Nov 17, 2012

ASEAN - Asean Market Preview: First Gen, Bangkok Airways, Fraser and Neave’s, Indofood, Malaysia GDP

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Economist and Hedge Fund Manager Shayne Heffernan of takes a look at First Gen, Bangkok Airways, Fraser and Neave’s, Indofood, Malaysia GDP

U.S. stocks have struggled to hold onto gains in recent days as investors fret the economy could slip into recession if no deal is reached to avoid the “fiscal cliff” – some $600 billion in spending cuts and tax hikes due to begin taking effect in January.

The S&P500 index is down about 2.0 percent for the week so far.

Profits at China’s State-owned enterprises fell 8.3 percent year-on-year to 1.75 trillion yuan ($277.78 billion) in the first 10 months of 2012, the Ministry of Finance said Thursday.


Moody’s Analytics forecasts Malaysia’s GDP to have grown at a slower pace of 4.9% in the third quarter ended September from 5.4% a quarter earlier.

It said on Thursday exports had declined due to softer global demand, but this was partly offset by domestic demand, hence for 2012, Malaysia’s GDP was expected to expand 4.8% on-year.

“The economy is forecast to expand 4.8% in 2013 driven by investment and improving regional demand,” it said.

In its assessment of Malaysia, it said the export-led economy slowed in the third quarter, weighed down by the Eurozone’s fiscal austerity and lacklustre US recovery.

On a year-ago basis, nominal exports contracted 2% in Q3, 2012 after a 4% gain in Q2.

Moody’s Analytics said robust domestic demand had partly offset the external weakness.

It pointed out that in the first half of 2012, the major catalysts were the government’s drive to improve and develop infrastructure and a steady flow of foreign capital. This has also supported the broader economy, including the labour market, with positive effects on household spending.


Indofood Sukses Makmur, the country’s largest food company, reported a profit increase of almost 10 percent in the first nine months of this year as demand for its food products remained strong.

The company said on Wednesday that net income rose 9.7 percent to Rp 2.55 trillion ($265 million) from the same nine month period a year earlier.

Revenue also increased 10.3 percent to Rp 37.26 trillion.

Indofood CBP Sukses Makmur — a unit that produces instant noodles, food seasoning and snacks — remained the company’s biggest revenue generator, contributing 43 percent with a 13 percent increase in sales to Rp 16.23 trillion.

Net income at Indofood CBP rose 8.4 percent to Rp 1.66 trillion in the first nine months.

“Indofood CBP posted good earning results where almost all divisions show healthy growth in the first nine months,” said Anthoni Salim, president and chief executive of Indofood Sukses Makmur.


Heineken said Thursday it had completed its acquisition of Fraser and Neave’s (F&N) share of Asia Pacific Breweries (APB) as part of the takeover of brand Tiger Beer.

“As a result Heineken currently owns in aggregate a 95.3% stake in APB and will consolidate APB into its accounts in November 2012,” the brewer said in a statement.

The company said it would also make an offer for the remaining shares in APB that it does not already own.

F&N shareholders in September approved Heineken’s offer of Sg$5.6 billion (3.6 billion euros) for its 40 percent stake in APB, which has breweries in 14 markets including China.

Amsterdam-based Heineken is seeking to boost sales in fast-growing Asian economies as demand falls in mature markets like Europe, where a prolonged financial crisis is dampening consumer spending.


Bangkok Airways (PG) is planning to list on the Stock Exchange of Thailand in early 2013, to enable it to acquire aircraft and build a new hangar at Suvarnabhumi, president Puttipong Prasarttong-Osoth told ATW. He gave few details but acknowledged the Initial Public Offering (IPO) will likely to be within the next 12 months. “We plan for early next year, 2013,” he said.

The size of the listing is also likely to be limited as Thai law prohibits foreigners from owning more than half of a Thai airline.

“(We will) probably put 40%-45% in the market,” Prasarttong-Osoth said.

The privately owned carrier will most likely be listing as an airline only. It owns and operates three airports—Koh Samui, Sukhothai and Trat—which are not likely to be part of the flotation. “I think it will be the airline,” Prasarttong-Osoth said.

The family-owned and run carrier has been limited in its ability to grow its equity base. It believes a successful float will allow it to raise more funds for future expansion, he added.


First Gen Corp. reported a surge in its net income to $147 million in the first nine months of 2012 from only $10.1 million a year ago.

In a filing with the Philippine Stock Exchange, First Gen attributed the profit growth to the higher earnings contributed by affiliates Energy Development Corp., currently the country’s largest geothermal producer, and FG Hydro Power Corp. (FG Hydro), which owns the 132-megawatt Pantabangan-Masiway power plants.

Subsidiaries First Gas Power Corp. and FGP Corp., operators of the 1,000-MW Santa Rita and the 500-MW San Lorenzo natural gas-fired power plants, respectively, were also major contributors to First Gen’s profit growth.

The rise in incomes was, however, partly offset by the increased administrative expenses of First Gen due to the additional costs related to the acquisition of the non-controlling 40-percent interest of the BG Group in the two natural gas plants in Batangas.

First Gen reported that its total revenue in the first nine months of 2012 rose by 15.2 percent to $1.179 billion from $1.023 billion a year ago.

The bulk of the revenue or $1.07 billion came from electricity sales.

In a separate filing with the PSE, geothermal producer EDC said it had posted a net income of P8.6 billion in the first nine months of 2012, a turnaround from the P488-million net loss it incurred a year ago.

EDC reported that net income attributable to equity holders rose P7.1 billion in the same period, from a net loss of P670.2 million last year.

Total revenue for the nine months ending September 2012 rose by 20.5 percent to P21.95 billion from P18.22 billion in the first nine months of 2011.

According to EDC, the company’s improved financial performance in the first three quarters of the year can be attributed mainly to higher electricity revenues of its subsidiaries. Also, last year’s level was lower because of the P5-billion impairment loss on the property plant and equipment of the 49-megawatt Northern Negros Geothermal power facility, which was recognized in June 2011.

NNGP was shut down last year due mainly to a mismatch in the geothermal resources in the area and the facility’s generation capacity. The equipment will be moved to another area on the island that can support a higher generation capacity, while a smaller facility may be put in place of the NNGP.

Revenue from the sale of electricity rose by 21 percent to P21.4 billion in the first three quarters of 2012 from P17.7 billion in the same period a year ago due to the better performance of Green Core Geothermal Inc., which manages the 305-MW Palinpinon-Tongonan power plants and FG Hydro.

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