by improved earnings from its new RM4.7bil integrated casino resort, Resorts World Sentosa.

Genting Singapore (GENS) has raked in almost S$1 billion in revenue for the second quarter with net profit coming in at close to S$400 million. For the quarter ended June 30 – the first full quarter with Resorts World Sentosa (RWS) contributing to the bottom line – GENS reported revenue of S$979 million, up from just S$120 million a year ago.

Net profit in the quarter also increased significantly to S$397 million, up from a loss of S$50.7 million a year ago. These numbers simply flew past market expectations.

GENS said that RWS alone recorded revenue of S$860.8 million in Q2. It added that earnings before interest, taxes, depreciation and amortisation (Ebitda) of S$503.5 million for the quarter represented an Ebitda margin of 58 per cent, ‘at the back of higher than industry average win percentage in the premium players market’.

At its Universal Studios Singapore, daily maximum capacity has increased to about 8,000 with an average visitor spend of S$84 while hotel occupancy at RWS was 70 per cent with an average room rate of S$263.

The number of foreigners visiting RWS also appears to be increasing. Previously, analysts had estimated that Singaporeans made up about 40 per cent of the visitors to the RWS casino. In a press statement released yesterday, GENS president and chief operating officer Tan Hee Teck said the results were ‘powered by overseas arrivals’.

He said: ‘The Singapore Tourism Board (STB) has been doing a good job and the whole tourism industry has been on a buoyant spin. Two-thirds of the visitors to the casino, for example, come from overseas. Many of them include Universal Studios Singapore and Voyage de la Vie (RWS’s resident theatre show) in their itineraries.’

OCBC Investment Research analyst Carey Wong said that GENS’ performance was ‘a lot stronger than expected on the topline’.

‘It suggests that the Singapore market is a lot bigger than what people were expecting,’ he added.

Mr Wong also noted that the opening of Marina Bay Sands (MBS) in the quarter did little to cannibalise customers. ‘Let’s be honest – within such a small place, gamers tend to flit from one to the other. Hence cooperative competition is benefiting both,’ he said.

Vincent Khoo, UOB Kay Hian’s head of research for Malaysia, was also pleasantly surprised by GENS’ performance, describing it as ‘astoundingly strong’. Indeed, GENS Q2 performance seems to put it on track to hit more bullish full-year earnings targets.

While there has been no consensus on how well Singapore’s nascent gaming market will perform, bullish estimates for total gaming revenue for both RWS and MBS combined have been around US$3 billion, suggesting that both casinos register combined daily gaming revenue of S$11-12 million.

A DBS Vickers report released this week estimated that MBS’s first 65 days of operations saw daily gross win of US$4 million while RWS saw US$4.9 million daily for its first 45 days.

GENS did not reveal its gaming revenue for the quarter. However, based on RWS’s total revenue of S$860.8 million for Q2, average daily revenue works out to about S$9.45 million.

GENS’ UK casino operations registered revenue of S$104.9 million for the quarter, a decrease of 3 per cent year-on-year while Ebitda fell 25 per cent to S$9.1 million.

In July, GENS announced that it was seeking to divest its UK operations.

Earnings per share for the six months ended June 30 was nil compared to a loss of 0.8 cent in the corresponding period a year ago.

The Philippines Stock Exchange added 34.45 points or 0.85 percent to close at a new peak of 4,087.96.

The day’s rally was led by gains eked out by the services counter, which rose by 1.3 percent. Only the mining counter was down as profit-taking on the sector prevailed.

Value turnover was heavy at P7.93 billion. There were 85 advancers that edged out 73 decliners while 25 stocks were unchanged.

Leading the day’s gainers were the Philippine Long Distance Telephone Co., Energy Development Corp., Banco de Oro Unibank, Philippine National Bank, Globe Telecom Inc., First Gen Corp., Ayala Land Inc., Lepanto Consolidated Mining Co. “A”, SM Prime Holdings Inc., Lopez Holdings Corp. and Ayala Corp.

On the other hand, there was profit-taking on SM Investments Corp., Philex Mining Corp., Megaworld Corp., Metro Pacific Investments Corp., Aboitiz Power Corp., Filinvest Land Inc., Metropolitan Bank & Trust Co. and Atlas Consolidated Mining & Development Corp.

The already upbeat sentiment on the local market was further bolstered by an overnight rally in Wall Street which extended the market’s rally into a fourth week. The Dow Jones gained 145.77 points or 1.37 percent to finish at 10,753.62.

Asian stock markets also traded favorably ahead of a US Federal Reserve Open Market Committee meeting.


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