Jan 27, 2015

Thai market in January

January was pretty eventful. With a few days left till February, the SET is up 6% YTD with a P/E of 19x. Local institutions and proprietary trading are net buyers, and I expect foreign investors soon, as well. I also have not bought or sold anything this year, and am sitting on autopilot for ADVANC and TTW only. I am also considering TT more funds to my Thai account, which takes about 3 days using DBS.

In no particular order... Rumors that Bank of Toyko-Mitsubishi UFJ had plans to delist Bank of Ayudhya (BAY) were refuted by BAY, and BAY plunged 13.8% yesterday, and another 7.4% today. BAY, which accounts for about 5% of the SET's market cap, jumped almost 30% last Friday due to this rumor. I wonder who these guys really are. The SET is really lively, and also the land of opportunity if you know where to look.

CP and Itochu to invest US$10.4 bn in CITIC. CP and Itochu will invest via CT Bright, a 50:50 (CP and Itochu) joint investment vehicle, in two transactions. The first will be CT Bright buying 10% of CITIC shares worth US$4.5 bn, from CITIC Group. The second will be paying US$5.9 bn in cash to CITIC Limited for convertible preferred shares. Upon the completion and full conversion, CT Bright will own about 20% of CITIC Limited. Dhanin really has a huge appetite, but I suspect Tesco would end up in someone else's hands, maybe Central or Charoen.

1 million tons of rice set to be auctioned this Thursday, I wonder who the buyers turn out to be, China maybe? While rice prices are down, the floor prices are set even lower, lower than market prices. Recall from the junta's audit, that only 10% of the 18 million-ton stockpile was considered good quality. I think the rice-pledging scheme really screwed Thailand up. Does anyone have any idea what can you do with substandard, yellowed rice? Feed them to the pigs? There might be a possibility for ethanol production but then this is unconventional, and would probably incur costs to be viable.

Thai Airways to reduce workforce by 20%, not through layoffs, but by retirement programmes. THAI report a loss of B9.2 bn for 9M14 with adjusted debt to capitalization of about 82%. THAI also has 6 consecutive quarters of loss from operations. I hope the restructuring pays off because personally, I really like flying with THAI.

The Board of Investment approved 3469 investment projects worth B2.19 trn in 2014, surging 117% in value, from 2013. The number of investments projects are a 50-year high, with a majority coming in from December 2014. This was likely due to the new BOI investment policy taking effect since the start of the year, which no longer supports activities that have low added value, labor-intensive, low technology and simple production processes. A B150 bn investment budget will be launched for fast-track projects, with B110 bn for water management projects and B40 bn for road maintenance and construction.

About 3000 fish at the abandoned Bangkok mall will be netted out and relocated, before the mall is demolished! Finally something is being done about this wreck, but its a pity, I had seriously considered the thought of tracking down the entrance and getting in to take a look-see. I am happy that at least the authorities are clearing them out by relocation to rivers and reservoirs.

Thailand is also expecting 72 million mobile broadband users this year, a growth of about 44% from last year. Processed seafood will be subject to sharp increases in import duties to the EU, as Thailand loses GSP privileges this year. Thailand also has no FTA with the EU. 


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