Despite the fact that Dr. Doom hasn’t been the most accurate predictor of the equity market rallies, one still always has to look at the markets from both a bull and a bear perspective.
Consider, first, that the previous QE rounds came at times of much lower equity valuations and earnings
Moreover, fiscal support is absent this time: QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus.
In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process
Source: The Mint
Fairly quiet week in terms of transactions, with only a big sell (THB 37mn) from a director of Preuksa Real Estate (PS)
Bank earnings are out and the sector had profit taking in the past week, same goes for telco’s post the 3G auction its been a sell on fact for most market participants. Combine all this with continued rubbish economic news out of Europe (its going to go on and on and on and on for donkey years) and the market had a rubbish week. Only bright light? Agri sector, finally!
Continue reading Sector Update 22.10.12 to 26.10.12
Just to give some perspective on whats happened…
Other than the simple reason that Thai banks corporate income tax rate is dropping from 30% last to 23% this year to 20% next year which has been a boon to their bottom line (remember the thai banking sector is really the only sector on the market paying full corporate income tax rates) the two main reasons for their outstanding growth in the past few years has been the growth of consumer banking and the growth of non-interest fees, especially with insurance as a main growth driver, see below for pretty charts.
- Consumer loans have more than doubled over the past 7 years, how is this a good thing? They can charge consumers extremely high interest rates capped @ 28%
- is it safe? Well the majority of consumer loans are secured i.e. mortgages (48%) and car leasing (26%)
- Income from consumer banking is now 51% of non-interest income
Khonburi Sugar Plc (KBS) was established in 1965 by Tawil Tawintermsup under the name Nong Yai Industry Co Ltd in Chon Buri’s Nong Yai district, with a cane crushing capacity of 1,500 tonnes a day. Listed on the Stock Exchange of Thailand in May 2011, today KBS crushes more than 20,000 tonnes of cane daily and counts major companies including Coca-Cola among its customers. Executive director Issara Twiltermsup discusses the company’s strategy and outlook.What is KBS’s business model?
Issara: Helping cane farmers improve
KBS has one sugar mill with a crushing capacity of 23,000 tonnes of sugar cane per day located in Nakhon Ratchasima. We consider ourselves to be a high-quality manufacturer, especially in white and refined sugar, and we operate at very high production efficiency and flexibility in order to service our customers well.
Who are KBS’s customers?
The Thai government sets the domestic quota to ensure there is enough sugar to meet the country’s needs. Domestically we sell about 25% and it goes to customers in the beverage industry such as Coca-Cola. We also sell to the modern trade companies _ Tesco, Big C and MaxValu _ as an original-equipment manufacturer for them and to convenience stores _ Makro and 7-Eleven _ around our factory area. We export the remaining 75% to traders that usually lock up commitments a year in advance.
Continue reading Quality, Versatility and Efficiency sweeten appeal of khonburi sugar
Normally one would only read about negative news regarding Thailand on CNN, how far things have come, with AIS being ranked amongst the top five stocks in Asia.
Advanced Info Services: AIS is the largest telecom company in Thailand. Singapore Telecom, the region’s largest carrier, has a 23% stake in AIS. But I like AIS over SingTel because of its improving fundamentals. AIS has pushed net margins up from 14.8% in 2008 to 17.6% in 2011, while SingTel’s margins have contracted from 23.1% to 21.2% in the same time period.
AIS is a solid way to invest in the continued growth of Thailand’s economy, where a larger middle class is emerging. AIS is a more pure play on Asian telecom growth without the baggage of SingTel’s presence across multiple markets.
The agriculture sector has made a good comeback this month, reason why? CPF mainly, it was oversold over the past 2 months b/c of commodity price issues (which have proven to be temp) and I’m hoping for it to continue :) As for the market as a whole, flattish month but still up 0.7%, earnings will dominate life for the next 4 weeks, lets see how the market has a whole performs.
Continue reading Sector Update 15.10.12 to 19.10.12