Oct 13, 2012

ASEAN - ASEAN Equity Preview: Banco de Oro, Pertamina, Maybank, Tune Group, Everland, OCBC

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October 13, 2012

Europe is gripped by a debt crisis and stalled growth. A budget standoff in the United States is set to trigger tax increases and spending cuts and perhaps a recession. A weaker Asia is slowing worldwide growth.

Mindful of those threats, the International Monetary Fund has turned gloomier about the global economy. And it’s warning that even its dimmer outlook might prove too optimistic if Europe and the United States fail to resolve their crises.

Developed countries are facing a heightened risk of recession, and their troubles threaten China and other emerging economies, the IMF said in its updated World Economic Outlook.

No major solutions are expected to emerge from the Tokyo talks, which begin Thursday when finance ministers and central bank presidents from the seven wealthiest countries meet. They’ll be followed Friday by the start of annual meetings of the 188-nation IMF and its sister lending group, the World Bank.

The leaders are expected to downplay any disagreements to avoid jolting financial markets. But they’re also likely to warn nations that action is urgently needed to avoid a global disaster.


OCBC Bank, located in Singapore, earned the Product and Service Innovation Award for FRANK, a radical approach to addressing Generation Y’s different style of connecting and engaging with financial institutions.

FRANK branches – or “stores” – are designed to specifically serve this group of young people aged 18 to 28, through being conveniently and strategically located in campuses and malls, the use of understandable language on signage and documentation, and through a casual atmosphere where popular music is played, and where interactive touch screens allow customers to shop and apply for their personalized FRANK debit or credit card. Overall, FRANK allows OCBC Bank to develop lifetime, personalized relationships with these consumers by meeting their needs early on.


Everland primary business is property development. To be distributed in the form of townhouses, Single houses and condominiums. The Company have plan is targeted to buy land in a location that has the potential to develop the project and gave within a period not exceeding three years to meet the working capital of the company is maintaining liquidity. At that time and increases sales potential. To provide programs. Spread in many areas. Can satisfy the needs the buyer has more variety.

According to the Consolidated – Audited financial statement for the first quarter of 2012, total net operating revenues increased with 79.94%, from THB 4,910 thousands to THB 8,835 thousands.

Operating result increased from THB -5,428 thousands to THB -5,329 thousands which means 1.82% change. The results of the period increased 17.14% reaching THB -9,476 thousands at the end of the period against THB -11,436 thousands last year.

Return on equity (Net income/Total equity) went from -9.80% to -2.34%, the Return On Asset (Net income / Total Asset) went from -1.30% to -1.45% and the Net Profit Margin (Net Income/Net Sales) went from -232.91% to -107.26% when compared to the same period of last year.

The Debt to Equity Ratio (Total Liabilities/Equity) was 61.12% compared to 652.90% of last year. Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.08 to 8.80 when compared to the previous year.


Malaysia’s Tune Group, a financial services-to-discount hotel conglomerate owned by Fernandes and Kamarudin, is expected to launch US$65mil IPO of its insurance arm, Tune Insurance, not later than the first quarter of 2013, according to two sources with direct knowledge of the deal.

“They are looking at a market capitalisation of US$260mil,” one of the sources told Reuters on Wednesday, declining to be named as the matter is still private.

CIMB Group Holdings Bhd, ECM Libra Financial Group Bhd and RHB Capital Bhd are involved in the flotation, said the second source.

Fernandes and officials with Tune were not available to comment.

Meanwhile, AirAsia’s long-haul arm, AirAsia X, recently hired CIMB, Malayan Banking Bhd and Credit Suisse Group AG for a US$250mil IPO expected early next year.

The group is looking to list its Indonesia operations, Indonesia AirAsia, by the first quarter of next year in a deal that could raise up to US$200mil.


State energy company Pertamina says it is sticking to a $725 million plan to acquire an oil asset in Venezuela amid media reports of a possible scrapping of the purchase in the wake of President Hugo Chavez’s re-election on Sunday.

Pertamina president director Karen Agustiawan said that the company was determined to conclude the transaction based on the original agreement.

“Media reports stating that the transaction depends on factors other than the written agreement are speculation,” she said in a statement released in Jakarta on Tuesday.

Pertamina announced in June that it planned to pay Houston-based Harvest Natural Resources $725 million in cash for a 32 percent stake in Petrodelta, a joint venture between Harvest and state-owned Petroleos de Venezuela.

Karen was not specific in responding to media reports. Indonesian media outlets reported that Pertamina had yet to give an official proposal to relevant Indonesian ministries and that Chavez’s re-election may alter the political dynamic.

“Pertamina is committed to concluding the transaction. In line with its policy. … [It] will not comment on any speculation regarding the transaction,” Karen said, adding that Pertamina was optimistic the transaction would be completed according to the timetable set in the agreement.

Pertamina and Harvest signed the sales purchase agreement and set a deadline of March next year to complete the transaction. Petrodelta is said to hold oil fields with reserves amounting to 486 million barrels of oil equivalent, higher than the reserves in Cepu, East Java, Indonesia’s largest discovery in the past 10 years.

Karen added that Pertamina planned to acquire at least five oil and gas assets by the end of this year, with a target of securing 32,000 barrels of oil per day from the acquisitions.

Karen said that Pertamina was prioritizing areas already in production, so that the outputs could be quickly used to help meet domestic demand for fuel. “With the current high prices of crude oil, there are not many oil fields being offered,” she added.

The company leader said that any additional production would be very significant in the short term, helping Indonesia to maintain energy security and boost the national economy.

“Rapid economic growth will be commensurate with the increase in the demand for energy,” she said.

“We appreciate our partners who are willing to sit down with us and talk about the framework of the most mutually beneficial cooperation in the future. The support from the government is also important considering Pertamina’s status as the national energy company.

“As a state-owned company, Pertamina is determined to increase the oil and gas production to 2.2 million barrels of oil equivalent per day by 2025.”

Interviewed in August, Karen said she wanted to turn Pertimina from an Indonesian oil and gas company to a global energy company.


Two of the country’s largest banks have expressed interest to roll out the country’s first exchange-traded funds (ETFs), for which the policy framework is being finalized by the Securities and Exchange Commission.

Banco de Oro Unibank and Bank of the Philippine Islands have expressed interest in becoming sponsors of the ETFs, products that should complement equity-laced funds, SEC Commission Juanita Cueto told a press briefing late Tuesday.

She said the final framework for ETFs—a mutual fund-like asset class that the Philippine Stock Exchange has wanted to add to its array of product offering for over a decade—has been set for en banc discussion Thursday.

Cueto said the private sector had found ways to make the ETFs work notwithstanding tax concerns.

SEC chairperson Teresita Herbosa said the corporate watchdog would finish the framework in line with the target of the Philippine Stock Exchange to launch this new product before yearend.

ETF is a financial instrument that tracks an index, a commodity or a basket of assets like an index fund. Since it trades like a stock on an exchange, its net asset value (NAV) is not calculated every day but it usually trades close to its NAV. This instrument thus offers public investors an undivided interest in a pool of securities and other assets and thus is similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on an exchange through a broker-dealer.

The proposed rules and regulations on ETF classify this as a new investment product, which is similar to mutual fund but has distinct characteristics. The framework is pursuant to the Investment Company Act (ICA), which prescribes the regulation of investment companies such as the requirements to register with the SEC and comply with certain standards. These standards include regular public disclosure of financial situation, investment policies and objectives, and fund portfolios, as well as the companies’ pricing and fees.

An ETF issues redeemable shares at net asset value. However, the SEC said those shares can only be issued or redeemed by or through authorized participants.

The PSE has been planning to introduce ETFs since the early 2000s but taxation issues hampered its progress.

The first ETFs were introduced in the US in the early 1990s but have evolved since then. The first ETFs held a basket of securities that replicated the component securities of broad-based stock market indexes, such as the S&P 500. Many of the newer ETFs are based on more specialized indexes, including indexes that are designed specifically for a particular ETF, bond indexes and international indexes.

Yesterday in Asia

Tokyo tumbled 1.98 percent, or 173.36 points, to 8,596.23 – its lowest since August 3. Sydney lost 0.32 percent, or 14.6 points, to close at 4,490.7 and Seoul was off 1.56 percent, or 30.82 points, at 1,948.22.

Hong Kong ended flat, edging down 17.68 points to 20,919.60, but Shanghai rose 0.22 percent, or 4.71 points, to 2,119.94.

The International Monetary Fund on Tuesday further cut its growth estimates for the world economy this year and next, citing the ongoing European debt crisis and stuttering US growth.

Singapore closed down 1.05 percent, or 32.10 points, at 3,033.81.

Wilmar International fell 1.60 percent to Sg$3.07 and Keppel Corp. shed 1.41 percent to Sg$11.18.

Wellington lost 0.51 percent, or 19.85 points, to 3,888.14.

Fletcher Building dipped 1.92 percent to NZ$7.16 and Chorus slipped 1.19 percent to NZ$3.32.

Manila closed 0.47 percent lower, shedding 25.30 points to 5,369.60.

Philippine Long Distance Telephone lost 0.22 percent to 2,724 pesos and Ayala Corp. fell 1.38 percent to 430 pesos.

Jakarta was flat, nudging down 0.24 points to 4,280.01.

Bank Rakyat fell 1.3 percent to 7,600 rupiah, Bank Negara lost 1.3 percent to 3,825 rupiah, and cigarette maker Gudang Garam rose 3.4 percent to 51,600 rupiah.

Kuala Lumpur was 0.24 percent, or 3.92 points, off at 1,659.40.

Axiata Group lost 0.3 percent to 6.71 ringgit, while Sime Darby shed 0.6 percent to 9.72 ringgit. YTL added 0.6 percent to 1.76 ringgit.

Bangkok fell 0.24 percent, or 3.13 points, to 1,289.35.

Mumbai slid 0.86 percent, or 162.26 points, to 18,631.1.

State Bank of India fell 2.46 percent to 2,224 rupees, Kingfisher Airlines fell 4.58 percent to 11.45 rupees.

Taipei was closed for a public holiday.

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