ASEAN Market Preview: SembCorp, Petron, Pertamina, BTS, Patimas
Economist and Hedge Fund Manager Shayne Heffernan of www.livetradingnews.com takes a look at ASEAN
Worry about the fiscal cliff – a series of budget cuts and tax hikes that will start to go into effect in the new year – has investors cautious because of the potential for harm to U.S. economic growth.
Barclays cut its year-end target for the S&P 500 to 1,325 from 1,395, saying “there is little basis to believe a grand compromise is in the offing.”
Though most consider it unlikely that some deal will not be reached, analysts fear going over the cliff could push the economy back into recession. There are also concerns that a protracted debate could hurt business and investment sentiment.
The economic outlook remains poor for major economies though there are growing signs of stabilization in Canada, China and the United States, the OECD said on Monday.
In its latest monthly report on the global economy, the Organization for Economic Co-operation and Development said its composite leading indicator (CLI) for the 33-nation OECD held steady in September at 100.2 for the third month in a row.
The reading for the United States rose marginally to 100.9 from 100.8 in August, which the OECD said was indicative of growth stabilizing in the world’s biggest economy.
China’s reading was steady at 99.4 for the fourth month in a row while Canada’s was also unchanged at 99.7.
However, in the euro zone, Germany’s outlook deteriorated with its reading slipping to 98.7 in September from 99.0 in August. France, meanwhile, saw its reading slip to 99.5 from 99.6.
“Compared to recent months where the CLI has pointed to a deteriorating outlook, tentative signs of stabilization are also emerging in Italy,” the OECD said. Italy’s reading rose to 99.0 from 98.9.
The OECD’s reading for the euro zone as whole was stable in September at 99.4, but that the level still indicated a weak growth outlook.
A reading of 100 reflects the long-term average for each country.
Charoen Pokphand Foods reported lower earnings in Thailand yesterday slowing the advance of the SET, the CP Foods earnings fell 56% and investors were not impressed with the high forecast given by company.. BTS Group fell as we predicted and will look for a level to consolidate as investor await more details on future Capex requirements and the dilution impact that may have on the share price.
Ananda Development, a Thai real estate developer focusing on housing near Bangkok’s subway system, launched an up to $213 million initial public offering on Monday, raising funds for new building projects and to pay down debt, according to a term sheet of the deal seen by Reuters.
The company is offering 1.33 billion shares at an indicative range of 4.2-4.9 baht each, putting the total deal at up to 6.52 billion baht ($213 million).
We will release a valuation of the Ananda IPO on the weekend, should you wish to be notified email when it is released firstname.lastname@example.org.
Pertamina EP, the production and exploration unit of state-owned energy company Pertamina, posted profit that rose more than a fifth in the January-September period on higher crude oil and gas output.
Nine-month net income rose 21 percent to Rp 14.3 trillion ($1.5 billion) from a year earlier, company spokesman Agus Amperianto said in a statement on Sunday.
He said higher production of oil and gas boosted the net income figure. Oil production reached 127,900 barrels per day and gas production was 1,049 million standard cubic feet a day (mmscfd).
This compares to 125,100 bpd of oil production and 1,028 mmscfd of gas production in the same period last year.
Agus said the company intensified efforts to maximize production, including by optimizing and upgrading existing oil and gas wells as well as finding new fields.
From January to September, it completed drilling 84 exploitation wells but at the same time was drilling 13 others.
Techniques to discover new oil and gas reserves include a three-dimensional seismic survey of 2,027 square kilometers of land and a two-dimensional survey on 538 square kilometers of land.
Meanwhile, efforts to optimize old wells include “enhanced oil recovery,” which involves techniques such as water or steam injection to produce more oil.
Pertamina is the second-biggest oil producer in the country after Chevron Pacific Indonesia.
Oil production in Indonesia has declined recently, due to aging wells and lack of investment in the sector. Indonesia left the Organization of the Petroleum Exporting Countries in 2008.
In recent years, producers have failed to meet the average daily production target set by the government, a trend expected to continue this year.
Shares of Patimas Computers Bhd rose in active trade on Monday when it resumed trading after Bursa Malaysia Securities lifted the trading suspension.
At 11.37am, it was up one sen or 33% to 4.0 sen. It was the most active with 24.98 million shares done.
The FBM KLCI was down 1.69 points to 1,639.39. Turnover was 291.25 million shares valued at RM183.65mil. There were 156 gainers, 273 losers and 241 counters unchanged.
Bursa Securities said Patimas had submitted its outstanding annual report for the financial period ended March 31, 2012 for public release.
It also noted Patimas had on Nov 1 submitted its quarterly report for the financial period ended June 30, 2012 and annual audited accounts for the financial period ended March 31, 2012.
Petron Corp., the country’s biggest oil refiner and retailer, registered an 88-percent drop in its consolidated net income to P932 million in the first nine months of 2012 from the P7.6 billion it posted in the same period last year.
The oil company explained that it continued to experience depressed margins because of the volatility in global oil markets in the second and third quarters of 2012. The Malaysian operation contributed only P155 million in consolidated net income for the January-to-September period, Petron said in a disclosure to the Philippine Stock Exchange on Monday.
In the third quarter alone, Petron posted a modest net income of P500 million, a turnaround from the P2.1-billion net loss it incurred for its consolidated operations in the second quarter this year.
In terms of revenue, however, Petron managed to post a 52-percent jump to P307.3 billion. Local fuel sales and exports grew by 4 percent to 35.6 million barrels, contributing P212.4 billion to the total revenue. The consolidation of Petron Malaysia beginning the second quarter likewise added 17.6 million barrels in volumes and revenues valued at P94.9 billion.
The increases in the volume of fuel products sold was attributed to Petron’s massive retail expansion program, which marked a milestone during the third quarter this year when the company’s service station network breached the 2,000 mark.
Overall, Petron said it has fortified its leadership position with 39 percent of the total market as of end-July this year.
In the case of its Malaysian operations, the company’s priority continued to be the rebranding of Esso and Mobil service stations into the Petron brand. The company aims to rebrand 550 service stations over the next few years. The new stations feature improved facilities and personalized services.
“Despite the challenging market conditions, we remained focused and followed through with our strategic initiatives that will ensure the long-term growth and profitability of Petron. Soon, we will start to see the benefits of these programs, which will not only be felt by the company but the country as well,” explained Petron chairman and CEO Ramon S. Ang.
Singapore shares closed 0.07 percent lower on Monday, as investor sentiment was weighed down by concerns over U.S. fiscal woes as well as Greece’s bailout.
President Barack Obama on Friday invited congressional leaders to the White House, saying he was “open to compromise”. House Speaker John Boehner, a Republican, reiterated his opposition to any tax hikes on the wealthy, while Obama said there was no way around tax increases on the wealthiest Americans.
Meanwhile, Germany warned that Europe’s largest economy was expected to slow further. Prospects for a bailout for debt- stricken Greece remained unclear even after Greece on Sunday won a parliamentary approval for the 2013 budget law, a crucial requirement for Athens to revive its stalled international aid and avoid insolvency.
DBS Group Research said “Straits Times Index’s 30 point decline last week broke the 3,030 points immediate support, turning it to resistance. Minor bounces off the immediate support at 2,985 points should find resistance at 3,030 points. We do not rule out subsequent downside to 2,930 points in coming weeks as the year- end lull drags.”
The benchmark Straits Times Index inched down 1.99 points to close at 3,007.57 points. Trading volume was 2.01 billion shares worth 960.6 million Singapore dollars. Decliners outnumbered advancers 263 to 217, while 479 stocks closed unchanged.
SembCorp Industries rose 1.4 percent to 5.06 Singapore dollars. The energy, water and marine group said its third-quarter net profit fell 18.5 percent to 181.2 million Singapore dollars from a year earlier, partly dragged by lower revenue recognition for its rig building projects.
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Heffernan Capital Management
Business Development Director – Private Client Group,
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408
Fax: +65 6329 9699
Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals. He is also an active consultant working with Corporations around the World.
He is recognized as one of the leading Economists in South East Asia, as well as the preeminent authority on ASEAN. His opinions and forecasts are widely read by decision makers in the region and Internationally.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.
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