Singapore Daily Bulletin – 21/11/12

Thai Beverage Sees Better 3Q12 Performance; Backed By Better Sales Of Alcoholic Drinks
Thai Beverage (ThaiBev) has reported an improvement in its 3Q12 earnings, where earnings saw an uptick of 16 percent to approx 2.99 billion baht, and revenue displaying a 28 percent increase to 37.6 billion baht. 9M12 earnings was up 42 percent to 12.3 billion baht, on the back of the 31.6 percent increase in revenue to 119.5 billion baht. ThaiBev’s star performing segment was none other than its spirits unit, which saw a 71 percent increase in the unit’s profits, to 4.98 billion baht. Its beer unit, which is the other alcoholic business unit of ThaiBev did however record a better performance, albeit still registering a loss of 325 million baht for 3Q12. The overall stellar performance was however dragged down to a certain extent by its non-alcoholic segment. Net profits for the non-alcoholic segment saw a declination of 80.1 percent to 14 billion baht. ThaiBev noted that its 29 percent stake acquisition of Fraser & Neave (F&N) in 3Q12 is also reflected in its 3Q12 results.

Significance: The stellar performance could possibly bolster ThaiBev’s battle for F&N. ThaiBev has lodged a bid of $8.88/share for shares of F&N that it does not already own. The only question would be whether or not this bid price could change after Overseas Union Enterprise put its bid for F&N at $9.08/share.

Yoma’s $101m Placement Sees Strong Interest From Institutional Investors
Yoma Strategic Holdings (Yoma), a property developer in Myanmar saw strong interest from institutional investors when it offered one-sixth of its enlarged share capital in a $101 million private placement. It agreed to sell about 192.9 million shares at 52.5 cents a share, which is at about 6.25 percent discount to its stock closing price of 56 cents on 16 November 2012. Capital Group International (CGI) will anchor the placement by acquiring approximately 42.5 percent of the shares offered by Yoma, in which upon completion, CGI will hold a 7.09 percent stake in Yoma. Yoma plans to use the proceeds to pursue investment opportunities and for working capital, including partial funding for development costs related to a recently announced acquisition of economic rights in a key downtown Yangon project. On 19 November 2012, Yoma also announced of its plans to buy 80 percent stake in Meeyahta International Hotel, which owns the economic interests in land development rights to a 10-acre mixed use project in Yangon’s business district, for US$81.3 million.

Significance: The keen interest seen from the investors signify demand for investors who are keen to have a foot in Myanmar’s new economy. As there aren’t many choices for direct investments in Myanmar as of now, Yoma, which is slowly ramping up its presence and finesse in Myanmar, is among one of the few options and will be a natural consideration for such exposure.

Olam’s Stock Price Stinging from Block’s Allegations Punch
Commodities supplier Olam International (Olam), saw a sting in its stock price, as it fell as much as 11 percent on 20 November 2012 after Muddy Waters founder Carson Block labelled it a “black hole” at the Ira Sohn investment conference in London, a charitable event which sees established European hedge funds among its participants. Block, who made his name exposing dodgy accounting and potential fraud at Chinese companies criticised Olam’s debt levels and accounting practices. In anticipation of a report by Muddy Waters that was to have been released, Olam requested for a trading halt, and resumed trading when the report did not appear. Sunny Verghese, Olam’s group managing director and chief executive said in an urgent conference call with media and analysts that Block’s statements have “no merit” and “baseless”. Verghese added that it’s quite apparent that the objective was to create panic among Olam’s shareholders and that this has been a concerted and unfair attack on the company and reiterated his stand to defend Olam vigorously.

Significance: Olam mentioned that it has observed a group of four or five hedge funds encouraging other investors to short the stock, leading it to believe that Muddy Waters may be acting in collusion with such hedge funds. Olam follows the International Financial Reporting Standards and is prepared to intervene if its share price continues to fall via share buy back.