Random Thoughts – Governments, infrastructure, central going wild, sweet sugar and more…

Which country’s government set up is this?
440 members, 330 elected 110 appointed by the Military. If you thought of Thailand I wouldn’t blame you, that is Myanmar’s current structure, raises quite a few questions doesn’t it?
Thailand infrastructure projects 
These ones are postponed – Mr Peerapol said the three projects are the Pink Line electric train from Khae Rai to Min Buri, worth 56.6 billion baht; the Yellow Line electric train from Lat Phrao to Samrong, worth 54.6 billion baht; and the joint Thai-Japanese double-track Kanchanaburi-Bangkok-Chachoengsao-Aranyaprathet and Bangkok-Chiang Mai rail routes.
And these ones are going ahead – First of the four lines is the 132km Map Kabao-Jira route, which will cost Bt29.67 billion. The project, being considered by the National Economic and Social Development Board (NESDB), should be added to the Cabinet agenda in the second week of May. The targeted completion date is 2020.The second project, the 165km Nakhon Pathom-Hua Hin route costing Bt20.15 billion, should be ready by 2019, while the third is the 90km Hua Hin-Muang Prachuap Khiri Khan line worth Bt10.30 billion.
So what? It does prove that the government is hell bent on approving all of the dual track projects asap and effectively everything else takes a back seat.
Negative interest rates are the dumbest idea ever 
I’ve been following Jeff Gundlach for years and whatever he says you most likely should take it as a given. Here are some great quotes and the link to the rest of the interview
So you have to find a center piece idea that will be important in driving the market. And you have to have an intuition about how other investors will react if you’re right and they wake up to that idea.
Negative interest rates are designed to fight deflation. But they are the very definition of deflation: Your money is disappearing. As an investor, you are going to have less money in the future than you have today with negative interest rates.
Recessions don’t drive financial markets. It’s the other way around.
The markets have humiliated the Fed into abandoning their pretty idiotic forecast.
CPALL and BEC back in the news

CPALL and BEC have been in the news again, this time with Thaipat Institute who “has removed CP All Plc and BEC World Plc from its top 100 listed companies ranked by environmental, social and governance measures, citing the pair’s tainted corporate reputation. ” Normally I would have posted this immediately, but I’ve never heard of thaipat until this news And I doubt many other people had either. But he did have a rather priceless quote “Companies that have good practices but bad performance, and good performance but bad practices are worthless,” Mr Pipat said. If only the world was really that black and white.

Sweet Sugar
Getting our sugar fix will become pricier with a proposed sugar tax – Soft drinks will likely be 20-25% more expensive if the cabinet approves the sugar tax rates proposed by reform councilors.
Two rates of the excise tax were proposed based on different sugar levels. Drinks with more than 6g to 10g per 100ml of sugar would be subject to a rate that would raise their retail prices by at least 20%. Those with more than 10g of sugar would see their prices at least 25% higher.
So we did an extensive market survey at the office (a total of 5 people of which 2 drink sugar drinks) and when you do the numbers..well an ichitan branded drink will go from 12 baht to 16 baht..not quite the end of the world, so will demand disappear and will people stop buying these “sugary” products, nope. If a government was really concerned about the nation’s health, easy ban cigarettes. To the markets, both ICHI and OISHI took a slight hit – interesting factoid, ICHI is now below its IPO price.
Central going wild
Central Group has been on the prowl! First with Zalora and now BIG C Vietnam.
“AT CENTRAL GROUP, online shopping contributed only 0.5 per cent of total sales last year. In a country where mobile-phone penetration is more than 100 per cent, with smartphones accounting for 70 per cent of phones in use, it is more than obvious that the retail giant must step up its e-commerce to be ahead of rival retailers and small tech companies.”
So for the Zalora purchase, things are still being finanlised using their listed co, Central Online (COL). Now at first I thought that typically central group doesn’t pay crazy prices for anything, I hope they maintain it here. All of these ecommerce sites in Thailand, despite the amount of news and marketing are losing tonnes of money!! Where’s the value in a business that is constantly losing cash every year? Oh the subscribers? The network? You could argue it both ways, but in the end isn’t a business that doesn’t make $ rather pointless?
And then Central Group went ahead and beat TCC to buying BIGC Vietnam…so much for not paying crazy prices.
He said Big C Vietnam had 43 stores nationwide, comprising 33 hypermarkets and 10 convenience stores, and 30 shopping malls. “Total revenue in 2015 was approximately 586 million euros.”
“Casino yesterday on its official website announced the closing of the sale of Big C Vietnam to Central Group, for an enterprise value of 1 billion euros, implying 2015 multiples of 1.8 times net sales, 20.4 times EBITDA (earnings before interest, taxes, depreciation and amortisation) and 34.4 times EBIT.”
MAI call for more auditors
This has been a recurring issue since the SEC cut the auditor list by half 1.5 years ago. And they wonder why the growth in the capital markets are slow. Then again they are just a regulator….though I don’t think that Prapan knows what’s he talking, stock analysts almost never cover MAI listings nor any company that is typically below THB 30 bn in market cap. Why? It’s the business model, small companies – less liquidity – less commissions, but of course if there is a great story or a strong relationship then every once in a while you’ll see a smaller name covered.
“The shortage of auditors and financial advisers has led to slow growth in new listed companies, says Prapan Charoenprawat, president of Market for Alternative Investment (MAI). Mr Prapan said the market had seen growing demand for companies to list on the bourse because listed firms have successfully raised funds through their issuance of initial public offerings (IPOs) and other financial tools. The market, however, can only accommodate a fraction of them due to limited resources. “It’s not just a lack of financial advisers and auditors, we’ve also fallen short of stock analysts who can cover MAI listings, resulting in a lack of investor confidence,” he said.”

WHTW: Top 10

  • Yen soars, stocks slump as BOJ holds policy, pushes back inflation target — The Bank of Japan held off from expanding monetary stimulus on Thursday, defying market expectations for action even as soft global demand, an unwelcome rise in the yen and weak consumption threatened to derail a fragile economic recovery. (Reuters, 29/4/16)
  • Fed Waits for Economy’s Green Light to Hike as Risks Abate – The strong conviction about growth, inflation and global stability needed to raise interest rates didn’t show up for officials at the Federal Open Market Committee meeting this week. They’re still open to finding it soon. (Bloomberg, 28/4/16)
  • UPDATE 1-U.S. crude inventories rise less than expected – EIA – U.S. crude oil stockpiles rose last week to a fresh record high as lower refinery production offset a drop in imports, while distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday. Crude inventories rose 2 million barrels in the week to April 22, compared with analysts’ expectations for an increase of 2.4 million barrels. (Reuters, 27/4/16)
  • Euro zone business growth slows despite discounting – PMI — Markit’s Composite Flash Purchasing Managers’ Index (PMI) for the euro zone, based on surveys of thousands of companies and seen as a good guide to growth, dipped to 53.0 from March’s 53.1, matching a 13-month low in February. (Reuters, 22/4/16)

Continue reading WHTW: Top 10