Stocks in the news (dna, hemraj, kk, ptt, rojna, tgpro) – 07.02.13

DNA – DNA to distribute hit Chinese movie — DNA, a home entertainment retail and distribution company, will distribute “Lost in Thailand” movie to more than 100 cinemas. Management is confident that its gross margin will be 40-50% if it distributes 10-12 movies. Revenue is expected to grow 40%. (Khao Hoon, 7/2/13)

Comment: On a numbers basis alone the stock is “cheap” by today’s standards

HEMRAJ Earmarks Bt8bn for 2013 business expansion — Hemaraj Land and Development plans to spend Bt8bn on expanding its industrial estate, utility, power and property businesses in this first year of its five-year, Bt40bn investment plan.(The Nation, 7/2/13)

Comment: We’ve always preferred Hemraj over every other IE developer in Thailand, and its utilities business/investment is fantastic given the recurring income (half of net income will be recurring). We saw it a few years ago, but have already since exited…oh well brokers are having fun releasing papers on it now.

KK Merger boosts Kiatnakin’s fee income — Kiatnakin Bank (KK) experienced a sharp rise in fee income, mainly from brokerage and investment banking fees, following its merger with finance company Phatra Capital. Fee income surged 60% last year after it consolidated Phatra’s four-month earnings into its balance sheets. The proportion of net interest to net fee incomes last year was 75:25, or Bt7.11bn and Bt2.81bn respectively. (Bangkok Post, 7/2/13)

PTT PTT venture to build condensate splitter in Timor — PTT International will own around 70% of the venture and petroleum firm Timor Gap will own the rest. The companies also agreed to jointly engage in condensate trading activities, he said, adding that the two deals require a combined investment of Bt5bn (US$168mn). (Dow Jones Newswires, 7/2/13)

ROJNA Sells land to Honda — ROJNA sold 1,600 rai to Honda to build an assembly and engine plant in Prachin Buri, worth Bt17.2 bn, with the annual capacity of 120,000 cars. This has pushed ROJNA above its 2013 land sales target of 1,500 rai. The company plans to raise its 2013 target. (Khao Hoon, 7/2/13)

Comment: ROJNA doesn’t have as a compelling a case as a business like hemraj or amata, its a simple rebound play from the floods and growing along with Thailand’s investment boom

TGPRO Aiming high — TGPRO aims to become one of the largest stainless steel plants in Thailand in the next two years. It will triple capacity from 1.2-1.5 thousand tons per month. (Tun Hoon, 7/2/13)

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4 thoughts on “Stocks in the news (dna, hemraj, kk, ptt, rojna, tgpro) – 07.02.13”

  1. I own KK shares and was told by another investor that most of their new higher income (profit) is coming from auto loans instead of from the stated merger with Phatra Capital. Any comment or truth to his claim?

    1. Hi tony,

      this is what I gathered from Thanachart’s research report on 21st Jan

      “•KK reported 4Q12 profits of Bt1.1bn, up 3,353% y-y and 15% q-q.
      •Results were stronger than expected as 2012 profits of Bt3.4bn, up 20% y-y, accounted for 105% of our projection.
      •Lower provisions were key responsible for the bank’s better profits. 2012 credit costs were 0.92% vs. our projection of 1%.
      •Pre-provisioning profits were strong and in line at Bt1.6bn, up 69% y-y and 6% q-q, pushed by strong loan growth and full quarter consolidation of PHATRA’s profits.
      •Loan growth was 25% YTD, driven mainly by auto HP and personal loans. NIM improved slightly q-q to 3.3% on lower funding costs and better lending yield.
      •Non-interest income jumped 101% y-y and 26% q-q on mainly on a consolidation of PHATRA and higher bancassurance fees.
      •NPL in absolute improved q-q but rose 19% from 4Q11. Nevertheless, NPL ratio dropped to 3.3% from 3.5% as loans grew faster.
      •The bank also revalued its investment in PHTRA. This resulted in a drop in goodwill by 63% from Bt4.7bn to 1.8bn.
      •That said, impairment test is still needed and the bank is going to implement the test starting from this year.

  2. Hi Pon.

    Thanks for clarifying the numbers and I can see that the increased income was from across the board so, there was not much merit in the other investor’s comment. And will be more careful going forward. Again, thanks for the information.

    Tony

    1. Hi Tony,

      Not a problem, sorry again for the slowness in reply.

      Yes everyone in the past 12 months now thinks that they are rock-star investors. Oh well, thats what a bull market does :)

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