Morning Matters
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29-Aug-2013 Morning Matters E F E A F TE A xF TE tA SET Intra-Day Graph WHAT’S INSIDE xF MT tA ax RT ct On The Platter ix rG st or OfficeMate (OFM TB;FVTHB71.5-Buy): Online Business Pioneer kV |o sa w OfficeMate is a major distributor of office supplies and stationery |l t equipment. Its recent merger with Central Retail Corporation (CRC) u h involved the transfer of two of the latter’s units, Office Club and B2S, into e the group. We like the company for the healthy growth potential of its | | Source: Bloomberg upcoming online business, which will be launched in 4QFY13, and initiate coverage with a BUY recommendation and a TP of THB71.50. Key Market Indices (28 August 2013) Value Chg % Chg % YTD SET 1275.76 -18.21 -1.4% -8.3% MEDIA HIGHLIGHTS SET50 873.62 -10.28 -1.2% -7.6% SET100 1911.71 -25.77 -1.3% -8.0% GMM Z removes RS satellite channels in fee row Government lowers speed of railway megaprojects Dow Jones 14824.51 48.38 0.3% 13.1% S&P500 1634.96 4.48 0.3% 14.6% PTT warnsof net profit downturn Nasdaq 3593.35 14.83 0.4% 19.0% Retailers expect flat prices in second half FTSE 6430.06 -10.91 -0.2% 9.0% Renewable energy push to spark growth FSSTI 3010.89 -23.13 -0.8% -5.1% Hang Seng 21524.65 -350.12 -1.6% -5.0% SCCC freezes Cambodia cement plant Nikkei 13414.50 155.04 1.2% 29.1% KLCI 1686.17 -15.07 -0.9% -0.2% SHANGHAI SE 2101.30 -2.27 -0.1% -7.4% ECONOMIC HIGHLIGHTS JCI 4026.48 58.63 1.5% -6.7% India: Rupee Plunge Risks Economic Nosedive for India SET 5-yr avg 2012 2013F U.S.: Pending Sales of Existing Homes in U.S. Dropped 1.3% in PE (x) 13.8 14.1 12.4 July P/BV (x) 1.8 2.0 1.9 Yield (%) 4.1 3.4 3.7 Canada: Canada Factories Count on U.S. Pickup to End Recession Key Statistics Brazil: Brazil Raises Rate to 9% as Real Undercuts Inflation Fight SET Value by investor Type: Daily U.K.: Carney Offers Banks Liquidity-Rule Sweetener for Lending Buy (THBm) Sell (THBm) Net (THBm) Spaniards Fleeing Jobless Scourge Seek Jobs in Morocco Institution 5,055.94 7,834.52 -2,778.58 Proprietary 10,955.74 8,460.22 2,495.52 Foreign 11,671.29 14,726.95 -3,055.65 Retail 26,005.72 22,667.02 3,338.70 SET Value by investor Type MTD (THBm) YTD (THBm) Institution 12,230.70 72,128.65 Proprietary -2,957.77 -8,221.99 Foreign -40,378.23 -116,464.46 Retail 31,105.30 52,557.80 SET50 Index Future Long Short Net MTD YTD Institution 11,212 13,996 -2,784 4,678 16,921 Foreign 5,773 6,883 -1,110 -5,722 -20,189 Local 17,993 14,099 3,894 1,044 3,268 Foreign Fund Flows (USDm) Last MTD YTD YTD% -94.7 -1,273.7 -3,780.2 -280.8 TM See important disclosures at the end of this report Powered by Enhanced Datasystems’ EFA Platform Media Highlights GMM Z removes RS satellite channels in fee row GMM Z has removed all channels owned by rival RS Plc from its platform due to a dispute over broadcast fees charged by the latter. The satellite-TV arm of GMM Grammy Plc notified its subscribers that RS's satellite-based Channel 8, Sabaidee TV, You Channel and Star Max Channel can no longer be viewed from its set-top boxes from this past Tuesday. The announcement explained that GMM Z could broadcast these channels if it complied with conditions set by RS. But the company considers these conditions to be in conflict with National Broadcasting and Telecommunications Commission regulations that stipulate companies licensed by the NBTC must not foster unfair competition. Therefore, GMM Z decided to stop broadcasting all RS channels via its set-top boxes. Company executives were not available for comment. (Bangkok Post) Government lowers speed of railway megaprojects The government will switch its railway investment from high-speed to medium-speed trains following strong criticism about the cost-effectiveness of the scheme, says Pansak Vinyaratn, chief policy adviser to Prime Minister Yingluck Shinawatra. Medium-speed trains capable of 250 kilometres per hour carry a lower investment cost than high-speed ones and are suitable for product shipments, he said without elaborating. A source said medium-speed trains will be used for the project's four routes. They are Bangkok-Nong Khai, Bangkok-Chiang Mai, Bangkok-Hua Hin and Bangkok-Rayong. The routes are the major part of the government's 2-trillion-baht megaproject investment over seven years. (Bangkok Post) PTT warnsof net profit downturn PTT Plc, the country's largest oil and gas conglomerate, is warning its net profit could fall to about 100 billion baht this year from almost 105 billion last year due mainly to the weak oil price in the first half. PTT achieved first-half revenue of 1.39 trillion baht for a net profit of 48.4 billion. A full-year net profit below 100 billion baht was last seen in 2010 _ 83.1 billion on revenue of 1.9 trillion. Mr Surong said the rising oil price could come as a boon to PTT's group financial performance, particularly to PTT Exploration and Production and other petrochemical units, while the baht's weakness could boost profits since some revenue comes in US dollars. A US-led military strike against Syria, the possibility of which is already spiking the oil price, would have only a psychological effect on the price level, he said. But a more widespread war would be the biggest concern, as that could weaken geopolitical stability in the Middle East. (Bangkok Post) Retailers expect flat prices in second half The prices of consumer goods are unlikely to increase much the rest of this year thanks to slower local consumption and higher competition. "Domestic trading activities during this period are tepid, as the country's overall economic condition is not good," said Somchai Pornrattanacharoen, president of the Thai Retailers and Wholesalers Association (TRWA). "Consumers have less purchasing power, so prices are likely to stay put." Consumers have changed their spending behaviour, shopping at community retail outlets and being more cautious, he said. Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce, said it's a buyer's market now thanks to the sluggish economy. Suwit Kingkaew, vice-president of CP All Plc, added competition among convenience store operators is expected to heat up in the remaining months, as new players like Japan's Lawson rev up their expansion. (Bangkok Post) Renewable energy push to spark growth The Energy Ministry has vowed to eliminate regulations that obstruct the expansion of renewable energy, saying investment in the sector is vital to Thailand's economic growth. Energy Minister Pongsak Raktapongpaisal said yesterday that the ministry is speeding up the revisions to support investments such as rooftop solar panels. Other investments are community solar farms, biogas from napier grass and municipality waste-to-energy projects. Spending on renewable energy and energy efficiency will be another tool to stimulate the Thai economy. The expected delay of the 2.2-trillion-baht infrastructure plan has prompted the state to support renewables. The Energy Ministry expects investment in the sector to top 400 billion baht between this year and 2020. Renewable energy use is planned to reach 25% of Thailand's energy mix by 2020, up from 8% now. Based on average GDP growth of 4% a year, the ministry says energy efficiency measures will help reduce consumption by 20% by then. (Bangkok Post) SCCC freezes Cambodia cement plant Siam City Cement Plc (SCCC), Thailand's second-largest cement maker, has shelved its US$150-million cement plant in Cambodia over political uncertainty in the neighbouring country as it looks at a possibility in Myanmar. Philippe Arto, managing director of SET-listed SCCC, said the board has decided to "put on the shelf" the plan to build a 1-million-tonne cement plant in Cambodia after finishing a feasibility study. SCCC, which is 27.5% owned by Switzerland's Holcim Ltd, in late 2010 signed a memorandum of agreement with Cambodia's Chip Mong Group for the study. "The board decided that the project is not a priority while we have many things to do in Thailand," Mr Arto said yesterday. Two of SCCC's kilns have been shut down for five years, but one will be reactivated in October and the opening of the other one is in the pipeline. Under the previous plan, construction of the Cambodian plant was due to start around the end of this year and take two years to complete. (Bangkok Post) See important disclosures at the end of this report 2 Economic Highlights India: Rupee Plunge Risks Economic Nosedive for India India needs to immediately use its foreign exchange reserves to arrest the rupee’s record plunge as the weakening currency has the potential to send the economy into a “nosedive,” billionaire Adi Godrej said. India’s rupee plummeted the most in two decades to a record yesterday as a surge in oil prices threatens to worsen a current account deficit and push the economy toward its biggest crisis since 1991. A continued drop in the rupee will stoke inflation, which is at a five-month high, in turn depressing consumer demand and raising costs for companies.