Full-Service strategy paying off for hemaraj

Hemaraj Land and Development Plc (SET symbol: HEMRAJ) has been Thailand’s leading developer of industrial estates and related services since 1988. It offers developed industrial land, utilities, ready-built factories for rent, warehouses for logistics, quality industrial services and an integrated logistics and supply chain in six industrial estates, located mostly along the Eastern Seaboard. It has also focused on environmental management through policies and plans that have been reflected in various successes and achievement awards. David Nardone, president and chief executive, discusses the company’s strategy and outlook.

What is Hemaraj’s business model?

Hemaraj is an integrated property developer focusing on industrial estates, utilities, power and property. We have six industrial estates with 5,000 hectares, 519 distinct customers and 784 total land or factory contracts. For utilities we provide industrial estate management, water and wastewater treatment as well as other services. For power we are involved in both small and independent power producer (SPP and IPP) projects, and finally with property we have ready-built factories and logistics parks for rent and selective other properties such as offices, condominiums as well as a new integrated property development project. Continue reading Full-Service strategy paying off for hemaraj

Thoughts on Europe

Having been in Europe for the past week or so, or specifically in Belgium I haven’t noticed a huge impact on consumer behaviour versus the last year or any other period that I have come here annually. Instead the majority of issues that I hear stem from the likelihood of increased taxes from the government (mind you people here already pay just over 50% income tax), stricter rules and regulations regarding businesses, and what is scary is that 56% of GNP here (according to De Staandard) comes from the public sector! People still of course want to keep the Euro, western Europe seem fed up that Southern Europe needs to be bailed out constantly and that they have to pay for that cost, major manufacturing companies are shifting away slowly and parents are worried about their children’s future as they worry about job potentials. So all in all its not as gloomy as SE Asia was in 1997-1998 but things are far from rosy.

Don’t fight with central banks

The first rule of fight club investing is don’t fight with the central banks.

Globally central bank policies have certainly transformed markets and placed a floor under all pull backs over the past few years. First the ECB pledge’s to buy up 3 year bonds (unlimited purchasing) of countries that will obey the laws and conditions imposed by the EFSF/ESM, and then the Fed announces QE3 which in effect extends is policy until mid 2015 from 2014 and agrees to buy US$ 40 bn per month for an unlimited period of time until the US unemployment declines substantially. (Although 40 bn per month, means 480 bil a year, which is less than QE2 US$600 bn…but they did say it could “unlimited”). And then the Japanese central bank announces it will expand its asset purchase and loan program by 10 trillion yen (US$126 bn) to 80 trn yen. And now today the Chinese central bank announces injection of 365bn yuan into the Chinese banking system.

Four major centrals bank announcing massive measures in the month of September. What has the impact been of all this? It’s kept equity markets up, bond yields down, and surprised a lot of market participants (including us) that thought the month of September would be its usual awful self.

Never fight with central banks

Thai Stocks to Get Boost From Infrastructure Push

Saw this article over at CNBC and it does a nice summary of what we were all waiting for this government to finally confirm and announce. THB 2.2 trillion baht worth of projects and liquidity to flush the system here. While companies will benefit? Well in this order I think. Contractors – Cement co’s – Banks – and then hopefully the rest of the economy.

The Thai government is planning to spend more than 2.2 trillion baht ($71.1 billion) over the next seven years to build railways and roads and another 350 billion baht ($11.3 billion) on infrastructure to prevent a repeat of the devastating 2011 floods that dragged economic growth down to just 0.1 percent for the year. This spending, which will be partly financed by the private sector, will boost the Thai economy, analysts say.

Source: CNBC

Thai Exports were rubbish in August

Thailand’s Export numbers for August were rubbish, according to the the Ministry of Commerce reported that exports dropped -6.9% YoY  to US$ 19.6 bn from -4.4% YoY in July (although they were still up +1.1% MoM)

Still something we’ve been writing all year is that because of the austerity measures in Europe coupled (and partly leading to) the slowdown in China will and have hit businesses everywhere. Funnily enough printing tonnes of $$ in the US is what may have led to the US economy continuing to grow.

See below for a breakdown of the numbers

Products

  • Industrial product exports, a major category (75.7% of total exports), recovered 1.8% MoM from -3.4% MoM in July, led by a 69.3% MoM increase in jewellery and decorative products vs. -24.7% MoM last month and with a rise in electronic parts exports of +0.4% MoM vs. – 17.6% MoM last month. However, auto exports contracted -11.7% MoM from +7.5% MoM in July and a drop in electronic appliances of -18.1% MoM vs. +2.7% MoM last month.
  • Agricultural product exports (9.9%) declined by -8.5% MoM from +23.8% MoM in July. The main agricultural product export was rubber, dropping 11.6% vs. +7.9% MoM in July and rice declined -10.3% MoM vs. +31.6% MoM in July.

Export Markets

    • Exports within Asia (63%) continued to shrink by -2.2% MoM vs. -1.5% MoM in July as exports in Asia and to Japan fell 4.8% MoM and 3.9% MoM, respectively. However, exports to China, Hong Kong and Taiwan recovered slightly by +4.0% MoM, +7.5% MoM and +6.3% MoM, respectively.
    • European exports (14%) expanded once again by +18.9% MoM from -2.2% MoM in July,
    • US exports (10%) contracted at a lower pace of -1.5% MoM from -4.0% MoM in July

 

Management Trades 17.09.12 to 21.09.12

Notable transactions

Buy(s):

  • BGH – The President continues his accumulation of shares, he started since around THB 80/share
  • BTS – Now this is interesting, whilst the VGI listing is a good sentiment boost for the stock, I’m thinking aloud that it may be the potential of an infrastructure fund that may be the reason behind this purchase.

Sell(s):

  • CPF – Another THB 30 mn worth of shares sold off by someone related to the co.
  • SRICHA – Hmm, a director selling off THB 38 mn in construction company, with the government infrastructure plans hopefully coming through within the next 12 months I wouldn’t understand why management feels the need to take profit @ 9x PE
  • TUF – Selling by top management has been going on since the stock went above THB 70/share for the past month or so.
  • Overall: Its been rather high selling by management/owners of companies the past 2 weeks, nothing to sound the alarm about but still worth taking into consideration

Comment: SMT Plc

I had the pleasure of meeting Stars Microelectronics in 2009 when the company was making its margins building screen after screen for RIM (blackberry) and its revenues manufacturing hard drives for Western Digital. The owner had a very good story regarding how the company came to be and within the past year has been unfortunately hurt badly by 1. Blackberry’s decline in popularity globally and 2. The Thai floods as their factories are in Ayudhya. There are a couple of points I found interesting in the article, 1. A lot of Thai companies are investing in technology to minimise their reliability on manual labour and 2. As a pure turnaround play several manufacturers are hoping to book their insurance claims in 3Q12. I’m not too sure on the company’s overall recovery story but having learnt about how the company came to be, how it managed the airport shut down I would advise that you all follow closely this company’s development. When I’m back in Thailand I’ll definitely try to do a company visit.

 SMT has 1,350 workers, down from 2,500 because it imported new machines to replace those damaged by the flood, which cut the manual workload by as much as 50%.

SMT also shifted its core production from microelectronics module assembly (MMA) of 120 million pieces per year to the higher-margin integrated circuits (IC) at 1.5 billion pieces per year.

MMA used to make up 60% of its production, with IC at 40%. But it will flip that ratio, raising IC capacity to 2.5 billion pieces per year this year.

He hopes to receive around 2 billion in insurance claims by the third quarter this year, which will be realised as profit.

Source: Bangkok Post

Disclaimer: Do your own research, use your own brain, and please go to the disclaimer section for the legal babble. Thank you!

What happened this past week

Its been a relatively quiet week, other than local domestic issues not regarding to the stock market to whine about I haven’t seen much else news to comment on.

Positives:

  • US existing home sales in Aug totals 4.82mm annualized, well above est of 4.56mm and the most since Nov ’09 with months supply falling to 6.1 from 6.4.
  • Thai banks continue to grow in August
  • Spain sells 4.8b euros of 3′s and 10′s, above 4.5b euro target with 82% being cheaper 3′s.
  • BOJ prints money!

Negatives:

  • US initial Jobless Claims total 382k, 7k more than expected and 4 week avg at most since late June.
  • Euro zone mfr’g and services index falls to lowest since June ’09.
  • German ZEW current conditions drops to weakest since June ’10.
  • HSBC China mfr’g PMI remains below 50 for 11th straight month at 47.8 vs 47.6 in Aug, Shanghai index at lowest since Mar ’09.
  • China FDI falls for 9th month in past 10, although not as much as expected in Aug.
  • BOJ prints money!

Thai Banks loans continues to grow in August

Analysts have been sending me this table most of today with the headlines that Thai Bank’s loan growth has been slowing in the month of August but a MoM growth of +1.0% for the whole sector isn’t bad.

Based on the figures this is what I see:

  • The Small financial institutions (KK and TISCO) have grown their deposit base massively  this year in order to fund their loans to the auto sectors and SMEs to a certain extent.
  • The same goes for the commercial institutions such as SCB, BAY and TCAP
  • Across the board loan to deposit ratios for the sector are below 1x – very safe figures
  • August is seasonally a slow month with most of the world on holiday thus to still see a +1.0% for the month isn’t too bad
  • Thus overall I still think the Thai banking sector is in very good condition, low LDR ratios, a good loan growth, plus their income tax drops from 30% in 2011 to 20% by 2013. Put this all together and they generally are still no brainer investments

 

Disclaimer: Do your own research, use your own brains and read the disclaimer for the rest of the legal babble, thank you!