Random Thoughts: 4G Madness, dictatorial love, Dawei, final post

4G Madness
  • Boom! There we go, the most expensive 4G license bidding price in the world, Thailand, take a bow, not only does the country have the most number of coups in recent history it can now have another reason to be in the Guinness Book of World Records. A quick recap:
  • During the week the stock prices of ADVANC, DTAC, TRUE and JAS were bouncing up and down
  • 66 hours of bidding, 199 rounds of price offers with TRUE and JAS paying a combined THB 151.95 bn.
  • True won with a THB 76.298 bn bid, JAS won the second license with a THB 75.564 bn (nearly 5x above the reserve price and 50% higher then our highest office pool vote)
  • AIS ended bidding at THB 75.975 bn and DTAC quit at THB 70.180 bn

So what?

  • As the smartest man in Thailand told me “This is the worst possible outcome for Thailand’s telecom industry and the consumer will come out at the losing end with service quality dropping across the board”  and “If the NBTC is smart, it should reallocate some of the digital TV, 600 MHz to mobile, but they are a bunch of ball-less !@#$ups”
  • We have no idea how JAS nor TRUE will pay for this, they’ll need some THB 8 bn in cash, and THB 68 bn in bank guarantees in the next 90 days. Expect to see a lot of capital increases, Investment Bankers should be licking their lips at this, minority shareholders will be cursing under the breaths if they are holding shares in either stock. Note: A capital increase takes 60 days.
  • For TRUE its quite simple the conversation will be – “Daddy I need more money, SCB bankers don’t cry, you’ll make a fee and we’ll pay you some interest on the loans, the CEO will probably buy himself another Ferrari, and don’t forget we are your biggest clients so in reality we own you, China Mobile, well it’s your own fault for not requesting any blocking rights when you bought a 19% stake in us :p”
  • For JAS..A PP announcement in the morning? A potential takeover target? We’ve heard its the koreans, SK Telecom, willing to back them but much remains to be seen, what else could he sell to an infrastructure fund?!
  • DTAC’s concession expires by 2018, so they are praying that there won’t be any delay in the next round of bidding and I dare not imagine how management there is feeling at the moment
  • AIS also needs more spectrum and is faced with having to double its capex to rollout nationwide 1800/2100, not the worst position but at least it appears like their dividend payout’s should remain the same.
  • Anything positive from this? The country benefits? Debt to GDP drops? More $ for the military to give to low income earners? Who knows…Although we now will have “real 4G”

Continue reading Random Thoughts: 4G Madness, dictatorial love, Dawei, final post

Co Visit: Thai Polycons (TPOLY)

Power and property strengthen foundation of Thai Polycons

SET-listed Thai Polycons Plc (TPOLY) has been in the construction business since 1988 and since diversified into renewable energy and property. President Chainarong Chanpalangsri discusses the company’s strategy and outlook.

Please explain Thai Polycons’ history and business model.

We started in 1988 initially with 1 million baht in capital and 30 employees as a subcontractor focusing on small construction projects. Over time, we grew and eventually listed on the Market for Alternative Investment (MAI) before moving to the main board of the SET.

Today we have four main business lines. Our core business is construction of multiple project types, from infrastructure to property or commercial developments. Second, we have a renewable energy company that focuses on biomass power plants. Third, we have a property business and will launch our second development next year. Finally, a trading business supports each of the above business lines.

How is the construction business progressing and how do you view the industry in Thailand?

We’ve had issues with our performance due to the increase in the minimum wage. The government’s insistence any impact would be minimal was incorrect, as the cost of each item increased and resulted in project losses for ourselves and others in the industry.

Chainarong: Building on construction base

Going forward we’re confident, as our backlog is currently at 5 billion baht excluding potential work with MAI-listed TPC Power Holding Plc (TPCH). Our customers range from property developers to hospitals, infrastructure and power plants, and we’re able to bid for projects across the board, as our philosophy is to remain open to new opportunities. The industry has a lot of potential with the government’s plans for infrastructure work, and we hope to participate in some projects with partners or joint ventures.

Continue reading Co Visit: Thai Polycons (TPOLY)

WHTW: Top 10

  • Quiet Motor Expo — A number of 39,125 orders were placed at Motor Expo 2015, 26.2 per cent below the 53,000 target. The number of orders was also 7.4 per cent below the figures recorded last year. The 13-day show which was wrapped up yesterday welcomed 1.5 million visitors. (The Nation, 14/12/2015)
  • Japan invests in Dawei — The multibillion-dollar Dawei special economic zone (SEZ) and related projects will go ahead at full scale after Japan yesterday agreed to take a one-third equity stake in the associated special purpose vehicle (SPV) jointly set up by Myanmar and Thailand. (The Nation, 15/12/2015)
  • Green light for Bt100-bn Thailand Future Fund – The Cabinet yesterday approved the launch of the country’s first infrastructure fund, dubbed the Thailand Future Fund, with Bt100 billion in initial capital to help ease the government’s financial burden from the expected investment on infrastructure next year. (Bangkok Post, 16/12/15)

Continue reading WHTW: Top 10

Stocks in the news (anan, ajd, asefa, bcp, crane, css, eforl, gfpt, nncl, prin, pstc, rojna, t, tpac) 18.12.15

ANAN targets 2016 revenue of Bt14.5-15.5bn (43% growth) backed by Bt38bn backlog. It targets sales of Bt21.5-22.5bn with 32% gross margin. It is confident 2015 revenue will reach target of Bt10-11bn. It plans to launch ten projects, valued at Bt22-23bn, next year. (Thun Hoon, 18/12/15)
Comment: Perhaps one of the few property companies still growing in Thailand

AJD expects 4Q15 earnings to be good backed by Top-Up machines. It plans to add 50,000 ToUp machines next year. (Thun Hoon, 18/12/15)
Comment: Follow this name at your own risk.

ASEFA expects orders to surge from mega projects and growth in data centers. (Thun Hoon, 18/12/15)

BCP is budgeting Bt3bn to expand its oil retail business in 2016. It plans to open 60 gas stations and also focus on non-oil business for sustainable growth. (Khao Hoon, 18/12/15)

CRANE expects performance to turn around next year backed by demand. It expects 2015 revenue to achieve its target. It is talking to a prospective partner to invest abroad. (Thun Hoon, 18/12/15)
Comment: It has consistently been an undervalued stock despite the fact that core business has always done ok.

Continue reading Stocks in the news (anan, ajd, asefa, bcp, crane, css, eforl, gfpt, nncl, prin, pstc, rojna, t, tpac) 18.12.15

The Fed did whaaaaaaaaaat?

….just as they said, just as it was telegraphed for most of the year, and so what? Currencies haven’t gone crazy, bond markets look ok, even equity mkts are up.  It has been the biggest non-event which is perfect.

So let us go outside and enjoy the “winter” weather that finally has hit BKK today.

But if you care enough, here’s a snippet from the official statement and a link to it as well:

“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

Source: Federal Reserve

Stocks in the news (akr, ap, arrow, bigc, com7, cpr, daii, gunkul, inet, kc, mfec, pttep, sappe, scc, seafco, super, trc, tse, tu, tvd) 17.12.15

AKR expects 2016 revenue to reach a new high of Bt3.2bn backed by a 20MW solar farm in a government unit. It expects revenue from solar farms to comprise of 35% of total revenue from 10% this year. It plans to take part in bidding for the Bt4bn electric transformer project next year. (Thun Hoon, 17/12/15)
Comment: Well…not interested in this company, there are better options out there in the market

AP expects 4Q15 revenue to reach new high at Bt7.5bn with Bt900mn in net profit. (Khao Hoon, 17/12/15)

ARROW expects 4Q15 net profit to be good backed by economic recovery. It expects 2015 revenue to reach target of Bt1.2bn after 9M15 net profit hit a new high of Bt183mn. It plans to set up new plants in 2016 because of lower raw material price. (Thun Hoon, 17/12/15)
Comment: They have continued to benefit from the expansion of condominiums, warehouses and now potentially infrastructure in Thailand

BIGC plans to open many new stores next year: 6 hypermarkets, 3 BIGC markets, and 75 mini BIGC. It plans to set up an REIT. (Khao Hoon, 17/12/15)

Continue reading Stocks in the news (akr, ap, arrow, bigc, com7, cpr, daii, gunkul, inet, kc, mfec, pttep, sappe, scc, seafco, super, trc, tse, tu, tvd) 17.12.15

Stocks in the news (age, apco, cen, ci, dcc, ifec, jwd, mcs, pjw, pttep, sawad, tfg, tk, tpch, uwc, wha) 16.12.15

AGE plans to expand to Vietnam and Cambodia where demand is high. It expects 2016 revenue to grow 10-20% from this year’s Bt4bn. It plans to expand its seaport, which is expected to increase its capacity by 30%. (Thun Hoon, 16/12/15)
Comment: The coal industry isn’t going anywhere and AGE is suffering with it

APCO plans to expand its market at home and overseas and will launch a new product, “Refreshing Spray”. It expects 4Q15 sales to increase by 50%. It expects to recognize revenue from abroad within 2016. (Khao Hoon, 16/12/15)
Comment: Effectively a listed MLM firm. If you believe that there are enough silly consumers out there to overpay for POS products then you can go ahead and believe in APCO

CEN expects to show net profit next year from net loss this year backed by its subsidiary and whole year of revenue from its power plant. It plans to expand abroad and acquire more power plants. (Thun Hoon, 16/12/15)

CI expects 2016 revenue growth of 100% backed by transfers, rental revenue, and selling Bt1.2bn assets to REITs. It expects 2015 revenue to be higher than Bt2bn. (Khao Hoon, 16/12/15)
Comment: This will mainly be from the REIT, the issue with a property company this size is that earnings will be lumpy, great for a year or 2 and rubbish for the next few years and CI is no different.

Continue reading Stocks in the news (age, apco, cen, ci, dcc, ifec, jwd, mcs, pjw, pttep, sawad, tfg, tk, tpch, uwc, wha) 16.12.15

BIGC setting up a REIT

While they haven’t explicitly stated that they will do a REIT, their announcement this morning stated

As part of its 2016 plan, Big C is also considering monetization options of part of its real estate, in particular the creation of a REIT composed mostly of its shopping centers, while continuing to fully consolidate their results. Big C owns and operates 174 shopping centers for about 800,000 m2 in rental area located in prime areas across the country. This project will facilitate Big C’s development on its attractive market and enable to create value for its shareholders. “

So what? 

Well it looks like BIGC has admitted that store expansion is limited, they already consider Thailand to be a developed retail market and thus the only way they can continue to demonstrate growth as a public company is to monetise assets.

Where should you look if you want hints on valuation?

Tesco launched a property fund years ago that is mainly on leasehold assets, so I’d suggest to use that as a quick and dirty comp

Source: BIGC 

Stocks in the news (bwg, ilink, irpc, ksl, ncl, nwr, ptt, rs, sena, solar, sricha, tpch, trc, tse, tu, vibha) 15.12.15

BWG plans to expand waste power plants by 50MW. It targets 100MW within five years. It expects 2016 revenue to be good backed by Bt100-200mn revenue from selling electricity, beginning in 3Q16. It plans to list its subsidiary. (Thun Hoon, 15/12/15)
Comment: They do seem to have a lot of momentum behind over the past few years. I do remember a decade ago BWG had several issues w/ environmentalists and local residents but it seems to have been able to move on.

ILINK expects to get projects from ADVANC, DTAC and TRUE (rental of fiber optic cable). It expects 2015 revenue to be higher than Bt3bn and expects to grow significantly next year. It expects to get Bt10bn new projects. (Thun Hoon, 15/12/15)
Comment: ILINK’s stock, like several others, just collapsed in the last 2 weeks but there are still going to benefit from all this IT expansion that Thailand has.

IRPC expects UHV project to start up in 2Q16. It expects this to increase its refinery efficiency. It is talking to PTTGC about an M&A. (Khao Hoon, 15/12/15)

KSL expects 2016 revenue growth of 5-10% backed by increase in sugar cane production from 8.6mn tons to 9mn tons. It expects sugar price to be stable at US$0.14-0.15/lb. It plans to invest in the power business with TSE. It has budgeted Bt800mn to expand ethanol plants. (Thun Hoon, 15/12/15)

NCL expects 4Q15 net profit to be positive. It expects to get Bt100mn in domestic freight. It is considering investing in Indonesia, Vietnam, and Cambodia. It expects exports to comprise 50%. It expects 2016 revenue to grow 30%. (Thun Hoon, 15/12/15)

Continue reading Stocks in the news (bwg, ilink, irpc, ksl, ncl, nwr, ptt, rs, sena, solar, sricha, tpch, trc, tse, tu, vibha) 15.12.15

Market update 07/12 – 11/12

Last week was  a shortened one for the SET as there were 2 public holidays but that didn’t stop the still relatively high daily value traded @ ~THB 40 bn, and what happened? Well the market dropped to be down 14.5% for the year which is impressive (so ~-20% in USD terms) and that’s just something realised across most of the sector. What’s happening this week? Holy crap it’s going to be fun, Fed meets, 4G and then we can finally relax just in time for xmas and new years.