Accelerating sales growth in 4Q
We trim our 2010F same-store-sales (SSS) growth slightly to 7% (from 8%) to reflect the softer-than-expected SSS growth in 3Q. However, the trend is expected to reverse in 4Q. Management also confirmed that Q-T-D SSS growth has accelerated from 4.5% in 3Q, thanks to surging purchases for flood victims. Seasonal spending should support the uptrend continuing in Dec.
More fresh food sales = higher GM
The outstanding rise in the nine-month gross margin (GM) of 100bps YoY to 7.4% is not only the result of the favorable economy, but also the successful strategic shift towards fresh food, whose GM is 50% higher than dry food. As of 3Q10, the portion of fresh food rose to 18.5% of total sales (from 16.3% in 3Q09), while the portion of dry food sales fell to 68% from 70%. Non-food merchandise has also been changed to focus more on items for food retailers, e.g., kitchen appliances and food preparation utensils. A full range of products for food retailers will help draw traffic from food retailers, who are key customers of fresh food.
We raise our forecasted gross margin by 30bps to 7.4% and 7.5% for 2010F and 2011F, respectively. As a result, our 2010F earnings are raised by 3.5% to Bt2,039m (growth of 33.5%) and by 7% to Bt2,474m for 2011F (growth of 21.4%).
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ในที่สุดก็ได้ส่งคำสั่งซื้อจนได้..
เมื่อวานเอาเงินไปเข้าบัญชีซื้อขายช่วงเช้า.. ทาง จนท.แจ้งว่าจะอัปฯ จำนวนเงินในบัญชีช่วงบ่าย เราก็รออย่างลุ้นระทึก..
ในที่สุดเงินก็เข้ามาในบัญชีซื้อขายแล้ว!!! แต่ว่าช๊อปฯ หุ้นเพลินไปหน่อยอะ.. แต่มันถือเป็นการลงทุนนี่นะ.. ไม่ได้ใช้เงินฟุ่มเฟือยเสียหน่อย.. อิ..อิ..
ในที่สุดเงินก็เข้ามาในบัญชีซื้อขายแล้ว!!! แต่ว่าช๊อปฯ หุ้นเพลินไปหน่อยอะ.. แต่มันถือเป็นการลงทุนนี่นะ.. ไม่ได้ใช้เงินฟุ่มเฟือยเสียหน่อย.. อิ..อิ..
Monday, November 15, 2010
ได้รหัสซื้อขายแล้ว เย้!!!
ได้รหัสซื้อขายแล้ว เย้!!!
ได้รหัสซื้อขายแล้ว เย้!!!
ในที่สุดนายแว่นธรรมดา.. ก็ได้รหัสซื้อขายหลักทรัพย์แล้ว..
เมื่อวานโทรไปถามเซลล์.. และแล้วก็ได้รหัสซื้อขายมา.. พอลงทะเบียนจะส่งคำสั่งซื้อ.. ปรากฏว่าซื้อไม่ได้แฮะ..
จริงๆ แล้วเราต้องโอนเงินเข้าบัญชีซื้อขายของบริษัท เคทีฯ ก่อนอะซิ.. ไม่เป็นไรมีเวลาเมื่อไหร่จะรีบเข้า bank ไปโอนเงินทันที.. จะได้ซื้อขายจริงๆ ซะที..
เราลองมาดูประเภทของการเปิดบัญชีซื้อขายหลักทรัพย์กัน
ประเภทการเปิดบัญชี
1. บัญชีแคชบาลานซ์ (Cash Balance หรือ Pre-paid หรือ Cash Deposit)
เป็นบัญชีที่คุณต้องฝากเงินไว้กับโบรกเกอร์จำนวนหนึ่งก่อน สำหรับเป็นเงินชำระค่าหุ้นที่จะเกิดขึ้นในอนาคต และถือว่าเงินจำนวนนั้นเป็นอำนาจซื้อของคุณเอง เมื่อถึงวันชำระค่าหุ้น (T+3) โบรกเกอร์ก็จะหักเงินออกไปจากส่วนที่ฝากนี้ชำระเป็นค่าหุ้นไปอัตโนมัติ ถ้าคุณต้องการซื้อหุ้น แต่วงเงินไม่พอ ก็สามารถโอนเงินเพิ่ม เพื่อให้อำนาจซื้อเพิ่มขึ้นได้ บางโบรกเกอร์ก็จะให้ดอกเบี้ยเงินฝากด้วย
ข้อดี เปิดโอกาสให้ผู้ที่มีทุนน้อย สามารถซื้อขายผ่านอินเทอร์เน็ตได้ แม้มีเพียงหนึ่งหมื่นบาทสามารถซื้อขายได้ตามกำลังซื้อของตน และให้ความสะดวกกับนักลงทุน ไม่ต้องนำเงินไปฝากกับโบรกเกอร์ ในขณะที่ยังไม่มีการซื้อขาย
ข้อจำกัด ต้องมีเงินหรือหลักทรัพย์ฝากไว้ก่อนทำการซื้อขาย กรณีเงินไม่พอต้องโอนเงินเพิ่มก่อน
2. บัญชีเงินกู้ยืมเพื่อซื้อขายหลักทรัพย์ (Credit Ballance )
เป็นบัญชีรูปแบบหนึ่งของบัญชีมาร์จิ้นซึ่งอำนาจซื้อหลักทรัพย์ (Purchasing Power) ของคุณจะขึ้นอยู่กับหลักประกันและมูลค่าขึ้นลงตามราคาตลาดของหลักทรัพย์ที่คุณมีอยู่ในบัญชีเครดิตบาลานซ์ (Market-to-Market) โดยการกู้ยืมเงินจากโบรกเกอร์ หรือยืมหลักทรัพย์เพื่อขายชอร์ต ต้องได้รับวงเงินและวางหลักทรัพย์ค้ำประกันตามอัตราที่แต่ละแห่งกำหนด บัญชีประเภทนี้ ลูกค้าควรศึกษากฎระเบียบต่าง ๆ ที่เกี่ยวข้อง และมีความเข้าใจเป็นอย่างดีเกี่ยวกับภาวะขึ้นลงของหลักทรัพย์ในตลาดหลักทรัพย์
ข้อดี ลูกค้ามีอำนาจซื้อมากกว่าเงินสดหรือทรัพย์สินที่มี
ข้อจำกัด ต้องมีการจ่ายอัตราดอกเบี้ยเงินกู้ กรณีชำระเงินเกินเวลาที่กำหนด
ได้รหัสซื้อขายแล้ว เย้!!!
ในที่สุดนายแว่นธรรมดา.. ก็ได้รหัสซื้อขายหลักทรัพย์แล้ว..
เมื่อวานโทรไปถามเซลล์.. และแล้วก็ได้รหัสซื้อขายมา.. พอลงทะเบียนจะส่งคำสั่งซื้อ.. ปรากฏว่าซื้อไม่ได้แฮะ..
จริงๆ แล้วเราต้องโอนเงินเข้าบัญชีซื้อขายของบริษัท เคทีฯ ก่อนอะซิ.. ไม่เป็นไรมีเวลาเมื่อไหร่จะรีบเข้า bank ไปโอนเงินทันที.. จะได้ซื้อขายจริงๆ ซะที..
เราลองมาดูประเภทของการเปิดบัญชีซื้อขายหลักทรัพย์กัน
ประเภทการเปิดบัญชี
1. บัญชีแคชบาลานซ์ (Cash Balance หรือ Pre-paid หรือ Cash Deposit)
เป็นบัญชีที่คุณต้องฝากเงินไว้กับโบรกเกอร์จำนวนหนึ่งก่อน สำหรับเป็นเงินชำระค่าหุ้นที่จะเกิดขึ้นในอนาคต และถือว่าเงินจำนวนนั้นเป็นอำนาจซื้อของคุณเอง เมื่อถึงวันชำระค่าหุ้น (T+3) โบรกเกอร์ก็จะหักเงินออกไปจากส่วนที่ฝากนี้ชำระเป็นค่าหุ้นไปอัตโนมัติ ถ้าคุณต้องการซื้อหุ้น แต่วงเงินไม่พอ ก็สามารถโอนเงินเพิ่ม เพื่อให้อำนาจซื้อเพิ่มขึ้นได้ บางโบรกเกอร์ก็จะให้ดอกเบี้ยเงินฝากด้วย
ข้อดี เปิดโอกาสให้ผู้ที่มีทุนน้อย สามารถซื้อขายผ่านอินเทอร์เน็ตได้ แม้มีเพียงหนึ่งหมื่นบาทสามารถซื้อขายได้ตามกำลังซื้อของตน และให้ความสะดวกกับนักลงทุน ไม่ต้องนำเงินไปฝากกับโบรกเกอร์ ในขณะที่ยังไม่มีการซื้อขาย
ข้อจำกัด ต้องมีเงินหรือหลักทรัพย์ฝากไว้ก่อนทำการซื้อขาย กรณีเงินไม่พอต้องโอนเงินเพิ่มก่อน
2. บัญชีเงินกู้ยืมเพื่อซื้อขายหลักทรัพย์ (Credit Ballance )
เป็นบัญชีรูปแบบหนึ่งของบัญชีมาร์จิ้นซึ่งอำนาจซื้อหลักทรัพย์ (Purchasing Power) ของคุณจะขึ้นอยู่กับหลักประกันและมูลค่าขึ้นลงตามราคาตลาดของหลักทรัพย์ที่คุณมีอยู่ในบัญชีเครดิตบาลานซ์ (Market-to-Market) โดยการกู้ยืมเงินจากโบรกเกอร์ หรือยืมหลักทรัพย์เพื่อขายชอร์ต ต้องได้รับวงเงินและวางหลักทรัพย์ค้ำประกันตามอัตราที่แต่ละแห่งกำหนด บัญชีประเภทนี้ ลูกค้าควรศึกษากฎระเบียบต่าง ๆ ที่เกี่ยวข้อง และมีความเข้าใจเป็นอย่างดีเกี่ยวกับภาวะขึ้นลงของหลักทรัพย์ในตลาดหลักทรัพย์
ข้อดี ลูกค้ามีอำนาจซื้อมากกว่าเงินสดหรือทรัพย์สินที่มี
ข้อจำกัด ต้องมีการจ่ายอัตราดอกเบี้ยเงินกู้ กรณีชำระเงินเกินเวลาที่กำหนด
Friday, November 5, 2010
Property: BoT seeks panel review of banks’ lending policy
Event:
The Bank of Thailand will ask the Financial Institutions Policy Committee (FIPC) to review the loan to value ratio used by banks in financing property projects in order to prevent a bubble from forming in the condominium market, particularly for the mid-lower end segment (unit prices lower than Bt3mn).
At present, commercial banks generally lend a maximum of 80-95% of the collateral value (selling price) and will cap the mortgage monthly installment at around 40% of household income.
Comment
Conclusion: Although we believe that it is too early to implement such a policy (some time may need to be taken for related parties, including developers, to debate the measures), the BoT’s comment already creates policy risk. This concern should limit the sector’s performance in the near term until it is clarified. If this policy is truly implemented, its potential negative consequences in the short to medium term should be priced in the valuation and we foresee the possibility of a downgrade to our sector weighting from currently overweight.
The Bank of Thailand will ask the Financial Institutions Policy Committee (FIPC) to review the loan to value ratio used by banks in financing property projects in order to prevent a bubble from forming in the condominium market, particularly for the mid-lower end segment (unit prices lower than Bt3mn).
At present, commercial banks generally lend a maximum of 80-95% of the collateral value (selling price) and will cap the mortgage monthly installment at around 40% of household income.
Comment
Conclusion: Although we believe that it is too early to implement such a policy (some time may need to be taken for related parties, including developers, to debate the measures), the BoT’s comment already creates policy risk. This concern should limit the sector’s performance in the near term until it is clarified. If this policy is truly implemented, its potential negative consequences in the short to medium term should be priced in the valuation and we foresee the possibility of a downgrade to our sector weighting from currently overweight.
Sunday, October 17, 2010
How will the QE work through the economy?
How will the QE work through the economy?
While a new round of quantitative easing (QE II) by the Fed seems to be a foregone conclusion, the market remains skeptical about how effective it will be in spurring the economy. Before we can analyze its potential effectiveness, we need to address how the Large Scale Asset Purchase program (LSAP) works through the economy.
LSAP or quantitative easing is different from traditional monetary policy implementation in that quantitative easing has not been used as a signal of the future path of short-term risk-free interest rates. We can see that dating back to the time of the QE I, the Fed informed markets about the chance of raising short-term rates at the appropriate time while expanding its balance sheet. In contrast, the LSAP is being conducted for the purpose of narrowing risk premiums, which will in turn pull down longer-term yields. As the QE is perceived as a government life support that will help ease systemic risks, it will not only reduce the yields on assets being purchased, but also spill over into the yields on other assets.
Now we can look at how the QE I worked to reduce risk premiums. The risk premium is the additional return that investors require when holding risky assets. In our study, we use the difference in 30-year government bond yields and 30-year fixed mortgage rates to represent risk premiums. The risk premiums ran at 124 bps on average during the end of the 2001 recession and the onset of the latest recession (December 2007). The premiums soared 82 bps from 172 bps at the onset of the recession to peak at 253 bps, triggering the first QE in late November 2008. Subsequently, the premiums dropped markedly to uncharted territory at 28 bps in March 2010 when the Fed’s MBS purchase program ended. The premiums have since gradually risen by 36 bps to 64 bps as of September. At the current levels, the risk premiums are still well below the average of the past five recessions (200 bps). This implies that even though the new QE may not do much to further reduce risk premiums and long-term yields, it could at least help keep a lid on them. By putting a ceiling on risk premiums, the Fed is at the same time putting a floor under economic growth. Figure 1 shows a negative relationship between risk premiums and the ISM manufacturing index, with a correlation of 0.5. The graph also suggests that risk premiums higher than 150 bps can lead the ISM index lower into contraction territory.
While a new round of quantitative easing (QE II) by the Fed seems to be a foregone conclusion, the market remains skeptical about how effective it will be in spurring the economy. Before we can analyze its potential effectiveness, we need to address how the Large Scale Asset Purchase program (LSAP) works through the economy.
LSAP or quantitative easing is different from traditional monetary policy implementation in that quantitative easing has not been used as a signal of the future path of short-term risk-free interest rates. We can see that dating back to the time of the QE I, the Fed informed markets about the chance of raising short-term rates at the appropriate time while expanding its balance sheet. In contrast, the LSAP is being conducted for the purpose of narrowing risk premiums, which will in turn pull down longer-term yields. As the QE is perceived as a government life support that will help ease systemic risks, it will not only reduce the yields on assets being purchased, but also spill over into the yields on other assets.
Now we can look at how the QE I worked to reduce risk premiums. The risk premium is the additional return that investors require when holding risky assets. In our study, we use the difference in 30-year government bond yields and 30-year fixed mortgage rates to represent risk premiums. The risk premiums ran at 124 bps on average during the end of the 2001 recession and the onset of the latest recession (December 2007). The premiums soared 82 bps from 172 bps at the onset of the recession to peak at 253 bps, triggering the first QE in late November 2008. Subsequently, the premiums dropped markedly to uncharted territory at 28 bps in March 2010 when the Fed’s MBS purchase program ended. The premiums have since gradually risen by 36 bps to 64 bps as of September. At the current levels, the risk premiums are still well below the average of the past five recessions (200 bps). This implies that even though the new QE may not do much to further reduce risk premiums and long-term yields, it could at least help keep a lid on them. By putting a ceiling on risk premiums, the Fed is at the same time putting a floor under economic growth. Figure 1 shows a negative relationship between risk premiums and the ISM manufacturing index, with a correlation of 0.5. The graph also suggests that risk premiums higher than 150 bps can lead the ISM index lower into contraction territory.
Will China Set Its Consumers Free?
Will China Set Its Consumers Free?
Japan’s experience in recent decades indicates that when rapid growth begins to slow in an economy with very high corporate and household savings driving fixed investment, demand can prove extremely difficult to manage. This is particularly true if the deliberate promotion of credit growth and asset price bubbles has been part of the mechanism used to sustain demand. Levels of fixed asset investment and consumption were very similar to current Chinese levels in Japan in the early 1970s (and the horrendous pollution of unregulated industrialisation in a one party state) but Japan never made the transition to a truly free market allocation of capital and maintained an implicit producer subsidy right through the bubble years. Anyone visiting Japan at the time from Europe or the US was struck by the relatively poor living standards of the average Japanese, despite world leading GDP per capita.
Japan’s experience in recent decades indicates that when rapid growth begins to slow in an economy with very high corporate and household savings driving fixed investment, demand can prove extremely difficult to manage. This is particularly true if the deliberate promotion of credit growth and asset price bubbles has been part of the mechanism used to sustain demand. Levels of fixed asset investment and consumption were very similar to current Chinese levels in Japan in the early 1970s (and the horrendous pollution of unregulated industrialisation in a one party state) but Japan never made the transition to a truly free market allocation of capital and maintained an implicit producer subsidy right through the bubble years. Anyone visiting Japan at the time from Europe or the US was struck by the relatively poor living standards of the average Japanese, despite world leading GDP per capita.
Sunday, October 3, 2010
KBANK: Growth acceleration, but opex higher - Hold (Target Bt123.00)
KBANK: Growth acceleration, but opex higher - Hold (Target Bt123.00)
Event: 3Q10F earnings preview and outlook
Key highlights
Expected 3Q10F at Bt5bn (+5% QoQ and +34% YoY)
Amidst loan growth and margin recovery, the slow Q-o-Q growth will come from lower bancassurance and acceleration of opex. Meanwhile, the strong Y-o-Y growth comes from both NII (+23%) and non-NII growth (+24%).
Loan growth acceleration in 3Q10 and beyond 4Q10
Although 8M10 loan growth at 4.8% is only half of its FY-10 target of 7-9%, signs of loan drawdown from the corporate and SME segments keep its FY-10 target valid. This guidance means MoM loan growth of 1% for the rest of this year, indicating strong NII growth momentum going forward.
….but cost overrun for K-transformation
However, the K-transformation capex budget for improving the core banking system has been significantly revised up by 25-30% from the original budget of Bt15bn, with the project’s completion to be delayed by 6-12 months to 2013F due to the complexity and longer test run. Assuming that the additional costs are capitalized with 10-yr amortization, this should incur additional expenses of around Bt600-700mn p.a. (or at 3% of net earnings) and keep the cost-to-income ratio high at 55% until 2012 (vs. 50% avg. at 3 big banks).
Hold with TP-12M of Bt123 (PBV of 2.0X)
In order to offset the cost overrun, we believe that KBANK will need to lower credit cost by around 5bps (from 70bps to 65bps). Lowering provision expenses to that level makes sense given its continued low NPL inflow, lowest NPL ratio at 3.5% and high coverage of 104%. Incorporating 3Q10F, 9M10 makes up 80% of our FY-10 forecast. With limited upside target price, we downgrade recommendation from buy to hold.
Event: 3Q10F earnings preview and outlook
Key highlights
Expected 3Q10F at Bt5bn (+5% QoQ and +34% YoY)
Amidst loan growth and margin recovery, the slow Q-o-Q growth will come from lower bancassurance and acceleration of opex. Meanwhile, the strong Y-o-Y growth comes from both NII (+23%) and non-NII growth (+24%).
Loan growth acceleration in 3Q10 and beyond 4Q10
Although 8M10 loan growth at 4.8% is only half of its FY-10 target of 7-9%, signs of loan drawdown from the corporate and SME segments keep its FY-10 target valid. This guidance means MoM loan growth of 1% for the rest of this year, indicating strong NII growth momentum going forward.
….but cost overrun for K-transformation
However, the K-transformation capex budget for improving the core banking system has been significantly revised up by 25-30% from the original budget of Bt15bn, with the project’s completion to be delayed by 6-12 months to 2013F due to the complexity and longer test run. Assuming that the additional costs are capitalized with 10-yr amortization, this should incur additional expenses of around Bt600-700mn p.a. (or at 3% of net earnings) and keep the cost-to-income ratio high at 55% until 2012 (vs. 50% avg. at 3 big banks).
Hold with TP-12M of Bt123 (PBV of 2.0X)
In order to offset the cost overrun, we believe that KBANK will need to lower credit cost by around 5bps (from 70bps to 65bps). Lowering provision expenses to that level makes sense given its continued low NPL inflow, lowest NPL ratio at 3.5% and high coverage of 104%. Incorporating 3Q10F, 9M10 makes up 80% of our FY-10 forecast. With limited upside target price, we downgrade recommendation from buy to hold.
Tuesday, September 28, 2010
PTT: The operating license
PTT: The operating license for GSP#6 to be granted soon! - Buy (Target Bt340.00)
? According to a local newspaper, Kaohoon, PTT’s top management Mr. Permsak Cheevawattananon claimed that PTT’s GSP#6 is likely to obtain an operating license within this Sep 2010.
? PTT expects it to take 30 days for commissioning and test running this new GSP with a 50% utilization rate. Afterward, the plant is likely to run at full capacity within the next two months to serve the current strong domestic demand for natural gas and LPG consumption.
? Management does not expect any negative effects to the start-up and/or operation of this new GSP from the protests in Map Ta Phut at the end of this month.
? This news could act as a positive share price catalyst to PTT in the short term as we previously expected the granting of the operating license to GSP#6 and other projects in Map Ta Phut to be delayed for a few weeks or months due to political intervention.
? As we assume GSP#6 to start contributing earnings in 2011, the quicker-than-expected operation start-up of the plant offers upside to our earnings forecast in 2010 of Bt72.2bn. Additionally, as the current demand for natural gas consumption has reached 4,000mmcfd—representing about 6% growth—this stronger-than-expected demand (~4% growth was the previous projection) could imply a higher profit contribution from the gas business in 2011. Therefore, our 2011 earnings forecast of Bt79.8bn is also subject to upside risk.
? Given all this, we reiterate our BUY rating to PTT with a mid-2011 target price of Bt340 due to potential upside to our earnings forecast and its cheap valuation—it trades at 10.9x of an average 2010-11 PER compared to 10.5x of its regional peers. The premium is deserved due to its stronger earnings growth and ROE.
? According to a local newspaper, Kaohoon, PTT’s top management Mr. Permsak Cheevawattananon claimed that PTT’s GSP#6 is likely to obtain an operating license within this Sep 2010.
? PTT expects it to take 30 days for commissioning and test running this new GSP with a 50% utilization rate. Afterward, the plant is likely to run at full capacity within the next two months to serve the current strong domestic demand for natural gas and LPG consumption.
? Management does not expect any negative effects to the start-up and/or operation of this new GSP from the protests in Map Ta Phut at the end of this month.
? This news could act as a positive share price catalyst to PTT in the short term as we previously expected the granting of the operating license to GSP#6 and other projects in Map Ta Phut to be delayed for a few weeks or months due to political intervention.
? As we assume GSP#6 to start contributing earnings in 2011, the quicker-than-expected operation start-up of the plant offers upside to our earnings forecast in 2010 of Bt72.2bn. Additionally, as the current demand for natural gas consumption has reached 4,000mmcfd—representing about 6% growth—this stronger-than-expected demand (~4% growth was the previous projection) could imply a higher profit contribution from the gas business in 2011. Therefore, our 2011 earnings forecast of Bt79.8bn is also subject to upside risk.
? Given all this, we reiterate our BUY rating to PTT with a mid-2011 target price of Bt340 due to potential upside to our earnings forecast and its cheap valuation—it trades at 10.9x of an average 2010-11 PER compared to 10.5x of its regional peers. The premium is deserved due to its stronger earnings growth and ROE.
Monday, September 27, 2010
DTAC: 3G disappointment is over
DTAC: 3G disappointment is over; focus on spectacular 3Q earnings - Trading Buy (Target Bt50)
3G disappointment is over; focus on 2G earnings recovery
We upgrade our recommendation to Trading BUY (from HOLD). The share price has slumped by 10% since the Central Administrative Court’s verdict on 16 Sep, proving a trading range to our 2G-only target price of Bt50/sh (21% upside at current price). We believe that the downside is limited at the current price. The key concern over a decline in 2011F earnings (as a result of rising revenue sharing and tax rate) is already reflected in the share price. DTAC now trades at low PER of 11x for 2010F and 11.5x for 2011F (based on normalized EPS), which is lower than the SET at 13x.
Spectacular 3Q earnings to drive the stock to re-rate in the short term
We expect DTAC’s 3Q normalized earnings to remain impressive with growth of 42.3% YoY on continued revenue recovery and a healthy EBITDA margin. On a QoQ basis, earnings will decline by 4.2% due to accelerating marketing expenses for on-net/off-net pricing parity promotions. Including extra gain of Bt507m, earnings growth will reach 74% YoY and 16.4% QoQ. We possibly upgrade our 2010F earnings growth to 37% (from currently 30%) to reflect stronger-than-expected earnings outlook in 2H after the results on 22 Oct.
Possible upside to 2010F DPS
With the indefinite delay in the 3G plan and overwhelming FCF, DTAC will now consider maximizing its capital structure, including refinancing existing debts to remove the dividend-payout covenant. Successful restructuring will imply a possible rise in the dividend payout to 100% (from the current expectation at 70%). 2010F DPS could rise to Bt3.9 or a yield of 9.5%
3G disappointment is over; focus on 2G earnings recovery
We upgrade our recommendation to Trading BUY (from HOLD). The share price has slumped by 10% since the Central Administrative Court’s verdict on 16 Sep, proving a trading range to our 2G-only target price of Bt50/sh (21% upside at current price). We believe that the downside is limited at the current price. The key concern over a decline in 2011F earnings (as a result of rising revenue sharing and tax rate) is already reflected in the share price. DTAC now trades at low PER of 11x for 2010F and 11.5x for 2011F (based on normalized EPS), which is lower than the SET at 13x.
Spectacular 3Q earnings to drive the stock to re-rate in the short term
We expect DTAC’s 3Q normalized earnings to remain impressive with growth of 42.3% YoY on continued revenue recovery and a healthy EBITDA margin. On a QoQ basis, earnings will decline by 4.2% due to accelerating marketing expenses for on-net/off-net pricing parity promotions. Including extra gain of Bt507m, earnings growth will reach 74% YoY and 16.4% QoQ. We possibly upgrade our 2010F earnings growth to 37% (from currently 30%) to reflect stronger-than-expected earnings outlook in 2H after the results on 22 Oct.
Possible upside to 2010F DPS
With the indefinite delay in the 3G plan and overwhelming FCF, DTAC will now consider maximizing its capital structure, including refinancing existing debts to remove the dividend-payout covenant. Successful restructuring will imply a possible rise in the dividend payout to 100% (from the current expectation at 70%). 2010F DPS could rise to Bt3.9 or a yield of 9.5%
Sunday, September 19, 2010
Thailand Telecom: An injunction on the 3G auction – Neutral
Event: Yesterday, the Central Administrative Court issued an injunction on the upcoming 3G auction regarding the lawsuit filed by CAT Telecom. The Court ruled that an interpretation on the bidding needs to wait until the new regulator is set up as part of the new Frequency Allocation Act (FAA). Today, the regulator plans to appeal the ruling to the Supreme Admin Court. The auction will be cancelled if there is no court order by Monday at 9.00 a.m.
Comment:
Timeframe of the Supreme Admin Court is the key
With the tight schedule (only three days left), the chance that the Supreme Court will rule before the auction is low, in our view. We thus expect the auction to be delayed from 20 Sep. The injunction ruling will negatively impact telco share prices, particularly DTAC and TRUE, which have rallied by 23% and 117% since July on optimism over 3G licensing.
… Auction likely delayed despite a favorable ruling after Sep
If the ruling comes out after Sep, even one in favor of the NTC, the expiring terms of three commissioners at the end of Sep will weaken the legal authority of the regulator in proceeding with the auction. With the upcoming approval of the Frequency Allocation Act (FAA), which will be discussed below, the auction is unlikely to be resumed.
… only hope for 3G auction happening is a favorable ruling within next week
If a favorable ruling comes out within next week, then the regulator can legally proceed with the auction. However, risk persists as there is still uncertainty over the verdict in the CAT lawsuit. The winning bidders may delay their investment, and this should cause downside to the expected benefit from 3G licenses.
3G by end of 2011 at the earliest
The FAA is now being subjected to final scrutiny by a joint committee before submission for parliamentary approval, which is expected by Nov. The establishment of the new regulator, the National Broadcasting and Telecom Commission (NBTC), should take at least six months, and an overhaul of the 3G licensing terms will take another six months.
Upside to 2010F DPS
Without CAPEX on 3G, we raise our 2010F DPS by approximately 50% for both telcos under our coverage. We now expect Bt9.3/sh for ADVANC and Bt2.9/sh for DTAC.
Recommendation:
- We downgrade our recommendation to ‘underweight’ (from under review) for the sector. Disappointment over 3G will overshadow recovery in the 2G business in the near term.
- Stripping out 3G value from our TPs, our new TPs are reduced to Bt96/sh (from Bt110/sh) for ADVANC and Bt50/sh (from Bt60/sh) for DTAC. The current prices offer limited upside to our new TPs. We therefore reduce our recommendation to HOLD (from under review) for both ADVANC and DTAC.
- A deep dip in share prices should provide an opportunity to BUY for their attractive dividend yields. We prefer ADVANC dividend yield-wise.
Comment:
Timeframe of the Supreme Admin Court is the key
With the tight schedule (only three days left), the chance that the Supreme Court will rule before the auction is low, in our view. We thus expect the auction to be delayed from 20 Sep. The injunction ruling will negatively impact telco share prices, particularly DTAC and TRUE, which have rallied by 23% and 117% since July on optimism over 3G licensing.
… Auction likely delayed despite a favorable ruling after Sep
If the ruling comes out after Sep, even one in favor of the NTC, the expiring terms of three commissioners at the end of Sep will weaken the legal authority of the regulator in proceeding with the auction. With the upcoming approval of the Frequency Allocation Act (FAA), which will be discussed below, the auction is unlikely to be resumed.
… only hope for 3G auction happening is a favorable ruling within next week
If a favorable ruling comes out within next week, then the regulator can legally proceed with the auction. However, risk persists as there is still uncertainty over the verdict in the CAT lawsuit. The winning bidders may delay their investment, and this should cause downside to the expected benefit from 3G licenses.
3G by end of 2011 at the earliest
The FAA is now being subjected to final scrutiny by a joint committee before submission for parliamentary approval, which is expected by Nov. The establishment of the new regulator, the National Broadcasting and Telecom Commission (NBTC), should take at least six months, and an overhaul of the 3G licensing terms will take another six months.
Upside to 2010F DPS
Without CAPEX on 3G, we raise our 2010F DPS by approximately 50% for both telcos under our coverage. We now expect Bt9.3/sh for ADVANC and Bt2.9/sh for DTAC.
Recommendation:
- We downgrade our recommendation to ‘underweight’ (from under review) for the sector. Disappointment over 3G will overshadow recovery in the 2G business in the near term.
- Stripping out 3G value from our TPs, our new TPs are reduced to Bt96/sh (from Bt110/sh) for ADVANC and Bt50/sh (from Bt60/sh) for DTAC. The current prices offer limited upside to our new TPs. We therefore reduce our recommendation to HOLD (from under review) for both ADVANC and DTAC.
- A deep dip in share prices should provide an opportunity to BUY for their attractive dividend yields. We prefer ADVANC dividend yield-wise.
Thursday, September 16, 2010
THAI: Capital increase via public offering
Today’s company update
THAI: Capital increase via public offering
News:
Regarding THAI’s capital increase, the number of newly issued shares is 483.89 million shares (ms) while the offering price is set at Bt 31 a piece. The allotments are as follows:
1) Ministry of Finance 246.933 ms
2) Existing shareholders 221.831 ms at ratio of 1 old share to 0.2667 new shares
3) Retail investors 15.106 ms.
Recommendation & Valuation
Although THAI’s capital increase might have some impact from EPS dilution resulting to lower our PER-derived target price (from Bt 37.75 to Bt 36.75). However, as Baht to US$ is stronger than our expectation, THAI should benefit from this currency movement. For every Bt 1/US$ strengthening other things being equal, we estimate the company’s earnings will increase by around 9%. As such, we are reviewing our earnings projection and target price for ’11. However, for existing shareholders and retail investors, we recommend subscribing the offered shares as the offering price of Bt 31 provides attractive upside of 18%.
Small bank: Outlook update for small banks
Auto H/P loan continues strong
Car sale growth +52% YoY in Aug and +54% YoY for 8M10: Domestic car sales continue strong in Aug-10 with total car sales of 65,724 units, increasing 52% YoY (but flat MoM). Meanwhile, the cumulative car sales (8M10) was 488,088 unit, up by 54% YoY
TISCO and KK is our pick
TISCO and KK valuations and div yield is attractive. Currently, TISCO is trading at PER of 9.1x/10.5x and PBV of 1.8x/1.7x of ‘10F/’11F earnings. Meanwhile, KK is presenting PER of 6.5x/8.9x and PBV of 0.7x/0.7x in ‘10F/11F. Assuming dividend payout at 60% for TISCO and 50% for KK, its current offers dividend yield of 7% for TISCO and 6% for KK.
Technical Analysis
However, the index’s pattern has not lost its rising trend, with the main support at 900 points performing well. The index was able to bounce from the 25-day EMA line along with the appearance of a Hammer sign.
Let Punch! - BUY (CENTEL, LH, HMPRO)
THAI: Capital increase via public offering
News:
Regarding THAI’s capital increase, the number of newly issued shares is 483.89 million shares (ms) while the offering price is set at Bt 31 a piece. The allotments are as follows:
1) Ministry of Finance 246.933 ms
2) Existing shareholders 221.831 ms at ratio of 1 old share to 0.2667 new shares
3) Retail investors 15.106 ms.
Recommendation & Valuation
Although THAI’s capital increase might have some impact from EPS dilution resulting to lower our PER-derived target price (from Bt 37.75 to Bt 36.75). However, as Baht to US$ is stronger than our expectation, THAI should benefit from this currency movement. For every Bt 1/US$ strengthening other things being equal, we estimate the company’s earnings will increase by around 9%. As such, we are reviewing our earnings projection and target price for ’11. However, for existing shareholders and retail investors, we recommend subscribing the offered shares as the offering price of Bt 31 provides attractive upside of 18%.
Small bank: Outlook update for small banks
Auto H/P loan continues strong
Car sale growth +52% YoY in Aug and +54% YoY for 8M10: Domestic car sales continue strong in Aug-10 with total car sales of 65,724 units, increasing 52% YoY (but flat MoM). Meanwhile, the cumulative car sales (8M10) was 488,088 unit, up by 54% YoY
TISCO and KK is our pick
TISCO and KK valuations and div yield is attractive. Currently, TISCO is trading at PER of 9.1x/10.5x and PBV of 1.8x/1.7x of ‘10F/’11F earnings. Meanwhile, KK is presenting PER of 6.5x/8.9x and PBV of 0.7x/0.7x in ‘10F/11F. Assuming dividend payout at 60% for TISCO and 50% for KK, its current offers dividend yield of 7% for TISCO and 6% for KK.
Technical Analysis
However, the index’s pattern has not lost its rising trend, with the main support at 900 points performing well. The index was able to bounce from the 25-day EMA line along with the appearance of a Hammer sign.
Let Punch! - BUY (CENTEL, LH, HMPRO)
Tuesday, September 7, 2010
Thailand Telecom : Positive sign regarding Court ruling on CAT labor union petition
News: According to Krungthep Thurakij, the Administrative Court will announce today (postponed from yesterday) whether the Court will accept a petition filed by CAT’s labor union against the 3G auction. However, the Court stated that an emergency protection ruling would not happen as the auction has not yet taken place and no damage has occurred.
Comment:
? The preliminary comments from the Court are positive for the sector, implying that the risk of the 3G auction being suspended is minimal.
? In addition, the chance that the Court will dismiss the petition of the labor union is high given that the labor union itself is not considered a party directly impacted by the auction. Earlier, the Court rejected several lawsuits filed by TOT’s labor union.
? Lawsuits from parties that would be directly impacted, like CAT Telecom and the TOT, appear unlikely. There is still no progress from the CAT/TOT sides. Objections from both state telecom enterprises have diminished as the government, the major shareholder of both firms, has shown its support for the upcoming auction.
Recommendation: This should reaffirm the viability of the 3G auction on 20-28 Sep. We maintain our Trading Buy recommendation for both ADVANC (TP of Bt110/sh) and DTAC (TP of Bt60/sh). In the near term, despite less upside to the target price, ADVANC appears attractive to us for two reasons (1) the highest possibility of securing one license (2) its underperformance of 15% compared to the SET and 17% to DTAC.
Comment:
? The preliminary comments from the Court are positive for the sector, implying that the risk of the 3G auction being suspended is minimal.
? In addition, the chance that the Court will dismiss the petition of the labor union is high given that the labor union itself is not considered a party directly impacted by the auction. Earlier, the Court rejected several lawsuits filed by TOT’s labor union.
? Lawsuits from parties that would be directly impacted, like CAT Telecom and the TOT, appear unlikely. There is still no progress from the CAT/TOT sides. Objections from both state telecom enterprises have diminished as the government, the major shareholder of both firms, has shown its support for the upcoming auction.
Recommendation: This should reaffirm the viability of the 3G auction on 20-28 Sep. We maintain our Trading Buy recommendation for both ADVANC (TP of Bt110/sh) and DTAC (TP of Bt60/sh). In the near term, despite less upside to the target price, ADVANC appears attractive to us for two reasons (1) the highest possibility of securing one license (2) its underperformance of 15% compared to the SET and 17% to DTAC.
Wednesday, September 1, 2010
SET is on track for 1,000 points
SET is on track for 1,000 points
Despite the impressive SET index rally of 24% YTD versus a negative return of (-3.8%) for MSCI ex Japan (and -6.0% for S&P), SET valuation is still inexpensive at 12x compared with the regional average at 14.2x. Note that since our recent index upgrade to 1,000 points (based on PER of 13.5X) in late July, the SET has already rallied by nearly 10%.
Decoupling is possible under no global recession case
Weak economic readings from the US continue to dampen investor confidence about the outlook of the economy and raise concern about a double-dip recession at the global level. Nonetheless, with the Fed’s recession gauge remaining at the rock-bottom level, we think Asian economies and Thailand will be able to diverge their economic trend from those of the US and EU (G2). The main driver for growth in Asia is not only much-improved intra-regional trade, but also sound domestic economies. As far as the Thai economy is concerned, overall growth will be driven by solid recovery in domestic consumption and investment, which will push GDP growth to 7.5% YoY this year and 5.5% in 2011. Nonetheless, our assumption requires some measure of stability in the political environment over the next 18 months.
Our top picks:
Our top stock picks for the month remain domestic plays, which should benefit from the new spending/investment cycle. We think real fundamental factors such as the government budget, employment market, wealth stream, as well as sentiment related stories, will accelerate the above trend growth (pent-up demand) and lead to the recovery of pricing power and corporate profitability expansion. Our 2011 earnings growth projection for the related sectors is attractive at 15-20%, while we still foresee the potential for further upgrades. Based on this theme, we prefer Banks, Construction and Consumer plays, such as BAY, TSTH, CK, LPN and ROBINS.
Despite the impressive SET index rally of 24% YTD versus a negative return of (-3.8%) for MSCI ex Japan (and -6.0% for S&P), SET valuation is still inexpensive at 12x compared with the regional average at 14.2x. Note that since our recent index upgrade to 1,000 points (based on PER of 13.5X) in late July, the SET has already rallied by nearly 10%.
Decoupling is possible under no global recession case
Weak economic readings from the US continue to dampen investor confidence about the outlook of the economy and raise concern about a double-dip recession at the global level. Nonetheless, with the Fed’s recession gauge remaining at the rock-bottom level, we think Asian economies and Thailand will be able to diverge their economic trend from those of the US and EU (G2). The main driver for growth in Asia is not only much-improved intra-regional trade, but also sound domestic economies. As far as the Thai economy is concerned, overall growth will be driven by solid recovery in domestic consumption and investment, which will push GDP growth to 7.5% YoY this year and 5.5% in 2011. Nonetheless, our assumption requires some measure of stability in the political environment over the next 18 months.
Our top picks:
Our top stock picks for the month remain domestic plays, which should benefit from the new spending/investment cycle. We think real fundamental factors such as the government budget, employment market, wealth stream, as well as sentiment related stories, will accelerate the above trend growth (pent-up demand) and lead to the recovery of pricing power and corporate profitability expansion. Our 2011 earnings growth projection for the related sectors is attractive at 15-20%, while we still foresee the potential for further upgrades. Based on this theme, we prefer Banks, Construction and Consumer plays, such as BAY, TSTH, CK, LPN and ROBINS.
Monday, August 23, 2010
ECON: Thailand continues to post robust growth of 9.1% in 2Q10
Growth was broader based …
In terms of economic components, we are satisfied with growth in most of economic drivers. While private consumption accelerated to 6.5% YoY, overall investments remained relatively stable at 12.2% in the period. It was quite encouraging to see that investments by the private sector jumped strongly by 18.5% despite the slight contraction of pubic investment growth (-3.4%).
…and more balanced
Apart from growth momentum, we always put our focus on the growth structure and its trend. This element will be very vital in the near future as we see more signs of weakness among the economies in G2 (US and Europe ). It is very encouraging to see that Thai economy has continued to firm up its balance growth structure. The economy in general has been driven by domestic factors as private consumption’s contribution to economic growth rose to 3.6% (from 2.1% in 1Q), with contribution from investment increasing modestly to 2.6%. Meanwhile, the country appeared to gain traction from net exports as it contributed 2.8% to growth against a drag of 2.4% in the previous quarter. This was partly due to a slight inventory adjustment in the current quarter as its contribution to growth from inventory fell slightly (-0.5%). We view that the current economic structure if sustained will be a good tool to help Thailand weather the upcoming global economic alignment.
Monday, August 16, 2010
IVL: Stronger earnings in 2Q10 - Positive
Results:
IVL announced stronger net profit in 2Q10 at Bt2,089m (EPS: Bt0.48), up 37% QoQ and 18% YoY. Its 1H10 earnings were Bt3,619m, up 26% YoY, representing 56% of the full-year estimate by the consensus.
These healthier net profits were mainly due to higher sales volume from the start-up of AlphaPET (line 2) and the realization of extra income of Bt563m from the acquisition of utility assets at the Rotterdam site at a lower price compared to the fair price. However, IVL was negatively hit by the depreciation of the Euro and US$ currencies against the Thai baht by 17% and 5% YoY throughout the first six months of 2010.
Looking forward, we expect IVL’s operating performance to remain strong as its overall product-to-feed margin will continue to benefit from lower feedstock costs (PX). Additionally, the greater production volumes from the full-quarter operation of new PET production facilities in the US will further enhance the overall performance in the quarter. However, there will be no gain from the bargain purchase of the assets at Rotterdam as was the case in 2Q10. Given its 1H10 earnings represent 56% of the 2010 profit estimate by the consensus, the market is likely to maintain its forecast at Bt6.5bn.
IVL announced that its subsidiary Indorama Polymers PCL (IRP) will set up a 75,000-ton/year SSP plant at Port Harcourt , Nigeria . This new capacity represents about 6% of IVL’s total PET production capacity. This is the first PET investment by IVL in Africa , which possesses demand for PET of about 450,000 tons/year. The competition in Africa is relatively low compared to other regions as there is currently only one PET producer on the continent. This new plant is expected to begin commercially operating in 3Q11.
Recommendation and valuation
Maintain a positive view:
We are positive to IVL due to the strong earnings growth, with a potential stock re-rating in the near future—although IVL’s share price currently trades at 15.0x of FY10 PER (estimated by consensus) compared to 13.0x-16.0x of the major petrochemical players in the region, we expect the stock price to be re-rated as IVL’s ROCE has significantly increased to 25% from 12%-16% over the past few years as a result of the completion of major expansion projects, particularly AlphaPET in the US. Additionally, the aggressive capacity expansion through acquisitions has caused IVL to be traded at a premium valuation to other petrochemical stocks. The consensus estimates IVL’s target price at Bt22.2.
Contractor: ITD will replace CK as the lowest bidder for the 1st contract of Blue Line – Neutral
Event - According to Kaohoon newspaper, a source from the Transport Ministry revealed that ITD will replace CK as the lowest bidder for the 1st contract of the Blue Line due to an error in the sum-up of the contract price. This refers to the MRTA consultant’s verification of the details of the bidding documents, with certain items in ITD’s bid being overstated by up to Bt60m. The source said that all bidders were informed of this issue and it was found to be acceptable. Thus, ITD becomes the lowest bidder (with the bidding price to be lowered from Bt10.79bn to Bt10.73bn) instead of CK (with a bidding price of Bt10.75bn).
Comment – Our sources from the MRTA, CK and ITD have not yet been able to confirm this news. In our view, if it’s true, this could be the reason behind the 11% price rally since last week. However, although this news is positive for trading sentiment, it is still not enough to turn ITD profitable. The project should raise ITD’s backlog at the end of 2010 to around Bt120bn (including subsidiaries), but this is still far from the turnaround level of Bt150-160bn required in our estimate. We maintain our view of expected losses of Bt0.55bn in 2010 given the risk that more exposure overseas might distort the profit margin. Maintain SELL rating with TP of Bt2.89 (P/BV of 1.1x).
Although this news is negative for CK, we view that it should minimally impact its 2011-12 outlooks. Stripping out this project would reduce new contracts in 2010 from Bt103bn to Bt92bn, as the 2nd contract of the Blue Line, SPP and Xayaburi worth totally ~Bt90bn would remain the key drivers. We maintain a BUY rating with a TP of Bt8.30 based on P/BV of 2.44x (average five-year PBV +0.5std)
IVL announced stronger net profit in 2Q10 at Bt2,089m (EPS: Bt0.48), up 37% QoQ and 18% YoY. Its 1H10 earnings were Bt3,619m, up 26% YoY, representing 56% of the full-year estimate by the consensus.
These healthier net profits were mainly due to higher sales volume from the start-up of AlphaPET (line 2) and the realization of extra income of Bt563m from the acquisition of utility assets at the Rotterdam site at a lower price compared to the fair price. However, IVL was negatively hit by the depreciation of the Euro and US$ currencies against the Thai baht by 17% and 5% YoY throughout the first six months of 2010.
Looking forward, we expect IVL’s operating performance to remain strong as its overall product-to-feed margin will continue to benefit from lower feedstock costs (PX). Additionally, the greater production volumes from the full-quarter operation of new PET production facilities in the US will further enhance the overall performance in the quarter. However, there will be no gain from the bargain purchase of the assets at Rotterdam as was the case in 2Q10. Given its 1H10 earnings represent 56% of the 2010 profit estimate by the consensus, the market is likely to maintain its forecast at Bt6.5bn.
IVL announced that its subsidiary Indorama Polymers PCL (IRP) will set up a 75,000-ton/year SSP plant at Port Harcourt , Nigeria . This new capacity represents about 6% of IVL’s total PET production capacity. This is the first PET investment by IVL in Africa , which possesses demand for PET of about 450,000 tons/year. The competition in Africa is relatively low compared to other regions as there is currently only one PET producer on the continent. This new plant is expected to begin commercially operating in 3Q11.
Recommendation and valuation
Maintain a positive view:
We are positive to IVL due to the strong earnings growth, with a potential stock re-rating in the near future—although IVL’s share price currently trades at 15.0x of FY10 PER (estimated by consensus) compared to 13.0x-16.0x of the major petrochemical players in the region, we expect the stock price to be re-rated as IVL’s ROCE has significantly increased to 25% from 12%-16% over the past few years as a result of the completion of major expansion projects, particularly AlphaPET in the US. Additionally, the aggressive capacity expansion through acquisitions has caused IVL to be traded at a premium valuation to other petrochemical stocks. The consensus estimates IVL’s target price at Bt22.2.
Contractor: ITD will replace CK as the lowest bidder for the 1st contract of Blue Line – Neutral
Event - According to Kaohoon newspaper, a source from the Transport Ministry revealed that ITD will replace CK as the lowest bidder for the 1st contract of the Blue Line due to an error in the sum-up of the contract price. This refers to the MRTA consultant’s verification of the details of the bidding documents, with certain items in ITD’s bid being overstated by up to Bt60m. The source said that all bidders were informed of this issue and it was found to be acceptable. Thus, ITD becomes the lowest bidder (with the bidding price to be lowered from Bt10.79bn to Bt10.73bn) instead of CK (with a bidding price of Bt10.75bn).
Comment – Our sources from the MRTA, CK and ITD have not yet been able to confirm this news. In our view, if it’s true, this could be the reason behind the 11% price rally since last week. However, although this news is positive for trading sentiment, it is still not enough to turn ITD profitable. The project should raise ITD’s backlog at the end of 2010 to around Bt120bn (including subsidiaries), but this is still far from the turnaround level of Bt150-160bn required in our estimate. We maintain our view of expected losses of Bt0.55bn in 2010 given the risk that more exposure overseas might distort the profit margin. Maintain SELL rating with TP of Bt2.89 (P/BV of 1.1x).
Although this news is negative for CK, we view that it should minimally impact its 2011-12 outlooks. Stripping out this project would reduce new contracts in 2010 from Bt103bn to Bt92bn, as the 2nd contract of the Blue Line, SPP and Xayaburi worth totally ~Bt90bn would remain the key drivers. We maintain a BUY rating with a TP of Bt8.30 based on P/BV of 2.44x (average five-year PBV +0.5std)
Sunday, August 15, 2010
Weekly Market update:
Weekly Market update:
In commodity
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Energy – $80 oil price again Last week, WTI and Dubai prices rose 2%-5% as speculators increased a bet. We expect WTI price to stay above $80 as market is optimistic on fuel demand to increase alongside the improved prospects for US economic recovery.
Chemical – All petrochemical prices increased Last week, all petrochemical prices increased in tandem with oil price movement.
Coal – The seventh consecutive week falls Last week, the BJI index further dipped $0.5 to $94.5/ton due to expected decrease in Chinese coal demand as a result of government policy on the pollution emission.
In commodity
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Energy – $80 oil price again Last week, WTI and Dubai prices rose 2%-5% as speculators increased a bet. We expect WTI price to stay above $80 as market is optimistic on fuel demand to increase alongside the improved prospects for US economic recovery.
Chemical – All petrochemical prices increased Last week, all petrochemical prices increased in tandem with oil price movement.
Coal – The seventh consecutive week falls Last week, the BJI index further dipped $0.5 to $94.5/ton due to expected decrease in Chinese coal demand as a result of government policy on the pollution emission.
Friday, August 13, 2010
Building a high-rise palace for every peasant
Chinese Housing Market:
Building a high-rise palace for every peasant?
? Soaring prices for high-end residential property in China have generated widespread comparisons with the recent housing boom in the US that ended in the subprime debacle. In fact, the only recent example of soaring property prices coinciding with double digit vacancy rates, soaring credit and construction growth but low average mortgage loan-to-values and an incestuous relationship between politicians, banks and developers was Ireland, where a similar hoarding pattern developed until the market collapsed along with the economy in 2008. Housing cconstruction in Ireland went from 5% of GDP to 15% in a decade (similar to current Chinese levels), at which point the country was annually producing five times more housing per capita than the UK while Irish bank lending to the non-financial private sector had more than trebled in a decade to 200% of GDP by 2008.
? In China , with negative real interest rates and casino like domestic stock markets as the only alternatives, real estate is the primary repository of personal wealth and is being hoarded as an inflation hedge like gold bullion, which helps explain the 20-25% plus vacancy rates for newly purchased apartments. Substantial hidden wealth in the ‘grey’ economy (which is probably over 10% of GDP) has also supported prestige developments. Nonetheless, the scale of price appreciation has become a source of widespread popular discontent among the younger generation of self describing ‘house slaves’ and that, as much as the threat to the banking system, is driving attempts to tame the market without killing it.
Building a high-rise palace for every peasant?
? Soaring prices for high-end residential property in China have generated widespread comparisons with the recent housing boom in the US that ended in the subprime debacle. In fact, the only recent example of soaring property prices coinciding with double digit vacancy rates, soaring credit and construction growth but low average mortgage loan-to-values and an incestuous relationship between politicians, banks and developers was Ireland, where a similar hoarding pattern developed until the market collapsed along with the economy in 2008. Housing cconstruction in Ireland went from 5% of GDP to 15% in a decade (similar to current Chinese levels), at which point the country was annually producing five times more housing per capita than the UK while Irish bank lending to the non-financial private sector had more than trebled in a decade to 200% of GDP by 2008.
? In China , with negative real interest rates and casino like domestic stock markets as the only alternatives, real estate is the primary repository of personal wealth and is being hoarded as an inflation hedge like gold bullion, which helps explain the 20-25% plus vacancy rates for newly purchased apartments. Substantial hidden wealth in the ‘grey’ economy (which is probably over 10% of GDP) has also supported prestige developments. Nonetheless, the scale of price appreciation has become a source of widespread popular discontent among the younger generation of self describing ‘house slaves’ and that, as much as the threat to the banking system, is driving attempts to tame the market without killing it.
Tuesday, August 10, 2010
Weekly Market update
Weekly Market update:
In commodity
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Energy – $80 oil price again Last week, WTI and Dubai prices rose 2%-5% as speculators increased a bet. We expect WTI price to stay above $80 as market is optimistic on fuel demand to increase alongside the improved prospects for US economic recovery.
Chemical – All petrochemical prices increased Last week, all petrochemical prices increased in tandem with oil price movement.
Coal – The seventh consecutive week falls Last week, the BJI index further dipped $0.5 to $94.5/ton due to expected decrease in Chinese coal demand as a result of government policy on the pollution emission.
Today’s company update
TOP: 2Q10 earnings results
PTTAR: Weak earnings as expected!
DCC: 2Q10 analyst meeting – defensive with growth
BANPU: China coal production below target
DELTA: 2Q10 net profit of Bt1.1bn beat our expectation
Property sector: Residential Market Survey by AREA
Technical Analysis
However, the index has thus far chosen the method of correcting within a day by moving up and down in a limited frame. Although the index has continued to advance, it has not been enough to eliminate or reduce the overbought condition.
Let Punch! - Speculate buy (PSL, UMI), Buy at the support (AH)
In commodity
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Steel – Soaring raw material prices KTZ is bullish on future demands for rebar but what has kept us cautious is steel margin which we haven’t seen clear sign for bottoming out.
Energy – $80 oil price again Last week, WTI and Dubai prices rose 2%-5% as speculators increased a bet. We expect WTI price to stay above $80 as market is optimistic on fuel demand to increase alongside the improved prospects for US economic recovery.
Chemical – All petrochemical prices increased Last week, all petrochemical prices increased in tandem with oil price movement.
Coal – The seventh consecutive week falls Last week, the BJI index further dipped $0.5 to $94.5/ton due to expected decrease in Chinese coal demand as a result of government policy on the pollution emission.
Today’s company update
TOP: 2Q10 earnings results
PTTAR: Weak earnings as expected!
DCC: 2Q10 analyst meeting – defensive with growth
BANPU: China coal production below target
DELTA: 2Q10 net profit of Bt1.1bn beat our expectation
Property sector: Residential Market Survey by AREA
Technical Analysis
However, the index has thus far chosen the method of correcting within a day by moving up and down in a limited frame. Although the index has continued to advance, it has not been enough to eliminate or reduce the overbought condition.
Let Punch! - Speculate buy (PSL, UMI), Buy at the support (AH)
Sunday, August 8, 2010
Morning call: BANPU (BUY/ TP Bt791), SGP (HOLD)
BANPU: 2Q10 Earnings preview – YoY slowdown due to lower equity income
Expected 2Q10 earnings of Bt 3.4bn, down 14%YoY
We project BANPU’s 2Q10 earnings at Bt 3.4bn, down 14%YoY but up 27%QoQ. The YoY earnings slowdown was caused by the 31% drop in equity income, especially from BLCP. Meanwhile, the QoQ earnings surge was attributable to the rise of the ASP following the uptrend in coal prices.
Maintain “Buy” with mid-11 target price of Bt 791
As a result of solid demand and the strong coal price outlook, BANPU will benefit the most as the majority of its earnings are from the coal business. Moreover, the acquisition of CEY (if successful) will provide 16-30% earnings upside and add value to BANPU by 12-24%. As such, we iterate “Buy” BANPU with the next 12 months sum-of-the-parts target price of Bt 791.
SGP: Weaker earnings expected in 2Q10!
Weaker profits expected in 2Q10:
We estimate SGP to post its 2Q10 net profits at Bt300m, up 7.2% YoY but down 8.5% QoQ. Its 1H10 earnings were expected at Bt628m, up 15.2% YoY, representing 45% of our full-year estimate. The YoY improvement was mainly due to improving LPG consumption; meanwhile, the QoQ weakening performance was the result of the softening demand as a result of political riot in Bangkok . Looking forward, we expect its profitability to gradually rise due to a peak demand season in later half of the year and the realization of earnings from the investments in Vietnam and Singapore .
Maintain HOLD:
Although SGP share price exceeds our current 12-month price target of Bt14.7, we maintain HOLD rating to SGP as our fair price is set on 9.0x PER. We believe that if SGP could close the acquisition deal in China , its share price will be re-rated to 10.0x PER as the other LPG trading players in the region have been traded at 12.0x PER. As the current share price is partly reflected this acquisition deal, key risk is the success of the deal, which should be completed prior this Sep 2010.
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Plus your green area with your hand.
http://www.bio-gentech.com/
Expected 2Q10 earnings of Bt 3.4bn, down 14%YoY
We project BANPU’s 2Q10 earnings at Bt 3.4bn, down 14%YoY but up 27%QoQ. The YoY earnings slowdown was caused by the 31% drop in equity income, especially from BLCP. Meanwhile, the QoQ earnings surge was attributable to the rise of the ASP following the uptrend in coal prices.
Maintain “Buy” with mid-11 target price of Bt 791
As a result of solid demand and the strong coal price outlook, BANPU will benefit the most as the majority of its earnings are from the coal business. Moreover, the acquisition of CEY (if successful) will provide 16-30% earnings upside and add value to BANPU by 12-24%. As such, we iterate “Buy” BANPU with the next 12 months sum-of-the-parts target price of Bt 791.
SGP: Weaker earnings expected in 2Q10!
Weaker profits expected in 2Q10:
We estimate SGP to post its 2Q10 net profits at Bt300m, up 7.2% YoY but down 8.5% QoQ. Its 1H10 earnings were expected at Bt628m, up 15.2% YoY, representing 45% of our full-year estimate. The YoY improvement was mainly due to improving LPG consumption; meanwhile, the QoQ weakening performance was the result of the softening demand as a result of political riot in Bangkok . Looking forward, we expect its profitability to gradually rise due to a peak demand season in later half of the year and the realization of earnings from the investments in Vietnam and Singapore .
Maintain HOLD:
Although SGP share price exceeds our current 12-month price target of Bt14.7, we maintain HOLD rating to SGP as our fair price is set on 9.0x PER. We believe that if SGP could close the acquisition deal in China , its share price will be re-rated to 10.0x PER as the other LPG trading players in the region have been traded at 12.0x PER. As the current share price is partly reflected this acquisition deal, key risk is the success of the deal, which should be completed prior this Sep 2010.
Plus your green area with your hand.
http://www.bio-gentech.com/
Starting in SET trade
I am new one of set trade in Thailand. This is first time to be stocker, so interesting !!!
I walk in to Investment Company and apply to be trader. Anyway I must to receive password for internet trading. So waiting for my first trading for 2 or 3 days.
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