Stocks in the news (advanc, bbl, beauty, bem, bsm, css, ea, mc, ori, ptt, smpc, sricha, svi, tacc, true, uv) 29.02.16

ADVANC reports more than 500,000 of its 2G clients have upgraded to 3G. It aims at getting more than 10mn 4G users from 4.4mn now. It has budgeted of Bt40bn to expand its business in 2016. (Kao Hoon, 29/2/16)
Comment: The number we read this morning from the news was 5 mn users already.

BBL announces a full-year dividend of Bt6.50/share. (Thun Hoon, 29/2/16)

BEAUTY reported net profit in 2015 of Bt402.5mn, up 33.65% supported by total revenue growth of 29.36% to Bt1.79mn from expanding its branches. It will pay a dividend in 2H16 of Bt0.83/share, XD on April 28. (Kao Hoon, 29/2/16)
Comment: And they keep growing!

BEM reported 2015 net profit of Bt2.65bn supported by higher toll and fare revenue. It had total revenue of Bt13.1bn with total assets of Bt78bn. It will pay a dividend of Bt0.07/share. (Thun Hoon, 29/2/16)
Comment: At what point will BEM do what BTS did and spin off the assets to an infrastructure REIT?

Continue reading Stocks in the news (advanc, bbl, beauty, bem, bsm, css, ea, mc, ori, ptt, smpc, sricha, svi, tacc, true, uv) 29.02.16

Random Thoughts: Humour, airlines, TCAP, politics, par value?


Would you believe it if I said that Thailand is the second best performing market in Asia this year? Nearly +4.5% in USD termsstockmarket_image



Let’s start with Nok Airways, it appears that ever since its ludicrously expensive IPO nok no one has been a believer in Nok Airways, perhaps its the way that they put a silly cartoon image on the front of their planes nok. Or perhaps its the fact that this company entered into an industry that is not only incredibly competitive but well known for having one of the worst return on investments and that unless you have the balance sheet, management capability, and ability to source traffic and network. And that even with all you are still effectively screwed. Now there are several issues at play with the company all of which are fairly public, their financial performance is crap (loss since 2014, negative FCF, ), pilots are now leaving in droves b/c of safety standards and one would expect for bookings to decline tremendously. Will someone buy them? What’s the point? Perhaps if it was offered for 1 cent and a 95% haircut on the debt then you may see Tony Fernandes swoop in as he did with  AirAsia  but there is no real tangible value here and if I was AirAsia, Bangkok Airways, (not Thai Airways b/c they own 40% of the company, here comes another write off!)  I would be toasting the loss of a competitor.

Thai Airways & AirAsia

Thai Airways stock price  has been on a huge run in the past week thaiairwaysthanks to some clever reporting  that Somkid raised the idea that Thai Airways should work with AirAsia through a share purchase (Bangkok Post). AS IF THIS WAS EVER POSSIBLE! But the market believed it, until the news came out that this was not not on the cards (Bangkok Post) and I had multiple messages about why weren’t we purchasing Thai Airways…I will whenever they recap until then I’d rather believe that pigs can fly.


It’s been in the news since December ’15 that Bank of Nova Scotia has been planning to sell their 49% stake in TCAP.tcap

Latest events suggest that there are two buyers lined up, basically Japan and China (
Bangkok Post). Traditionally we normally heard rumours that Malaysian Banks were interested in expanding here and they were typically the parties willing to pay high multiples of BV. But with TCAP’s relatively smaller customer base, loan book etc etc and to compound this the fact that the world isn’t doing well either, it isn’t quite the attractive proposition as other entities in the past. In any case if you believe in the foolishness of buyers don’t be surprised to see a deal happen @ 2x P/BV.


Well the draft charter has been in the news, Yingluck has invited reporters to visit her garden and Thaksin has allowed himself to be interviewed in Singapore. (I do wonder how long it will be before BEC makes a drama similar to this) And in the past week’s Economist there was a piece on Thailand (Economist) I’ll let you read the article in its entirety but it did end the following “…that Thailand’s self-chosen leaders have no real strategy at all. “ Which is rubbish they do, protect the status quo, protect their positions, ensure no one can have full control of parliament and other things which I can’t mention unless I want to be invited for attitude adjustment.

Par Value

One of the easiest ways in this country to make one’s stock price go up is to decrease its par value/a stock split/par split. Why? Basic finance principles imply that this should have no impact upon the valuation of a business, in reality animal spirits are different….So the SET has come out with a new criteria stating that there would be a floor limit for par value set at 50 satang (Bangkok Post). So one should applaud them for the best efforts to limit the number of unscrupulous companies and owners that are just looking for the ability to manipulate their share prices. Of course there is an easy way around this…do a reverse par, wait a few years and then split it again and again….

Co Visit: IRPC Plc

SET-listed IRPC Plc is Thailand’s largest integrated refinery and petrochemical company. President Sukrit Surabotsopon discusses the company’s strategy and outlook.

What is IRPC’s business model?

In simple terms, our operations start from importing crude oil to refining oil into petroleum products such as naphtha, petrol, diesel and liquefied petroleum gas and making petrochemical products. Petroleum products represent 70% of our revenue. Our petrochemical business involves producing olefins and aromatics, which represent nearly 30% of our revenues. About 60% of our products are sold domestically and the rest exported globally.

We also have two other businesses: an asset management unit that is developing an eco-industrial estate park; and a port and tank farm business.


Sukrit: Aiming at industry’s top quartile

What differentiates IRPC from other players in the industry?

IRPC is the only integrated petrochemical refinery in Thailand that uses crude oil as a feedstock. Others — PTT Global Chemical Plc, for example — are gas-based petrochemical producers, while some import naphtha as a feedstock. As a fully integrated refinery and petrochemical producer, we can extract the synergistic benefits of these two businesses and optimise production to gain good outcomes.

Please explain IRPC’s Everest project.

To explain the Everest project, we must start from the beginning of IRPC’s history with PTT Group. In 2006, our main focus was to build a strong foundation through restructuring of the balance sheet, corporate and business units. After the restructuring, we initiated the Phoenix Project, a strategic plan concentrated mainly on asset investment. Of the total investment of US$1.5 billion, $1.1 billion was allocated to the UHV project (upstream hygiene and value-added products), which allowed IRPC to upgrade fuel oil to high value-added products. It will be operational by the next quarter. We have also taken this a step further to expand polypropylene capacity by 300,000 tonnes a year, with completion scheduled in mid-2017.

Next, we carried out the Delta Project from 2013-15 to invest in software with a focus on best practices and enhancing operational, commercial and procurement excellence. The Everest project began last year with a focus on efficiency enhancement and developing people. Under this scheme, we aim at $300 million of incremental profit. We plan to be a top-quartile performer in the industry, measured by return on invested capital, which we hope to increase to 14% from 8%.

The financial indicator that demonstrates the success of the project will be the increase of earnings before interest, tax, depreciation and amortisation from 17 billion baht currently to 29 billion baht over the next two years. To achieve this target, we are bringing in world-class consultants to help increase the capability of our people on the operational and commercial side and all other areas.

Investing in assets with the expectation of a return of 20-30% is incredibly difficult. However, the return from investing in knowledge is infinite. And this is why we are focusing on investing in knowledge instead of assets.

Continue reading Co Visit: IRPC Plc

WHTW: Top 10

  • January export value slides by 8.9% — JANUARY’S export value continued contracting by 8.9 per cent to US$15.71 billion on the same global factors – slumping demand and rock-bottom crude-oil prices. (The Nation, 26/2/16)
  • Household debt expected to remain above 80% of GDP — THE LEVEL of household debt this year is expected to continue to exceed 80 per cent of gross domestic product even though some people who borrowed to take advantage of the previous elected government’s first-car scheme will pay off that debt in the fourth quarter. (The Nation, 22/2/16)
  • Trouble ahead? Euro zone business activity declines further — The euro zone composite PMI index, which measures activity in the manufacturing and services sector, fell to 52.7 in February from a revised figure of 53.5 in January. The index came in below expectations of 53.3 from analysts polled by Reuters. The 50-point mark separates expansion from contraction. (CNBC, 22/2/16)
  • G-20 Needs to Take Bold Action on Global Growth, IMF Report Says – Group of 20 policy makers “must act now to implement forcefully” existing growth strategies while also planning for unified support for demand through fiscal spending, IMF staff said in a report ahead of the Feb. 26-27 meeting of finance ministers and central bankers in Shanghai. The IMF is likely to further cut its global-expansion outlook in the next update in April, according to the report. (Bloomberg, 25/2/16)

Continue reading WHTW: Top 10

Stocks in the news (anan, banpu, bcp, bjchi, bwg, epco, forth, fpi, gunkul, ircp, k, l&e, maco, ndr, nok, rs, samart, sawad, tcj, tfd, tkn, tmi, trc, tvt, ubis, wha) 26.02.16

ANAN targets 2016 revenue to reach Bt11bn backed by Bt37.2bn backlog. It plans to launch 12 projects, valued at Bt22bn. (Thun Hoon, 26/02/16)
Comment: Seems to be rather conservative estimates coming out from the management team given their backlog, lets see how things unfold during the year

BANPU expects net profit to return to the black this year aided by US$70mn extra gain on Hongsa power plant and its coal capacity of 46.1mt/year. It plans to acquire a coal mine in Indonesia. It plans to issue a Bt10bn debenture. (Khao Hoon, 26/02/16)
Comment: Well and there’s a supposed listing of BANPU power..

BCP is budgeting Bt20bn for add 60 gas stations. It plans to list a subsidiary in 4Q16. (Thun Hoon, 26/02/16)

BJCHI reported its highest net profit at Bt1.32bn in 2015 supported by continuous construction of FPSO’s P75&77 projects. It targets 2016 revenue to grow not less than 15% thanks to Bt3.7bn backlog. It expects to be awarded new projects in April. (Thun Hoon, 26/02/16)
Comment: Impressive results given the huge drop in oil prices

Continue reading Stocks in the news (anan, banpu, bcp, bjchi, bwg, epco, forth, fpi, gunkul, ircp, k, l&e, maco, ndr, nok, rs, samart, sawad, tcj, tfd, tkn, tmi, trc, tvt, ubis, wha) 26.02.16

Stocks in the news (ait, ecf, fpi, gfpt, glow, ifec, jwd, mcs, mtls, nok, pranda, pps, pylon, samco, scn, seafco, spa, tpch, tu, twz) 25.02.16

AIT is talking to A prospective partner to provide data center service. It expects this to need Bt400mn capital investment. It plans to ask board approval in April. It plans to take part in Bt10bn public bids, of which it expects to get 40-50%. (Khao Hoon, 25/02/16)
Comment: They’ve come out saying a few times that they want to diversify away from being a project based company, and if the government is really adamant on these data centers then it just sounds like another great cash flow for those that are able to win these contracts

ECF reported 2015 net profit of Bt75mn. It will pay a dividend of Bt0.05/share, XD on April 19. It targets 2016 revenue of Bt1.5bn. (Khao Hoon, 25/02/16)

FPI targets 2016 revenue growth of 10% as the auto sector bottoms out. Its backlog is Bt600mn. It expects Bt300mn to be booked this year. It is talking to a partner to expand to India. (Khao Hoon, 25/02/16)
Comment: Haven’t they said that the deal in India was already completed?

GFPT targets 2016 revenue to reach Bt16-18bn thanks to broiler price recovery and lower cost. (Thun Hoon, 25/02/16)
Comment: Well they have benefited from lower raw mat costs, the only question here is will the domestic price of chicken increase?

GLOW’s board approved investing in Vietnam and Malaysia. Its 2015 net profit is Bt8.35bn. It will pay a dividend of Bt4.36/share, XD on April 29, PD on May 26. (Khao Hoon, 25/02/16)
Comment: Don’t be surprised to see GLOW continually offering special dividends every year

Continue reading Stocks in the news (ait, ecf, fpi, gfpt, glow, ifec, jwd, mcs, mtls, nok, pranda, pps, pylon, samco, scn, seafco, spa, tpch, tu, twz) 25.02.16

Management Trades 14/02 – 19/02

Notable Transactions

Note: Interesting to see the wide divergence in buy’s/sell’s

Buy(s) THB 226 mn

  • BROOK – Harumph…trust this company at your own peril…
  • TMT – It’s been a rather odd following this company over the past few years, dividends have been amazing but every once a in while one of the quarterly #’s are rubbish…

Sell(s) THB 4.6 mn

  • Na