Dec 5, 2012

ASEAN - ASEAN Market Preview, Philex, Olam, Wismilak, Sunway, Thanachart

Follow Me on Pinterest
The Dow Jones industrial average .DJI fell 13.82 points, or 0.11 percent, to 12,951.78 at the close. The Standard & Poor’s 500 Index .SPX dipped 2.41 points, or 0.17 percent, to 1,407.05. The Nasdaq Composite Index .IXIC shed 5.51 points, or 0.18 percent, to close at 2,996.69.

The market has been sensitive to rhetoric from Washington, as a failure to reach an agreement could send the U.S. economy back into recession. Still, many expect a resolution to be found, which could extend the S&P 500′s rally of 12 percent so far this year.

Differences within the Republican Party came to the fore on Tuesday as one senator opposed to raising taxes lashed out at Republican House Speaker John Boehner for proposing to increase revenue by closing some tax loopholes.

Congressional Republicans recently proposed steep spending cuts to bring down the budget deficit, but gave no ground on Obama’s call to raise tax rates on the rich. The proposal was quickly dismissed by the White House.

Speaking at the 4th China Overseas Investment Fair in Beijing, Mu Hong, deputy head of the National Development and Reform Commission, pledged to boost the resources available to companies, and set up information networks and associations to help organizations with the advice they need to seek opportunities overseas.

“Despite the sluggish world economy, Chinese outbound investment remained robust and the whole year will see Chinese outbound investment at record levels,” said Mu.

He said that in the first 10 months of the year, China’s non-financial outbound direct investment totaled $58.17 billion, up 25.8 percent from a year earlier.

The country’s ODI increased by 8.5 percent year-on-year in 2011 to $74.7 billion, with non-financial ODI reaching $68.6 billion, up 4 percent year-on-year.

The government will be looking at various specific issues, he said.

For instance, efforts will be made to improve the investment safeguards offered to Chinese companies by neighboring countries, while at home, there will be a fine-tuning of the legal and approval requirements needing to be met by firms looking to invest abroad.

The government also plans to fund a network of public information organizations abroad, and establish investment agencies and associations at home, which could offer business advice to companies looking to invest internationally.

They will be available to guide companies in the often-complex legal and regulatory conditions of key markets around the world, as well as working to promote the image of the country globally.

Commerce Minister Chen Deming said last week that Chinese non-financial ODI is likely to pass $70 billion in 2012 and that the surging momentum will drive ODI close to foreign direct investment in China in the next five or 10 years.

Singapore

The next round in the Olam Vs Muddy Waters battle will start early in Singapore today and the deck has been reshuffled, Olam now has survived the first day of trading and Muddy Waters will be spouting fire and brimstone this am in Singapore.

Yesterday belonged to Olam , once the market opened Olam jumped as much as 8.6 per cent to an intraday high of S$1.71 before giving back most of those gains to finish at S$1.60 or 1.6 per cent higher.

This was a direct result of Olam’s rights issue and Temasek’s support of the issue.

The rights issue takes advantage of Muddy Waters cash position. 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 that 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.

Given the stock is now at $1.60 and that the rights issue is at $1.291 with 162 warrants for every 1,000 existing ordinary shares the market looks set to test the 2nd level short sellers as early as today and the Muddy Waters short position (by my estimate) at around $1.80.

When you are short a stock you become responsible for any dividend or entitlement attached to the equity, short sellers are now on the hook for the value of the rights offer as determined by the market, and today they lost serious ground.

Muddy Waters was not surrendering Tuesday, characterizing the company’s $1.25 billion fund-raising plan as a “sovereign bailout” a week after the commodities trader said it had enough liquidity during an interview with Sri Jegarajah of CNBC. I would probably agree with CEO Carson Bloc, it is Temasek coming to support a local company and the reputation of the Singapore Stock Exchange, and really he should have seen that coming.

Temasek is not your regular investment fund Muddy Waters so easily scare, Temasek have wider responsibility, one to the Sovereign Nation of Singapore and it’s people. Temasek could stand to lose 10′s of billions if Olam were to fail and the Singapore Financial Hub, Singapore Stock Exchange left tarnished. It will not happen.

Apart from the noise and hyperbole Muddy Waters do provide a reminder to all investors to look at value , accounting methods and business models before investing, and Carson Bloc has been right more times than he has been wrong, but this time he under estimated the competition, while he was focused on Olam he should have considered Temasek’s reaction.

Thailand

Thanachart Capitai Pubiic Company Limited will be buying back 10% of the outstanding shares of the company,

1.1 The maximum amount for the share repurchase is 3,400 million baht.
1.2 Number of share repurchased not exceeding 127,781,636 shares (at par value of 1O bah! per share) or equal to 1O percent of the total of paid-up capital.
1.3 Procedure used for the repurchased of shares

0 Buying from the Stock Exchange of Thailand

D Offering to general shareholders at the price of baht .. per share (the price being the same)

The repurchase period will be started from 11 December 2012 to 10 June 2013.

1.4 The principal used to determine the repurchase price taking into account the average market price during the last 30 days prior to the date on which the company discloses the information of shares repurchase.

The repurchase price shall not be more than 1.1 times book value of the latest disclosed financial statements and not be exceeding 115 percent of the average closing shares price prior to 5 working days on date of sale and purchase. Accordingly, the average share price backward 30 working days during 12 October 2012 until26 November 2012 is equivalent to 36.14 baht per share 2. The information of the company

2.1 The company’s retained earnings and excess liquidity information
The information is based on the company’s latest l reviewed financial statements as of 30 September 2012.

The company’s retained earnings were 12,981.5 million baht.

The company’s debts, which shall become due within the next 6 months following

From the date on which the shares will be repurchased, equal 3,000 million bah!.

The ability to repay the above mentioned debts in the next 6 months From the date on which the shares will be repurchased

As of 26 November 2012, the company’s liquidity amounted to 6,400 million baht and alter repaying the above mentioned debts, the company still has liquidity of around 3,400 million baht.

2.2 The number of minor shareholders (Free Float) as in the share registration book finalized on 9 October 2012 equaled 1,131,730,796 shares or 88.57 percent of the company’s paid up capital. In addition, the company encloses herewith the report of the company’s share distribution.

3. Reasons for the proposed share repurchase

3.1 To manage the excess liquidity of the company to the highest interest.

3.2 To show the strong financial status of the company.

4. Likely impacts alter the share repurchase.

4.1 impact to the shareholders: The shareholders would receive the higher return per share because the shares repurchased by the company would have no right receive the dividend and would make the higher rate of return per share.

4.2 impact to the company: The company would have the lower liquidity asset and book value of shareholders’ equity whereby in the case that the company can repurchase in full amount as specified, the company would have the have the liquidity asset!and book value of shareholders’ equity being lower in equivalent lo such amount as repurchased.

Malaysia

Sunway Bhd and Iskandar Investment Bhd have teamed up to undertake a mixed development project in Iskandar Malaysia which will have a gross development value of RM12bil.

Sunway said on Tuesday its unit Sunway City Bhd and Iskandar Assets Sdn Bhd had teamed up to undertake the project on several parcels of land in Iskandar Malaysia.

“The proposed mixed development on the land is expected to generate gross development value amounting to approximately RM12bil,” said Sunway.

Under the corporate exercise, SunCity’s unit, Harmony Impulse Sdn Bhd would acquire 412.75 acres of land and 366.32 acres in Tanjung Kupang, Johor Baru for a total of RM412.72mil.

SunCity and Iskandar Assets would hold ordinary shares and redeemable preference shares in Harmony Impulse in the proportion of 60:40.

Sunway said the purchase consideration of up to RM412.72mil for the 799.07 acres was based on RM12.16 per sq ft.

Indonesia

Wismilak Inti Makmur, a Surabaya-based cigarette maker, is expected to raise Rp 409 billion ($43 million) in an initial public offering next week.

The company plans to price shares at Rp 650 apiece, well within its indicative price range, according to FinanceAsia.com, citing unidentified sources.

Wismilak plans to offer 630 million shares, or 30 percent of its enlarged equity, to investors on Dec. 10-12. The shares will be listed on the Indonesian Stock Exchange on Dec. 17, the company said.

Iman Rachman, a director at Mandiri Sekuritas, one of the underwriters, said on Nov. 19 that the company aimed to fetch an IPO price at between Rp 575 and Rp 800 a share. Wismilak hired OSK Nusadana Securities as a second underwriter.

Iman did not respond to calls by the Jakarta Globe seeking comment on the IPO price on Monday.

Indonesian companies are selling shares through IPOs to capitalize on rising consumer demand and investor confidence in the nation’s equity market.

Ronald Walla, president director of Wismilak, said on Nov. 19 that 50 percent of the IPO’s proceeds would be used to finance its various business plans, 30 percent to boost capital and the remaining 20 percent to repay debt.

The company plans to spend money on new machines to produce cigarettes. Its production capacity stands at 3 billion cigarettes per year, made both by machines and using hand-rolling methods.

The firm aims to boost production to 4.7 billion in the coming years, Ronald said on Nov. 19.

Wismilak will join Gudang Garam — the country’s largest clove cigarette maker — as well as Hanjaya Mandala Sampoerna and Bentoel International as cigarette companies listed on the exchange.

Wismilak was founded in 1962 as Gelora Djaja and adopted its current name in 1994. Its popular brands include Wismilak and Galan.

Indonesia is one of the world’s largest tobacco markets, with liberal advertising regulations and low taxes.

Wismilak will be added to the growing list of Indonesian companies taking the IPO route this year.

Express Transindo Utama, the country’s first listed taxi operator, made a stellar debut in early November, after it raised Rp 589 billion by selling 49 percent of its stake. Express is controlled by the country’s Rajawali Corpora, founded by one of the country’s richest people, Peter Sondakh.

Philippines

Philex in Trouble?

Rep. Neri Javier Colmenares has filed House Resolution 2891, urging the committee to invite officials of Philex mining, the Department of Environment and Natural Resources (DENR), anti-mining advocates and concerned agencies during the planned public hearings.

Colmenares said Philex., a gold and copper producer, had been initially asked to pay more than P1 billion in fines, based on the estimate of DENR Secretary Ramon Paje, for the tailing pond spills in the firm’s Padcal facility in Benguet province.

The lawmaker said that on top of the P1-billion penalty the DENR had set, Philex was asked to pay P200,000 daily for the spills in violation of the Philippine Clean Water Act of 2004 or Republic Act 9275 and its own environmental compliance certificate.

“This means that Philex could end up paying a fine of P975 million or P325 million multiplied by three, plus another P8.4 million or P200,000 multiplied by 42 days – and counting as of Sept. 11, 2012. However, the direct impact of the mine tailing to its immediate surroundings had not been given significant attention,” Colmenares said.

Citing the reports on the mine tailings spills, he said 9.9 million tons of toxic waste were discharged from Philex’s Tailings Pond 3 from Aug. 1 to 9, 2012.

“The waste covered a stretch of 2.5 kilometers, 15 feet wide and two to eight feet thick along the Balog River in Itogon. This volume may have doubled by the fourth mine spill on August 30,” Colmenares said.

The Cordillera Peoples Alliance (CPA), Katribu and Aminan Salakniban, non-governmental groups in the Cordillera region also called for an independent environmental investigation on mine tailing spills.



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.

No comments:

Post a Comment