Jun 22, 2013

Marco Polo Marine - News release - Acquisition of newly built mid-sized AHTS

read in detail here;

In short, the acquisition was done to support its market position quickly in OSVs in Indonesia, as it would take at least 18 months to build one. The vessel is already undergoing re-flagging to an Indonesian flag and is expected to be chartered soon to a leading oil company for deployment in Indonesian waters.

The limited supply of Indonesian flagged vessels puts MPM in good position, via its 49.6%-owned subsidiary, PT BBR. The company is wasting no time in increasing its supply of vessels for chartering services amid robust demand in Indonesian waters. MPM intends to build bigger vessels such as the AHTS and prepare itself to handle more sophisticated vessels and massive steel work modules. These modules hold piping, cables, valves and equipment and many of them are linked together in the development of giant refinery plants.

What role does an AHTS play?
AHTS are used mainly in offshore support activities and production/maintenance. Exploration-type AHTS are also used in supporting drilling activities in both exploration and development.

Indonesia's cumulative O&G production is about 90% onshore, with its offshore basins largely under-explored.

As of 2012, Indonesia's aging infrastructure and fields suggest that it may struggle to meet production targets in the short term. The government has been encouraging increased exploration with incentives.
In May last year, the Indonesian government agreed to give a higher share of oil to companies operating under the production sharing contract for deepsea explorations. The government will take 65% and the remaining 35% of oil production goes to the contractor. Previously it was 85:15. More details here;

In April this year, the Indonesian government announced that companies involved in the O&G and geothermal exploration are able to get tax incentives, more details here;

CP Fund 2Q13

Portfolio Activity
1. Sold all ChinaMinzhong at 1.03 in May. I noticed the volatile swinging in this counter and decided to take some money off the table while still profitable. My reason is that it is still possible to catch CMZ on  its next downswing at the same or even better entry price than my original one. It made sense to free up some funds while the market had begun to slide, and many counters(some that I favor more than CMZ) were approaching 1-yr lows.

2. Sold Tee Land at 0.57 in June, on the second day of its trading. Managed to obtain some lots at 0.54 via private placement, this was purely speculative.

3. Sold all Valuetronics at 0.20 in June. I decided to cut loss as this stock was not going anywhere. Liquidity is bad, dividends had been cut, and especially when everyone is dumping dividend stocks, the upside is very limited and it had also struggled to touch 0.225 before languishing again at 0.20-0.205 level. Again here the reason is to free up more funds while I can.

4. Bought some Krung Thai Bank on SET at 18.00 yesterday. Thai market continued its selldown on Thurs and I managed to snag some on Friday. I have yet to place the second half of my order.

1. Thai Bev
2. Marco Polo Marine
3. CACHE Reit
4. Starhill Global
5. Krung Thai Bank (SET)

Portfolio currently has ROI of 13.42%, down from the peak of 23.17% in the mid of May. I have taken several measures like the above to prepare a decent amount of funds. It was also fortunate that I have cleared off Maple Ind/Log early, and did not try to hold on to attempt picking a top. There is still value in selected REITS and for now I am still comfortable with what I have.

Thai Bev remains the anchor of the portfolio, while the stock price has also taken a bit of a beating, so far it has held above the 0.60 mark. If it does break that support, it should approach 0.555 again, which was the price of my 3rd buy-in. I have prepared some funds for a 4th order if it does come to that price.

I am also watching Marco Polo Marine and will get more at 0.35. I do not intend to allocate much more to the local market for now.

SET short term Targets
1. Krung Thai Bank at 18.0 and 17.4
2. Bumrungrad Hospital at 72.0 and 71.8
3. TRUE at 5.5 and 5.0

Related post

Jun 4, 2013

Oishi green tea to be sold in Malaysia

Headline taken from here;

which prompted me to do some more reading.

To refresh up on related events, Thai Bev had in March 2013, ''released'' some shares of Oishi Pcl to increase free float. Thai Bev still retains 79.66%, after a net of 2564 million baht, about SGD106.8 million.
I also noticed hands from Singapore have also a small piece of the pie, with DBSV, UOB KH, Phillip Securities, Raffles nominees, HSBC (SG) nominees having some form of direct and indirect stake among the top 10 shareholders.

The latest Thaibev-FNN synergy-related news is about FNN Malaysia distributing Oishi's bottled green tea in 1460 7-Eleven stores in Malaysia.

According to Oishi, the growing bottled tea market in Malaysia is valued at 2 billion baht, green tea approximately SGD33.3 million. Ready-to-drink tea consumption per capita in Malaysia is 0.94 litres per person per year compared to Thailand's 5.8 litres. The distribution plan aims to have Oishi tea available at 3800 convenience stores and petrol stations by the end of 2013.

Personally I am unsure whether the low consumption of bottled tea in Malaysia has potential to grow, as we are talking about tea; it is just another beverage flavour, unlike beer or liquor's general appeal. I am happy that these plans are able to be achieved in a matter of a few months, which should not be of surprise as FNN Malaysia already commands the largest distribution network in Malaysia, with 27% market share of soft drinks distribution and manufacturing.

This is a right step in utilizing the reach of FNN in growing its non-alcoholic beverages segment. However it will be an uphill battle as this segment posted a net loss 1Q13 though EBITDA stayed positive. This was mainly attributed to increased advertising and promotion expenses and staff costs, largely related to the launch of new brands by Serm Suk.

A source from Standard Chartered expects the Singapore and Malaysia soft drink market to form 25% of Oishi's sales in 5 years time.

Amidst all these talk about synergy, it seems people have forgotten about 1 significant stumbling block, me included, which hit me like a kick in the nuts, as I recall now that Heineken and FNN had signed a non-compete clause which bars FNN from selling Chang beer in clubs and restaurants in Singapores, however it is free to do so in supermarkets. And I still held hope that one day all the coffeeshop uncles would be drinking Chang instead!

On the bright side, I think the clause runs for 2 years only and only covers Singapore, Papua New Guinea, Cambodia and Vietnam.

I will be waiting with bated breath for more news on the expansion of more of Thai Bev's products into ASEAN.