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ASEAN STOCK WATCH Asean Affairs  26 September 2012

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By Shayne Heffernan Ph.D.

The latest moves by the European Central Bank and the U.S. Federal Reserve to stimulate their economies has put the benchmark index ahead nearly 7 percent for the quarter.

As the actions by the central banks helped contain declines, investors found little reason to justify any additional move higher.

In economic news, U.S. consumer confidence jumped to its highest in seven months in September, the Conference Board said.

In addition, two separate reports showed home prices rose for another month in July, though the gains were not as strong as the previous month.

Genting

enting Singapore PLC (G13.SG) said Tuesday it has sold off its entire 4.8% stake in Australian casino operator Echo Entertainment Group Ltd. through a block trade for 158 million Australian dollars ($165 million).

The operator of the Resorts World Sentosa casino in Singapore last week sold its holdings of 39.6 million Echo shares at A$3.99 apiece, the Singapore-listed company said in a regulatory filing.

Genting Singapore, a unit of Malaysian gambling group Genting Bhd. (3182.KU), didn't identify the buyer of its Echo stake. The company's Tuesday filing comes after it revealed last week its intention to sell the shares.

Despite the stake sale by Genting Singapore, Genting Bhd.'s Hong Kong unit said last week it remains committed to its investment in Echo and will continue to ask Australian regulators for permission to raise its Echo stake to beyond 10%--the maximum a single shareholder can own under Echo's constitution.

Genting Singapore and its sister company Genting Hong Kong Ltd. (0678.HK) had jointly bought 9.9% of Echo earlier this year.

The purchase of that position in Echo, which started in April, had spurred market speculation that Genting Bhd. was plotting a takeover of Echo or planning to block a similar bid by Australian billionaire James Packer's Crown Ltd.

Sembcorp Marine

Sembcorp Marine subsidiary SMOE has acquired UK platform fabricator SLP Engineering from Smulders Group.

SLP, based in Lowestoft on the English east coast, will be renamed Sembmarine SLP and will be controlled via a newly incorporated company Sembmarine North Sea, owned 70% by SMOE and 30% by eight members of the SLP management team.

The transaction comes to about $4 million for both shares and settlement of SLP’s intercompany loans.

Ho Nee Sin, managing director of SOME, said: “Following the acquisition, Sembcorp Marine will now have a footprint in the UK, providing synergistic support and reaching out to its North Sea clientele. Sembmarine SLP offers the opportunity for future growth in new business areas within the renewable energy sector as well as in the fabrication of minimum facilities platforms (MFP) for marginal oil and gas fields in the North Sea and Asia Pacific waters.”

Paul Thomson, managing director of Sembmarine SLP, said: “We are delighted to be part of the Sembcorp Marine Group, a leading offshore engineering group with diverse capabilities in rig building, ship construction, ship conversion, ship repair and offshore engineering & construction. With SMOE’s extensive experience in building major offshore structures, it will greatly enhance our objective of becoming the leading UK supplier of EPC services to the offshore energy market.”


Sri Trang Agro-Industry

Sri Trang Agro-Industry, is hoping to become a market leader in the global market by 2014 and is kicking off this plan by putting aside Bt2 billion to build three new plants over 2013-2014.
Company director Kitichai Sincharoenkul said his firm wanted to boost its production capacity to 1.5 million tonnes by 2014 from its current scope of 1.1 million to 1.2 million tonnes.

“We aim to double our global market share from 9 per cent to 15 per cent by 2014,” he said.

This year Sri Trang was able to boost its production capacity to 100,000 tonnes at its factory in Udon Thani province and by another 100,000 tonnes in Palembang, Indonesia. The boost in its production capacity should help the company’s sales volume grow by 10 per cent next year, Kitichai said.

Sri Trang’s revenue this year is expected to be Bt100 billion, less than last year’s Bt133 billion because the price of rubber has plunged 40 per cent this year to US$2,700 (Bt84,645) per tonne.

He said the global demand for rubber was dropping due to the economic slowdown, though demand for the material in the automotive industry is rising thanks to the booming Chinese economy. China is the key importer of rubber at 37 per cent of total sales volume, followed by the United States and Europe.

Bumi Resources

Bumi, co-founded by financier Nat Rothschild, said in a brief statement on Monday that it had commissioned an independent investigation into the allegations concerning its Indonesian subsidiaries, including 29-percent owned Bumi Resources, Asia’s biggest exporter of thermal coal, which is used in power stations.

Bumi is one of several foreign-owned, London-listed miners that have raised corporate governance concerns among investors over the past year. It has heavily underperformed the mining sector since its re-listing in June last year, weighed down by worries over its subsidiaries’ debts amid weak thermal coal prices, battles between shareholders and a complex corporate structure.

The group’s Indonesian partners tried to oust Rothschild from the board last year after he called for a “radical cleaning up” of governance at Bumi Resources, in what was seen as a sign of his frustration with the Bakries. In a reshuffle at Bumi Plc that followed, Rothschild stepped down as co-chairman, and key investor and coal entrepreneur Samin Tan took the chairman’s role.

The investigation, to be led by an as-yet unnamed law firm, is expected to include a close look at some $300 million of funds used by subsidiaries and affiliated companies to develop new projects, and also at certain loans extended by Bumi Resources, long a concern for investors.

 Bumi said that “an area of focus” would be the “extensive” development funds of Bumi Resources, most of which were written down to zero at the end of last year, along with one potential mining project held by another subsidiary, Berau Coal Energy.


Asahi Breweries

Asahi Breweries of Japan is in talks with the Lucio Tan group on a strategic partnership in the beverage business, beginning with the distribution of premium beer and possibly expanding into manufacturing and even an investment in Asia Brewery.

Inquirer sources said that Asahi Brewery and Tan’s Asia Brewery started exploratory talks on a potential business partnership a few years ago, with Asahi keen on entering the Philippine market similar to the route taken by Kirin Holdings in its entry in San Miguel Brewery.

Michael Tan, president of Tanduay Holdings, which will consolidate all major businesses of the Lucio Tan group, confirmed Asahi’s interest. However, Tan said a distribution deal was all that the parties would establish for now.

“There are other interested parties, not just Asahi,” Tan said when asked whether Asahi would likely be a partner in the liquor business.

Other sources from the Lucio Tan group said Asahi had long expressed interest to invest in the local group’s liquor business but that the tycoon’s group would like to consolidate first the beverage operations of Asia Brewery and Tanduay Distillers.

Tan said at the sidelines of Tanduay Holdings’ recent stockholders’ meeting that for now, the group would focus on an importation and distribution deal with Asahi. In a separate chat with reporters later, he said the group had signed up a deal to import and distribute locally Asahi Super Dry beer, reportedly the best-selling beer in Japan.

“It’s the best beer. Super Dry will be in cans and in bottles and will be premium-priced,” Tan said. He said the group would likely start with the importation of about 20,000 to 30,000 cases of Asahi Super Dry beer a month.

Other sources said Asahi was also looking at opportunities in local manufacturing and has explored the possibility of a partnership with the Lucio Tan group.

Asahi has been expanding in the Asia-Pacific region. Only Last July, Asahi teamed up with a local Indonesian group to set up manufacturing and marketing units for non-alcoholic beverages in Indonesia. Last year, Asahi also invested in the beverage business in Australia and New Zealand as well as in a soft drinks company in Malaysia.

One source from the LT group said the beverage business might be the next core business in which a strategic partner would be taken in similar to how San Miguel Corp. was brought into Philippine Airlines and Philip Morris International into Fortune Tobacco. The group ceded management control of the businesses to these partners.

But to unlock better values from the beverage business, the source said the operations of Asia Brewery and Tanduay Distillers would have to be consolidated before taking in a new investor—whether it’s Asahi or another group. The source said all sales and marketing operations as well as bookkeeping, sales and inventory have now been merged. Only the production side has yet to be consolidated.

Another source explained that the strategy was to form “strategic collaboration” to strengthen core businesses. However, as no definitive deal has been agreed upon with Asahi outside of distribution, the source said the group would still be open to scout for other potential partners. Liquor, however, would still be part of the core businesses of the future LT Group Inc.

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Tokyo was 0.25 percent higher, adding 22.25 points to 9,091.54 but Sydney slipped 0.29 percent, or 12.6 points, to 4,372.9 and Seoul shed 0.60 percent, or 12.03 points, to 1,991.41.

Hong Kong ended flat, edging up 3.98 points to 20,698.68, while Shanghai lost 0.19 percent, or 3.90 points, to end at 2,029.29.

Attention turned from this month’s stimulus-boosting measures by the US, European and Japanese central banks to the real economy and global growth worries.

In Germany, the eurozone’s main economic engine, the Ifo economic institute’s closely watched business climate index dropped to 101.4 points in September from 102.3 in August.

– Singapore closed almost unchanged, dipping 0.80 points to 3,067.13.

Wilmar International gained 1.57 percent to Sg$3.24 and United Overseas Bank added 0.51 percent to Sg$19.76.

– Taipei ended 0.44 percent lower, losing 34.17 points to 7,734.13.

Hon Hai Precision shed 2.40 percent to Tw$93.5 while Taiwan Semiconductor Manufacturing Co. was 0.23 percent lower at Tw$85.9.

– Manila closed flat, nudging down 0.43 points to 5,325.17.

Universal Robina was up 2.49 percent to 65.85 pesos while Philippine Long Distance Telephone slipped 0.14 percent to 2,798 pesos.

– Wellington closed 0.42 percent, or 16.16 points, higher at 3,825.32.

Telecom climbed 1.9 percent to NZ$2.39 and Nuplex eased 0.3 percent to NZ$2.96.

– Kuala Lumpur rose 0.38 percent, or 6.20 points, to 1,618.58.

Axiata Group inched up 2.9 percent to 6.30 ringgit, while Tenaga Nasional added 1.3 percent to 6.79 ringgit and AirAsia lost 1.4 percent to 2.87 ringgit.

– Jakarta added 0.62 percent, or 25.97 points, to 4,226.89.

Telkom rose 1.1 percent 9,350 rupiah, cement company Semen Gresik jumped 0.7 percent to 14,250 rupiah and Bumi Resources added 1.5 percent to 690 rupiah.

– Bangkok ended up 0.16 percent, or 2.02 points, to 1,286.32.

PTT Plc slipped 0.60 percent to 332 baht, while coal producer Banpu closed unchanged at 392 baht.

– Mumbai ended up 0.11 percent, or 21.07 points, to 18,694.41.

United Spirits rose 8.89 percent to 1,147.7 rupees.

 

Shayne Heffernan Ph.D.  

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