Thursday, July 30, 2009
Wednesday, July 29, 2009
FPO Director-General Somchai Sajjapong said private consumption and exports showed signs of improvement from earlier contraction, but private investment continued shrinking.
The economy had stabilised with the unemployment rate declining and employment in the production sector picking up. Simultaneously, the country's international reserves remain at a healthy level.
Given these positive factors, the FPO believes the economy had already bottomed out in the first quarter of this year and contracted more slowly in the second quarter.
It is expected the economy will further recover in the third quarter and resume positive growth in the fourth quarter.
He said FPO will revise the country's gross domestic product (GDP) for 2009 in the next two months. It had earlier forecast GDP would contract 3 per cent this year.
Now, various economic figures stay volatile, but there are positive aspects to the economic growth. As the economy now signal recovery, he said, FPO sees a need for private companies to prepare for investment expansion.
They should not wait until the economy recovers because it might too late.
He advised the government to accelerate spending to ensure it meets its target, and forge ahead with implementing Thailand's investment projects under the Thai Khem Kaeng (Stronger Thai) slogan to lead the way for private companies to decide to increase investment because the investment in the second quarter remained worrying.
President and CEO Kan Trakulhoon yesterday attributed the expected stronger demand to increased investor confidence in the economy in the final two quarters.
In the first and second quarters, cement consumption fell 10 per |cent and 4 per cent, respectively, |due to the economic slowdown and delays in construction projects.
However, Kan is optimistic the whole year will see less of a demand contraction than previously forecast.
"We believe cement consumption in the second half will be higher than in the first six months. Investors now have more confidence to continue their projects," he said.
"Government mega-projects like the Purple Line mass-transit scheme are also in progress."
Meanwhile, SCG's sales and net profit from the cement business dropped 11 per cent and 21 per cent, respectively, year on year in the second quarter.
Kan said SCG revenue from all businesses this year would likely plunge by 20-25 per cent, because of lower sales and the weakening of prices.
SCG posted net sales of Bt56.88 billion in the second quarter, up 3 per cent quarter on quarter but down 29 per cent year on year, due to lower prices of chemical and paper products.
Its consolidated net profit in the quarter was Bt6.837 billion, up 32 per cent from the previous three months, thanks to better performance in the chemicals, paper and building-material business units.
However, consolidated net profit was down 5 per cent year on year.
SCG recorded net sales of Bt112 billion for the first half of the year, down 29 per cent year on year, due to lower core-business prices. Net profit decreased by 16 per cent.
The company plans to issue a new lot of debentures not exceeding Bt10 billion and with a four-year maturity at the prevailing market interest rate at the time of issue.
It plans to sell the debentures to holders of existing debentures who are individual investors, and to the holders of the company's other debentures.
Kan said the issue would replace existing debentures due to be retired for redemption on October 1. After issuing the new batch, the company's overall debentures will not exceed Bt110 billion.
Meanwhile, SCG's planned petrochemical project in Vietnam has not been scrapped but has been delayed, because the global financial meltdown has made it difficult to find financing, Kan said.
SCG is also scheduled to test-run a new olefin plant in Rayong province next March and start commercial operations in the third quarter, he said.
The plant will boost the annual production capacity of ethylene from 800,000 tonnes to 1.7 million tonnes and of propylene from 400,000 tonnes to 1.2 million tonnes.
Kan also said the group would |support veteran SCG executive Payungsak Chartsutipol as a candidate to chair the Federation of Thai Industries.
In 2008 it posted a net loss of nearly 2.0 billion baht, making it three consecutive annual losses. It also made a net loss of 502 million baht in the first six months of 2009.
“A return to net profit this year, that’s hard to predict,” President Subhak Siwaraksa said. “Even though we are already showing operating profits, the key variable is provisioning charges, which depend on economic conditions.”
“But we will surely make a net profit next year, after spending all this year on cleaning up the bank, ... things like controlling asset quality,” he said. CIMB has previously said its Thai unit, the country’s eleventh-largest lender by assets, was unlikely to show a net profit in the next two or three year because of the global economic slump and the investment needed to revamp it.
CIMB Thai, formerly BankThai, maintained its aim of expanding lending by 15 per cent this year, adding 12 billion baht (US$353 million) in loans, even though lending shrank 9.6 per cent in the first six months, Subhak said.
“The target isn’t easy to meet, but it’s possible,” he said. “So far this year, we have been busy with restructuring, but now we are ready to run the business fully from the third quarter.”
“We see opportunities in exports, the construction sector, and property,” he added.
The bank, which has 150 billion baht in assets and 74 billion in loans, completed its restructuring in early July.
CIMB, controlled by Bumiputra-Commerce Holdings, bought a stake in BankThai from a Thai central bank unit in 2008 and completed its acquisition in the first quarter of 2009.
CIMB Thai operates 147 branches and runs a securities firm, an asset management company and a non-life insurance firm.
The bank set aside loan-loss provisions of 600-700 million baht in the first six months, Subhak said, adding it planned to reduce its non-performing loans to below 8 per cent of total lending from 9.79 per cent at the end of June.
Last week, the Bank of Thailand forecast the economy would shrink 3.0 to 4.5 per cent this year, then grow by 3.0 to 5.0 per cent in 2010.
CIMB Thai had no plans to expand through mergers or acquisitions, Subhak said.
Rival Thanachart Bank, 49 per cent owned by Canada’s Bank of Nova Scotia, has expressed interest in buying almost half of Siam City Bank. -- Reuters
Tuesday, July 28, 2009
BANGKOK, July 29 (Reuters) - Siam Cement PCL (SCC), Thailand's biggest industrial conglomerate, posted a 5 percent fall in second-quarter net profit on Wednesday as the economic recession hurt cement and paper earnings.
SCC which earns up to half its profit from petrochemicals, reported an April-June net profit of 6.84 billion baht ($201.4 million), below a year-earlier profit of 7.2 billion baht but above the 5.2 billion baht forecast by six analysts polled by Reuters.
SCC, which also makes paper, cement and building materials, posted a 5.2 billion baht net profit in the first quarter.
Before the earnings announcement, SCC shares were down 0.57 percent at 173 baht at the midday break, when the broader stock market was down 0.25 percent.
($1 = 33.98 Baht)
(Reporting by Viparat Jantraprap; Editing by Alan Raybould)
Monday, July 27, 2009
Some 35 local companies are also in talks on possible deals with Chinese companies, Industry Minister Charnchai Chairungrueng said yesterday.
The two-day meeting hosted by the Industry Ministry has drawn 260 Chinese investors from 50 companies belonging to the World Eminence Chinese Business Association, as well as 500 local businessmen.
The Chinese are interested in 16 kinds of businesses in Thailand and would like to set up manufacturing bases here.
Combined investment could reach as high as Bt20 billion.
Among the parties signing a memorandum of understanding (MoU) to conduct a feasibility study were the Small and Medium Enterprises Promotion Office with the China Association of Small and Medium Enterprises; the Industrial Estate Authority of Thailand with Sunshine Biotech International; Bangkok Thonburi University with the World Eminence Chinese Business Association; Pacific Rubber Works with the Brazil-China Chamber of Commerce; and Petch Thai Pattana with Dashan Technology.
Sunshine Biotech International is interested in setting up a Bt3.5-billion biochemical plant in a local industrial estate.
Saha Farms, the Kingdom's leading boiled-chicken producer and exporter, entered into an MoU with leading investment conglomerate the New Hope Group to conduct a feasibility study on setting up a boiled-chicken base in Thailand.
ComLink will work with the China Sun Bio-Chem Technology Group to establish a processed-tapioca plant.
BBCA of China has asked the Industrial Estate Authority of Thailand to help it find a location to open a processing plant. The company focuses on exporting citric acid made from cassavas.
Thai Diamond City has paired up with Luqing.
Saha Farms president and CEO Manoonsri Chotitawan said his company was looking for a partner to complete its new plant in Lop Buri province. The final phase requires Bt7 billion to install 10 new processing lines.
The plant now runs 20 lines capable of dressing 500,000 chickens a day. The expansion would allow the company to double that.
New Hope Group chairman and CEO Liu Younghao said if the Thai government could design clearer investment promotions and increase the benefits of foreign direct investment, his company would double its investment in Asean.
The group has poured US$100 million (Bt3.4 billion) into the Philippines. Its four core businesses are livestock and food, chemicals and energy, property and infrastructure and finance. The group achieved sales of $10 billion last year.
"It's a good time to explore opportunities in Thailand. It makes the group more confident in Thai politics, the economic crisis and the type-A (H1N1) problem," he said.
Amata chief operating officer Viboon Kromadit said the developer had reserved 600 rai of land in its Amata Industrial Estate in Rayong province for Chinese investors. The company plans to woo five-10 Chinese companies to build plants in its estate.
Kosit Panpiemras, Chairman of the Board of Executive Directors of Bangkok Bank, Thailand s largest commercial bank, predicts that Thailand s exports in 2009 would plunge more…
During the first six months of this year, the bank has granted THB13.37 billion worth of new loans and export guarantee facilities, up from THB10.90 billion in the same period a year ago.
The bank posted a net profit of THB104 million for the period, up from THB58 million in the first six months of last year.
Based on raw customs data, Thailand's exports in the first half plunged 23.5% to $68.21 billion while imports fell 35.4% to $57.22 billion.
As of end-June, outstanding loans amounted to THB46.21 billion while export guarantee obligations totaled THB13.07 billion. Nonperforming loans dropped to 8.84% of total loans from 9.24% at the end of last year due to debt restructuring attempts.
Sunday, July 26, 2009
Phuket Tourist Association (PTA) President Somboon Jirayus said current average occupancy rates are about 30-40 per cent in most parts of the island, down about 30 per cent year-on-year, on average.
Revenue is down even further because of all the discounts and promotions hotels are putting on to attract tourists, he said.
The main reason for the drop in tourist arrivals figures is not the swine flu pandemic, but the global economic downturn and Thailand's internal political situation, he said.
Patong is outperforming the rest of the island in terms of occupancy, he said.
The PTA hopes and expects the tourism picture to improve following the successful hosting of the Asean-led meetings at Laguna Phuket that ended on Thursday.
Thai tourism in general and Phuket in particular should benefit as a result, he said.
An improvement in the domestic political situation and an expected increase in the number of charter flights expected in October should help boost occupancy rates to around 60 per cent going into the high season, he said.
Nampetch "Nikki" Tipaxsorn, Marketing Communications Manager at the Hilton Phuket Arcadia Resort & Spa, said occupancy rates and revenue were down to only about 30 per cent of what they would be 'under optimal circumstances'.
She likewise blamed the bleak economic picture and internal politics for the occupancy drop-off at the island's largest resort.
This low season is worse than last year's, although the situation has improved in the last two months, she said.
Methee Tanmanatragul, President of Thai Hotels Association Southern Chapter, estimated that occupancy in the region is down about 20 per cent year-on-year.
Rooms going at 1,000 baht per night last year are now typically being offered at 800 baht, while promotional offers have increased costs, he said.
Patong was faring better than the rest of the island, with occupancy rates about 10-15 per cent higher than the rest of the island, he said.
As for the prospects for next year, the internal political situation would be the most critical factor, he said.
"If Thai people stop fighting, everything will surely improve, but if we can't find harmony we will remain stuck in this rut," he said.
Promchote Traivate, director of Phuket Tourism and Sports Office, noted that European tourists are far less likely to cancel trips to Thailand due to the swine flu outbreak.
Asian tourists are far more sensitive to health and security issues when it comes to holiday planning, he said.
Figures released by Thai Immigration support this. June arrivals from some important source countries in East Asia are down about 40 per cent compared to around 10 per cent from Europe.
Thailand's Siam Cement PCL expects domestic cement demand to fall 5-10 percent in 2009 but is banking on a recovery in 2010 on the back of government spending on infrastructure.
Siam Cement, Thailand's biggest producer of the building material, predicted domestic consumption of 23 million tonnes this year, with its own cement sales falling in line with the industry, cement division president Pramote Techasupatkul said.
"For the full year, we expect cement demand to fall by 5-10 percent. The decline is close to the range of last year. It's not a big worry," he told Reuters in an interview.
Domestic cement consumption has weakened over the past three years because of the slowdown in the economy and prolonged political turmoil.
However, the government's 1.43 trillion baht ($42 billion), three-year economic stimulus package is expected to increase demand for cement in both public and private construction projects later this year.
Domestic cement consumption growth is usually about 1.5 times GDP growth. Thailand's economy is expected to contract 2.5-3.5 percent this year after 2.6 percent growth in 2008, according to the Finance Ministry. A recovery is expected next year.
Pramote said the company's cement exports could fall by 10 percent to around 7.6 million tonnes this year because of the global economic crisis. Its main overseas markets are in South and Southeast Asia.
Last year, it shipped about 8 million tonnes.
A 5.8 billion baht investment in developing waste-heat power generation at five domestic cement plants and a plant in Cambodia was due for completion in the fourth quarter, which would cut energy costs by an annual 25 percent, Pramote said.
The company would invest another 0.5 to 1.0 billion baht on improving energy efficiency at its cement plants over the next four or five years, he said.
Last year, cement earnings increased 10 percent, helped by lower energy costs, whereas the company made losses in its petrochemical and paper divisions, hurt by the global recession.
Siam Cement will spend 100 million baht this year on increasing capacity at the Cambodian plant, Pramote said.
It was also looking at building another cement plant in Cambodia and was looking to buy cement firms in Southeast Asia, including Vietnam and Indonesia, he added.
Siam Cement is the biggest domestic cement producer with capacity of 23.2 million tonnes. Its cement plant in Cambodia has a capacity of 1 million tonne.
At 0751 GMT, shares in Siam Cement, valued at $5.9 billion on the Thai bourse, were up 2.4 percent at 170.5 baht and the main Thai stock index <.SETI> was also 2.4 percent higher. ($1=34.03 Baht)
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Saturday, July 25, 2009
Thursday, July 23, 2009
Former Finance Minister Virabongsa Ramangkura bluntly announced on Thursday that there is no sign of recovery in Thai economy, due to a number of risk factors.
Against general optimism that the economy would return to the positive territory in the fourth quarter, Virabongsa said despite some improvements, economic indicators could fall again. Meanwhile, there is no hope from private investment, as their capacity utilisation is only 50 per cent of total.
He commented on the lack of clarity of the second economic-stimulus package. While it is known that Bt200 billion would be used to replenish fiscal deficits, there is no clarity on how the remaining Bt600 billion fund would be used to stimulate the economy. As such, he had no idea how this package would boost the economy later this year.
"The government needs to look forward, what needs to be done for the next 4-5 days," he said at the Fiscal Policy Office's seminar on "Thailand's Economic Survival amid Global Pressure".
He expressed concerns over the government's lack of measures to tame the influenza A (N1N1) pandemic, to restore foreign tourist confidence particularly those from China.
Wednesday, July 22, 2009
By Anuchit Nguyen
July 22 (Bloomberg) -- Thailand’s benchmark stock index may advance a further 8 percent by the end of August, according to a trading momentum chart that shows the rally is “just the beginning,” KGI Securities (Thailand) Pclsaid.
The SET Index may rise to 660 after the Moving Average Convergence-Divergence oscillator this week rose above the so- called signal line, saidAdisak Kammool, a Bangkok-based analyst at KGI. The relative strength index at about 60 also indicates more room for the gauge to rally, he said.
“The MACD crossover signals the recent rally may be just the beginning,” Adisak said in a telephone interview. “The RSI is still below the selling territory, while daily stock trading volume of more than 20 billion baht demonstrates strong demand among investors.”
The SET Index, which has gained 37 percent this year, rose 0.8 percent to 614.95 as of 10:03 a.m. local time.
Daily trading turnover on the Stock Exchange of Thailand surged 31 percent this week to an average 22 billion baht ($647 million), from 16.8 billion baht last week, according to the Stock Exchange of Thailand’s data.
Technical buyers usually step in when the MACD rises above its signal line, a so-called bullish crossover. MACD charts can indicate whether a price shift is a change in trend or a short- term deviation, by comparing moving averages based on nine-, 12- and 26-day periods.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.