Expect a rally in ASEAN today, Wall St marked the second straight day
where a leading legislator dictated trading action. On Tuesday, stocks fell on
pessimistic remarks from Senate Majority Leader Harry Reid, a Democrat from
Nevada.
The market has been swinging for
weeks now on headlines from Washington, with Wednesday’s gyrations once again
highlighting the importance that Wall Street is giving to finding a solution to
avoid the series of tax increases and spending cuts that could push the U.S.
economy into recession.
The Dow Jones industrial average
.DJI rose 106.98 points, or 0.83 percent, to 12,985.11 at the close. The
S&P 500 .SPX gained 10.99 points, or 0.79 percent, to 1,409.93. The Nasdaq
Composite .IXIC added 23.99 points, or 0.81 percent, to close at 2,991.78.
The S&P 500 bounced off a
strong support area near 1,385 that includes both its 200- and 14-day moving
averages. It closed above 1,400 for the third session in four – an optimistic
sign for stock bulls.
ASEAN will follow that lead and
should trade broadly higher, bad news from Europe is the only danger.
Singapore
Will Olam Survive Muddy Waters:
Sunny Verghese Vs Carson Block
Olam International Ltd is under
attack from short sellers but the company looks to be holding on OK, I do not
think Olam is the new Enron, and if we were to extend the theory of pre booked
profits that is being spouted by the short sellers then every insurance company
in the world is in bankruptcy and so are most of the banks.
Olam will survive this, and
considering how much short selling would have been generated, and the net short
position the company may bounce back over $2.00SGD and give the short sellers a
nasty, but well deserved shock.
“There is no substance in their
broad allegations,” Olam said today in a statement, promising a fuller response
in due course. “We will clear our name and hold Muddy Waters accountable for
their damaging actions.”
But instead of fighting the short
sellers CEO Sunny Verghese needs to reach in to his pockets, rally his friends
and burn the short sellers, it is not our opinion that the short sellers are
well heeled enough to withstand much of an attack, there are plenty of rumors
about the financial state of the short seller and Muddy Waters may be looking
for a big winner here to salvage themselves.
Certainly I hope it is the case,
it would be a shame for the reputation Singapore has built to be destroyed by
the rumor and innuendo of Muddy Waters.
Sunny Verghese, here is the check
list of what you need to do now.
1. Get some funds together, reach
out to your financiers.
2. Prepare a detailed statement
of financial standing.
3. Distribute that to Brokers,
Banks, Hedge Funds and Bond Traders.
4. Make the Statement available
to the public.
5. Buy the debt and the equities.
Based on volume I would estimate
the short position averages around $1.90SGD, the brokers acting on behalf of
the short seller would have a safety margin of around 30% so the stock needs to
run to $2.34 to rid the company of the short seller.
The average short away from the
short seller looks to be around 1.68SGD, so they will become buyers at the
$1.86SGD point.
This will be an interesting week.
How the fight is shaping up.
Sunny Verghese
Strengths
Has a good history
Should have access to capital
Weakness
Poor reaction to the claims
against him
Over 2 years of falling stock
prices
Carson Block
Strengths
Has done this better than anyone
before
Has market followers that short
and aid the position
Weakness
May not have access to capital
A break of $2.34 would put him
out of the game
Malaysia
Maxis Bhd posted lower net profit
of RM442mil in its third quarter ended Sept 30, 2012 due to accelerated
depreciation for network modernisation.
This compared with the earnings
of RM537mil a year ago due to lower earnings before interest, tax, depreciation
and amoritisation (EBITDA) of RM25mil and higher financing and amortisation
costs of RM18mil and RM29mil.
It said on Wednesday revenue for
the quarter under review was at RM2.21bil against RM2.24bil last year. Net
profit was down to RM442mil against RM537mil.
For the nine-month period,
revenue was higher at RM6.66bil against RM6.53bil a year ago supported by
growth in all of its core businesses.
Maxis said EBITDA was RM3.29bil
with EBITDA Margin at industry-leading 49.5%, despite strong competition and
aggressive market initiatives. Net profit was down to RM1.48bil compared
RM1.6bil a year ago.
“PAT performance for both the
nine months and Q3, 2012 was impacted by accelerated depreciation for network
modernisation. Additionally, PAT for the nine months ended Sept 30, was also
impacted by asset write-off amounting to RM125mil,” it said.
On the Q3, 2012 earnings, chief
executive officer Sandip Das said the quarter had shown growth across all core
businesses.
“We are now well positioned to
strengthen future revenue streams, having launched several tariff initiatives
for our customers, over the last nine months, in the areas of IDD rates,
roaming, mobile Internet, postpaid and prepaid. All of which are beginning to
bear fruit.
“It is also reassuring to see
that revenue generating subscribers growing in both postpaid and prepaid
categories,” he said in a statement.
Mobile services recorded a
year-on-year revenue growth of 1% or RM78mil driven by increasing mobile
internet usage, higher sale of devices and higher wireless broadband revenues.
Consequently, total non-voice
revenue as a percentage of total mobile revenue grew 2.5% points to 45.4%.
Prepaid and postpaid average
revenue per user (ARPU) remained relatively unchanged at RM37 and RM107,
respectively, compared to the corresponding preceding period.
“True to our continued commitment
to dividend, we have declared a third interim dividend of eight sen per share
amounting to RM600mil to our shareholders this quarter, successfully
maintaining our track record of consistent dividend pay-out with the previous
quarters,” added Sandip.
Thailand
Thailand’s top energy firm PTT
Pcl is considering building a US$28.7 billion (RM87.64 billion) oil refinery in
central Vietnam, a company official said today, in what would be a record
foreign investment in the country.
A report in Vietnam’s state-run
Tuoi Tre newspaper said the refinery would have a capacity of 660,000 barrels
per day (bpd), or almost five times the current capacity of the Dung Quat oil
refinery – Vietnam’s sole such facility.
“The Vietnam government has hired
PTT’s subsidiary to study the possibility of a refinery project in Vietnam. PTT
has not yet decided whether they will invest in the project … and it should
take a long time for PTT to make a commitment,” PTT’s chief financial officer,
Surong Bulakul, said.
PTT has reported its
pre-feasibility study of the proposed refinery to the Binh Dinh central
provincial government, the newspaper said, quoting the management board of the
economic zone where the plant would be located.
The proposed facility could be
built in Nhon Hoi, about 1,000km (620 miles) south of Hanoi, according to the
website of the Binh Dinh economic zone management board. (kktbinhdinh.vn)
Provincial officials have
requested PTT to prove its financial capacity and swiftly complete a feasibility
study to give to the two governments. Nhon Hoi has a port with a capacity of
30,000 deadweight tonnes, which will be further expanded by 2020, the economic
zone management board said.
Construction of the Nhon Hoi
refinery could begin in 2016 and the plant is expected to start operating in
2019, pending approval by the Vietnamese government, the newspaper added.
Vietnam’s sole oil refinery, Dung
Quat, currently has a capacity of 135,000-bpd but it is expected to be nearly
doubled to 240,000 bpd by 2017.
The Southeast Asian country has
been planning at least four other refineries to raise its refining capacity to
25-30 million tonnes by 2020 as stated by the government.
Indonesia
Bumi Resources fell the most in
two months to its lowest close in almost four years amid concern about the
company’s ability to pay its bills, following an announcement that its total
debt stood at $3.8 billion.
Shares of Indonesia’s largest
coal miner fell 6.8 percent, the biggest decline since Sept. 24, to Rp 550 on
the Indonesia Stock Exchange (IDX) on Tuesday.
The stock had not closed that low
since Feb. 4, 2009.
“Investors see that the company
is heavily indebted, [which] makes them hesitant to buy shares,” Edwin Sinaga,
president director of brokerage firm Financorporindo Nusa, said on Tuesday.
In a filing to the IDX on Monday,
Bumi Resources said that its total debt was due between 2012 and 2017.
“[It’s] nothing new — that’s the
number in all our previous disclosures,” said Dileep Srivastava, a director at
Bumi Resources, via e-mail on Tuesday.
He noted the company has been
bombarded by negative media coverage because of its debt, while shareholder
rifts are adding pressure on the firm internally.
Bumi Resources’ debt-to-common
equity ratio is 489 percent, compared to 74 percent for Astra International,
the biggest publicly traded company, according to Bloomberg data. Its market
capitalization is Rp 11.4 trillion, compared to Astra’s Rp 315.8 trillion,
Bloomberg data show.
Bumi Resources, controlled by the
Bakrie Group, has been at the center of investors’ attention in the past few
months due to a high-profile dispute involving Bumi Plc co-founder Nathaniel
Rothschild and the Bakrie family.
Srivastava said Bumi Resources
“[does] not comment on shareholders as a matter of policy.”
Falling coal prices have also
contributed to the 74 percent drop in share prices this year. It posted a net
loss of $322 million in the first half, turning from $231.7 million in profit
for the same period last year.
“Bumi is a super beta stock,”
Srivastava said, referring to the stock’s volatility relative to the market.
He added that “nothing has
changed overnight.” He said the company is focusing on “higher production”
targets. It seeks to increase its coal mining production to 100 million metric
tons of coal by 2014 from its 2012 estimate of 75 million tons.
Bumi Resources is “strengthening
internal cash generation through higher volume and monetizing non-core assets
at profit to repay [the] debt,” Srivastava said.
He added that the company’s
priority is settling the remaining $1.3 billion in debt owed to the China
Investment Corporation “far ahead of maturity dates.”
Srivastava said last month that
Bumi Resources is committed to disposing its secondary assets and its mineral
mining arm, Bumi Resources Minerals.
Michael Tjoajadi, the president
director at Schroder Investment Management Indonesia, was quoted by Bloomberg
on Nov. 12 as saying that Bumi Resources’ minority shareholders are at risk, as
the coal miner faces two probes into its finances and is part of a falling out
between Nat Rothschild and the Bakrie family.
Shares have plunged 74 percent
this year. On Dec. 30, each share was valued at Rp 2,175.
State-controlled builder
Pembangunan Perumahan said it could book up to Rp 18 trillion ($1.9 billion) in
new contracts this year, exceeding its initial target of Rp 16.8 trillion.
Corporate secretary Betty Ariana
said that from January to October, the firm known as PTPP booked Rp 16.3
trillion in new contracts. Given the trend, Betty estimated the year-end figure
would be at about Rp 18 trillion.
The contracts will primarily come
from construction work that includes engineering, procurement and construction.
Work contracts that have been
secured by the company through October include the construction of the Kalibaru
container terminal in Tanjung Priok, North Jakarta.
PTPP won the tender for six
construction projects, according to an Aug. 10 letter from the board of
directors for port operator Pelahuban Indonesia II (Pelindo II).
PTPP has been appointed to handle
Rp 8.2 trillion worth of construction projects at the new Tanjung Priok.
The work includes building a
container yard, a breakwater disposal and a breakwater container yard. It will
also include overburdening and reclamation projects.
Other major projects it secured
include the Educity Apartment complex in Surabaya, East Java, the Landmark
Pluit property in North Jakarta, Kualanamu airport in North Sumatra, a
geothermal power plant in Muara Labuh, West Sumatra, and a gas power plant in
Duri, Riau.
PTPP is also building roads in
Papua.
Bambang Triwibowo, the president
director of PTPP, said that this year, net income is predicted to rise by 28 percent,
to Rp 309 billion.
The company set aside Rp 455
billion for capital expenditure next year for building property, offices, toll
roads, ports and other infrastructure.
Shares in PTPP, which went public
in 2010, rose 1.2 percent to Rp 850 in Tuesday trading in Jakarta.
Philippines
Amid the country’s solid
7.1-percent economic growth in the third quarter, the main-share Philippine
Stock Exchange index surged to new all-time highs, bucking the downturn in most
markets in the region.
The PSEi climbed 47.27 points, or
0.85 percent, to mark its best ever finish at 5,633.72. A new intra-day peak of
5,636.33 was likewise recorded.
Because of the stellar economic growth
in the first three quarters of the year and given the still rosy prospects
until yearend, Metrobank’s research team has upgraded its full-year GDP growth
forecast for this year to 6.6 percent from 5.5 percent.
“On the demand side, household
consumption will remain as the growth driver. Consumer spending will still be
supported by the sustained inflow of remittances and the still well-anchored
inflation expectations,” Metrobank said.
On the supply side, Metrobank
said the services sector would be supported by the rosy outlook for the real
estate and tourism sub-sectors.
Public construction is expected
to sustain its growth in the second half of the year on accelerated government
spending ahead of the congressional elections next year while the agriculture
sector is also seen to sustain its rebound given that no adverse weather
condition was experienced in the last months of the year.
But the next question is how this
robust growth would affect monetary policy. The Bangko Sentral ng Pilipinas
(BSP) has so far slashed its key interest rates by 100 basis points this year
but mostly due to concerns over a sharply appreciating peso rather than growth.
One out of 10 households in the
country is supported by remittances from relatives overseas. The peso value of
these remittances shrinks whenever the local currency is appreciating.
Exporters who earn in foreign currency are also affected by a strong peso.
Monetary easing seen
JP Morgan, in a research report
on Wednesday, said the strong growth reduced but did not eliminate potential
for monetary easing.
“Domestic demand has been strong
in the Philippines. This strength has reflected a low interest-rate
environment, combined with strong remittance inflows and steady government
consumption this year (spending has been slower this year than planned but is
still stronger than last year). Moreover, the government has been pushing
investment via private-public partnerships (PPPs), which though slow, are
starting to get off the ground,” JP Morgan said in its research.
JP Morgan noted that while an
important signal, the PPPs themselves may have a small direct effect on growth,
likely around 0.5 percent of GDP on average until 2020.
Fastest expansion
HSBC economist Trinh Nguyen said
that in contrast to the region, which experienced slowing growth in the third
quarter, the Philippines saw the fastest economic expansion this year.
“Exports of both goods and
services, private and public consumption, and investment soared despite the
global slump. This reflects both timely policy actions by the BSP and the
government as well as the resilient nature of the consumption-driven economy.
With such a strong performance, the BSP will hold rates when it meets in December,”
Nguyen said.
On the whole, economic growth was
broad-based, which means “most of the economy’s engines are humming stronger,”
said Jose Mari Lacson, head of research of Campos, Lanuza & Co.
“Most notable, however, was the
tag team of private and public construction, which drove industrial production
higher. While manufacturing sustained its improvement, we do note a
deceleration in services growth. And the services slowdown was across the
sub-sector, meaning even retail and wholesale trade demand may have started to
plateau—a possible repercussion of the stronger peso. The bottomline, however,
is that the recovery in agriculture and stronger industrial production had more
than offset the slowdown in services and reduced purchasing power of overseas
remittances in the third quarter of 2012,” Lacson said.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
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