Sep 24, 2013

Tidying up my Thai holdings

Recent events have propelled the Thai market up and then in brutal fashion, the index is down 3.37% today.

Due to my concerns over TRUE in the short term, I went for a full exit last week at 8.10 baht to preserve my profits. It didn't help too that I got out on the first run up and missed the larger second, but that is not an issue.



I have tidied up my Thai holdings and currently only hold Krung Thai Bank. The stock is down 5.94% today to 20.60 baht. I still have a significant margin of safety price-wise. The 2 trillion baht loan that the ruling party is seeking for funding transport infrastructure projects should come before the Senate this week, even as the opposition seeks to debate reducing the size of the loan.

The government borrows a lot from Krung Thai Bank, which could see the bank benefit when the infrastructure plan rolls out. Banks have already observed increased demand for term loans as companies pro-actively begin preparations. Krung Thai Bank's loan growth target of 7.5% has already been met in the first half, and it plans to maintain that rate.

KTB Leasing has reduced its used-car loan business and will revamp it. It has also expanded into heavy-vehicle loans, a good business with low competition and good margin.

Funds from sale of TRUE will come in handy. My next addition will be a company with growth potential, especially on expansion into ASEAN, and this time I will hold it for at least 1 year or longer.

Sep 17, 2013

Thai bev's Oishi moves and update on ready-to-drink tea market


Oishi expands bottling capacity in Pathum Thani with Shibuya Kogyo, a leading Japanese bottling system manufacturer, for the purchase and installation of an aseptic cold filling system for PET bottles. The US FDA-approved system enables the use of thinner containers which will reduce material cost and lower environmental impact. The system can also reduce the need for preservatives while prolonging shelf life and flavour retention. The ambient filling conditions also provide flexibility in bottle design.

PET bottles are safe, lightweight, and recyclable. Note the similarities in the operations of Serm Suk, where recycling is also a theme in their glass bottling form for est. Thai Bev is actively involved in sustainability and the environment.

Chief Executive and President of Thai Bev, Khun Thapana, is also the Chairman of Oishi Trading believes the move is required to serve domestic and exports markets to capitalise on opportunities from the AEC. The expansion is another strategic move to maintain Oishi's market dominance in Thailand while facilitating growth into ASEAN. Thai Bev is continuing to expand in the robust non-alcoholic drinks business to optimise its distribution network.

The investment will cost 1.3 billion baht (about S$53 million), and will increase production capacity at the plant in Nava Nakorn by 25%, a capacity of 75 million bottles a month from 60 million today.

Approval has been granted from the Board of Investment for this system and commercial run begins in December 2014.

In other news, Thai consumers are spoilt for choice as Suntory, a leading Japanese beverage company, has entered Thailand's ready-to-drink tea market with its Tea Plus oolong tea. Suntory will pair up with Tipco and plans to spend 250 million baht on brand marketing. (No lack of money thrown at marketing and advertising this year and the next, as I have speculated here.)


Monday green, great start to the week

STI up +1.9% to close at 3179.48, 3.6 billion shares, trade worth S$1.72 billion.

SET up +3.14% to close at 1445.11, 10 billion shares, trade worth 55.11 billion baht (about S$2.25 billion).

Rally across Asia. Summers has withdrawn his Fed chairman candidacy, with Janet the frontrunner now. Syria deal struck. US industrial production rose in August by the most in six months, etc etc. Read the rest here.

Lets toast to the exit of Summers and possible winner Janet Yellen. It seems so nonsensical that just because someone has a bias towards a certain method, any small action or event involving his influence can move the market like that.

Back to Asia;

Notable movements today;
TRUE Corp is up +14.48% to close at 8.30 baht.
Krung Thai Bank is up +6.53% to close at 21.20 baht.
Thai Bev is up +3.8% to close at S$0.55

Not to be a party-pooper to the Thais but, notable news today;
1. Yet another train derailment
2. More violence in the rubber protest,
3. Is China bailing out Thailand???

Thai commerce minister says that China will definitely purchase 1.2 million tonnes of white rice from the Thai government stockpile within the next two weeks. The Chinese state-owned enterprise, Beidahuang, is also interested in buying 200,000 tonnes of rubber.

As usual, nothing is proven even from the mouths of the politicians, until actions have formed from words. An industry source from the Chinese side revealed that China does not need that much rice. If somehow such a deal really works out, the motive may likely be country politics.

Sep 15, 2013

Planning for a hands-off period for my SG and Thai investments

I am leaving sunny Singapore for cold and wet England soon, and will be there for a year. I have many things to miss but on the plus side, I will be located near the northern region where the scenery is beautiful. Monitoring company and financial developments in Asia will be a bit troublesome for me and I would probably be reading up once in a while, and perhaps might poke my nose into the British stock market instead.

After the period period of selling-downs where my portfolio experienced about 15% drop from its peak, the bounce up from the past week was uneven across my portfolio. Generally, my Thai stocks recovered more. In this period, I had accumulated more Marco Polo Marine, Krung Thai Bank, and True Corp. I divested Thai Bev earlier to protect my profits but missed the opportunity to re-enter as I had been waiting too cautiously at S$0.40 instead.

Nevertheless, I do not have much pruning left to be done. Looking forward, certain news and 'catalysts' may emerge which will affect stock prices.

Global
US debt ceiling somewhere in September when Congress is back, or 1st October. FOMC meeting should be around September 17-18 followed by Botak Ben's press conference. Things have also seemed to cool down between Barack, Putin and Assad for the time being.

Regional
Earlier foreign outflow of funds in Thailand caused its exchange to tank and the baht to weaken considerably. However the past week has been good to Thailand with renewed optimism about Asian exports. Global funds bought $310 million in Thai equities than selling in the first four days of the past week. Foreign investors contributed a net of $381 million into Thai bonds this week. The baht gained 1.3% this week to about 31.74 per USD, however it faces downward pressure in this weak market environment.



Krung Thai Bank is up about 21% after the past 11 trading days. Meanwhile, in my previous write-up about one of its troubled debtors, Saha Farms, with 20% of Thailand's poultry market, is today in the spotlight again as Krung Thai Bank guides it along on business rehabilitation. Earlier this week, CP Foods denied any plans of a takeover for Saha Farms. Krung Thai Bank, a state-run institution, will be closely involved in government infrastructure projects, as PM Yingluck promises to press ahead with stimulus mega-projects.

Thai Beverage has several potential catalysts and events upcoming; decision on F&N beverages and F&N's tussle with MEHL over Myanmar Brewery.Thai Bev also has a few cards on hand as it expands its distribution network in the south and explores cost-savings via freight train transport. Thai Bev also already owns a right to develop a Chang Beer brewery in three locations in Myanmar.
I am anticipating the results of sales of Oishi tea recently launched in Malaysia via F&N Berhad, as well as the effects of the increased alcohol excise tax.
Focus will also be on the 3Q results as the second half is expected to improve over the first half of this year.

TRUE Corp is the disappointing one, with executives boasting confidently of pushing ahead with its infrastructure fund a few months back, has now backed down to CAT on the dispute over ownership of 4500 of 7000 telecom towers originally earmarked for the fund. The fund may be cut from $3.1 billion to $1.9 billion. TRUE is in a hurry to raise funds as it needs to pay down debts as well as plans to spend $470 million on expanding its 3G and 4G networks as industry players are scrambling for market share as Thailand's mobile data usage grows.

Marco Polo Marine, I have not been keeping track of it much since the first half results. Share price is now up to close at S$0.38 however trading volumes have been pretty thin. Indonesia's interest rate hike should not affect MPM much. Barring any unforeseen events, the company should be seeing strong growth next year when more OSV's comes under their stable and when existing charter rates get renewed into current market rates which are much higher.

CACHE has seen its price beaten down into more attractive yield recently. I had written about some insider trades recently and John Lim has again shaved off more of his holdings by 0.05%. There are not much of future events to anticipate currently besides potential acquisitions.

Starhill Global's Wisma Atria reported that rents renewed in the 12 months to June were 15% higher even as other retail rental revisions were lower. Despite flat growth of retail rent amid more supply of malls, international and regional brands expanding into Southeast Asia will likely benefit owners of malls in the Orchard MRT vicinity.


The 3-minute commercial by True Move

Our favourite telco, True Corp, has created a commercial about giving, and it has almost 1.8 million views on Youtube since last Wednesday. The commercial to promote TrueMoveH, brings the message that ''giving is the best communication''.

The cast in the three-minute commercial acted excellently and touched many viewers, with the story of a man who was unexpectedly rewarded for a lifetime of good deeds he performed without expecting anything in return.

Though I am highly sceptical of True Corp giving without expecting anything in return, this commercial is a great reminder for all to be kind and a little bit of giving can change the lives of others.

Kob khun krap!

Better World Books

I had outgrown fiction a long time ago, and now mostly read finance related books. I had the good chance of coming across a prominent local blogger named AK71 and was introduced to Better World Books.

Better World Books is a purpose-driven, for profit company that collects and sell books online to donate books and fund literacy initiatives worldwide. They save unwanted books from the landfill and help find new homes for them.
Better World Books also funds literacy and teacher training, reading assistance workshops to fight global poverty through education. If you are concerned about your overseas order's carbon footprint, you can also choose the option of carbon balancing for just a few cents extra.

I have bought a book called Little Book that beats the Market, by Joel Greenblatt. It cost me about $6.50 with free shipping. The condition of the book was good and it just seems to make so much sense to buy books second hand as it can still serve its purpose of providing a good read. Most of the time you finish a book and then you tuck it away till next year's spring cleaning. Buying a second-hand book that is still at a satisfactory condition and with free shipping to my doorstep seems a good deal to me.

The Little Book That Beats the Market
There are stocks available now for Good and Very Good conditions at S$6.48 including shipping!

Some more recommended books;
Security Analysis: Sixth Edition, Foreword by Warren BuffettOne Up on Wall Street: How to Use What You Already Know to Make Money in the MarketThe Intelligent Investor REV Ed.


Something for everyone;
The Hunger GamesFifty Shades of GreyThe Official SAT Study Guide

S.E.A Aquarium - Resorts World Sentosa

I had Friday free and off I went to S.E.A Aquarium with the missus. I bought 2 tickets online with the UOB Cards promotion and got 15% off each ticket as well as a $5 meal voucher each. Pretty reasonable I would say. The promotion is still on here.

Although it was a weekday, it was a Friday and therefore the place was still crowded with visitors. It was pretty annoying to have people getting into your face with their cameras as well as screaming kids all over the place. Many of them were also using flash photography which was really annoying and affecting everyone else's viewing experience. It was heartening though, that other viewers (both Singaporeans and foreigners) spoke up to ask them to turn off their flash. We were one of them too, especially the missus, in an annoyed tone no less!

Nevertheless, it was our first visit here and we had a great afternoon. The first exhibit with the shipwreck was captivating and most of the exhibits are well-done and maintained. We skipped the Discovery Touch Pool as the queue was really long and I didn't think there was anything interesting to touch anyway(I mean exotic fish!). It was nice to hear some kids who were able to tell a manta ray from a sting ray, something that many adults do not know too.


We spent the longest time gazing at the Open Ocean. We got a good spot to sit right at the front with a great view especially of the larger specimens like the mantas or the large grouper that likes to swim along the front. We were lucky to have caught a magnificent scene, whereby one of the larger manta rays which has a huge school of fish shadowing it, suddenly swooped upwards and jumped above the surface before diving gracefully back underwater. This spectacle produced an audible gasp from the audience!

The final exhibit we watched was Shark Seas although the sharks were not very huge, probably about 1.5m at the largest. We managed to catch the sharks feeding too, as a few dead squid appeared and we saw the sharks gobble them up, but that was all.

There is a cafe called the Fish & Crab shack at the entrance that serves some western food at pretty reasonable prices too, about $15+ for a fish and chips, though the Kettle Chips and snacks were the really over-priced ones, at about $4 for a small bag of chips.

Will definitely return in future and not on a Friday afternoon. Thanks for reading!

Sep 5, 2013

Thai alcohol excise tax update with details - PART TWO

Today we have a table of the breakdown in alcohol excise taxes, provided by the Excise Tax Department.

It seems to me that wholesalers affect the taxes more now as their prices will determine the taxes paid by the brewers. While this has caused business operators much grief, Mr. Somchai from the Excise Department believes the new rates will increase the competitiveness of local producers against importers.

As a consumer, it must be pretty confusing to see all the complex levels of taxes and new changes, and it would be simpler to just feel annoyed and then wait to see the new price labels at the store.

SPIRITS
As my last post focused more on beer, I shall take a look at the impact on white spirits here, which also happens to be part of the strongest business segment in Thai Bev.

At a glance, it seems the alcohol taxes are not evenly imposed, whereby some beverages are taxed more than the other. For one, imported wines are probably going to become much more expensive.
On the other hand, white spirits as compared to the others, such as beer, is only taxed 4% of wholesale price as the Value-based Tax, and is also pretty close in the bracket for Content-based Tax.

To begin with, all of the brown, white and other types of spirits in Thai Bev's lineup, have only 40% or less of alcohol content by volume, which will avoid the Extra Charge. Also note that the 4% Value-Based Tax on white spirits used to be 50% earlier! The Content-Based Tax is set at 145 baht/litre/100% alcohol for now, with the ceiling at 400 b/l/a.

Lets take for example a 660ml bottle of Chao Phraya white spirits, with 40% abv. The content-based tax works out to about 36.25 baht, with the only other unknown, last wholesale price to be taxed at 4%.

I do not intend to speculate but my opinion is that after all the noise has died down, Thai Bev will benefit from this via its white spirits/spirits brands.


Related post;
http://cluelesspunter.blogspot.sg/2013/09/thai-alcohol-excise-tax-update-with.html

Sep 4, 2013

Thai alcohol excise tax update with details

Further updates to my previous article about the new alcohol excise tax increase in Thailand.

Effective on midnight last night, the new effective tax rates on beer, wine and liquor have been approved by Cabinet. Alcohol tax will be in two parts; product value tax and alcohol content tax.



For drinkers and related shareholders
A. Beer: price will increase by about 3-7 baht per bottle and 2-3 baht per can, maximum tax remains at 60% of product value, effective tax rate per litre of pure alcohol rose to 300 baht from 100 baht before.

B. Wine: Product value below 600 baht exempt from product value-based tax. Product value above 600 baht taxed at 36% of retail value. All wine taxed at 1000 baht per litre of pure alcohol, up from 100 baht.

C. Liquor: price will increase by about 7-15% depending on type and alcohol content, more details to be revealed. Price increase for imported whiskey is noted.




The alcohol excise tax in Thailand has always been a mix of milking the cash cow, and also of protectionism by making imported alcohol less price competitive.

The impact may be minimal for cheap booze as the cost of a bottle of Singha or Chang in Thailand will still be lower than beer in other countries, especially most of the ones where tourists to Thailand come from. Globally, Thailand is still more affordable than many other countries with regards to alcohol prices, especially Singapore, which should be around the highest. If we are looking only at the particular group of booze-hunting tourists, then it is possible that they will just skip Thailand for Laos, Cambodia or Vietnam to stretch their alcohol dollars further. The folks concerned about ''reduced purchasing power'' of farmers and all, affecting sales of spirits may possibly see those farmers and rural drinkers brew their own instead!


Let me do a rough calculation here;
A 660 ml bottle of Chang beer costs roughly 50 baht. It has 6.4% alcohol content. Tax ceiling of 2000 baht per litre of alcohol content.

6.4% of 660ml gives us 44.24ml of alcohol, times 2 baht per ml alcohol content

44.24 x 2 = 88.48 baht alcohol tax on Chang Beer.

Lets compare this to a 5% alcohol content Singha beer. 

5% x 660 ml = 33 ml x 2 baht/ml = 66baht alcohol tax on Singha Beer.

Singha currently is more expensive than Chang at about 60 baht per bottle. With the maximum tax imposed, a bottle of Chang could cost 138.48 baht and a bottle of Singha, 126 baht. 


This would create a scenario whereby Singha becomes the cheaper option whereas it used to be the premium brand. It will be very possible for Chang to lose more market share to Singha. However with all things equal, after tax, the higher alcohol content beer demands a higher price.

As yet, many things are still not yet certain regarding the tax changes, the final price of your bottle of beer would likely be increased at a gradual pace towards the ceiling instead of a large one-time increase. Thus, if we believe the figures estimated by official sources, beer will most likely rise by only 3-7 baht per bottle this time round. Do note that tax revisions can come at any time in this country.




For coffee shop chatterbugs or political-showbiz watchers
''I want to assure you the tax restructuring for alcohol beverages is not aimed at boosting state revenue, but is aimed at reducing the number of alcohol drinkers. More importantly, we hope alcohol consumption will reduce during this Buddhist Lent period.'' - Finance Minister Kittiratt Na-Ranong

If he just said plainly that the tax rise was to increase state revenue and also to pay for mouldy rice, I would gladly buy the man a Chang!

It is strangely interesting when I look at them and see the right pocket in, left pocket out policies in Thailand and then realize how familiar it is to me.


Related post;
http://cluelesspunter.blogspot.sg/2013/08/thai-alcohol-tax-ceiling-rises-to-sky.html






Sep 2, 2013

Thai Bev expanding its distribution reach in ASEAN


From an announcement made today on Thai Bev's website, it announces an opening of a new distribution center in Surat, southern Thailand, for the purpose of distribution to the south and add linkage to its network to the rest of ASEAN. This is another step in their efforts to prepare its operations for the AEC.

The new facility at Surat is Thai Beverage Logistics' second distribution center and Thai Bev with the support of Railway of Thailand,will utilize transport via freight trains to minimize transport costs by transporting in bulk. Thai Bev expects the reduction in transport costs by 30% with rail as compared to road transport.

Currently, Thai Bev Logistics has 18 transport containers and expects to increase that to 41 by the end of the year. Within 2 years, it expects to own 120 transport containers.