The building material, steel, downstream petrochemicals, auto parts and discountstore sectors will benfit from the government's second economic stimulus package, according to a research paper by SCB Securities.
Firms making building materials are expected to reap the biggest gains from the Thai Khemkhaeng (Invest for Strength) scheme phase I, worth Bt200 billion.
About Bt59 billion of the Bt200billion package will be used to develop small reservoirs and repair irrigation systems, and PVC manufacturers such as Thai Plastic and Chemicals and Vinythai will enjoy the benefits.
The brokerage said another Bt35 billion would be allocated for building and repairing roads, boosting asphalt demand and benefiting Tipco Asphalt.
Tata Steel (Thailand) and G Steel will also be beneficiaries from the stimulus package, as steel bar and wire will be major raw materials in construction works related to irrigation systems, hospitals and electric trains, SCB Securities said.
However, the brokerage is nor sure whether Sahaviriya Steel will also gain, as PVCpipe prices and maintenance costs are lower than those for steel pipelines.
Cement-makers Siam Cement, Siam City Cement and TPI Polene are other expected gainers in the buildingmaterials sector.
The brokerage estimates that the 10-12 electricrail routes will need 9 million10 million tonnes of cement.
"It is too early to calculate cement demand for all the routes, but the Purple, Red and Blue lines alone will create 2.53 million tonnes of cement consumption over their fouryear construction periods," the paper said.
For the consumption sector, Big C Supercentre and Siam Makro will be winners from the Thai Khemkhaeng programme, as about Bt20 billion will be allocated to village funds.
From the previous village funds' budget in fiscal years 20042005, Big C and Makro reported sales growth in existing branches at 3 per cent and 6 per cent, respectively. This is well above Big C's current performance of minus 2.5 per cent to positive growth of 3 per cent, and Makro's growth of 13 per cent.
Makro tends to receive greater benefits from such schemes than Big C as its products are more related to economic activities.
This said, SCB Securities recommends "buy" on Big C with a 12month target price of Bt55 based on the dividend discount model, and "sell" on Makro with a 12month target of Bt67.
However, as both firms will benefit from the government's economic stimulus measures, the brokerage will soon review its assumptions.
Given that the package will bolster economic activities in rural areas, the demand for pickups and tractors will increase, making Somboon Advanced Technology a winner.
The company is Thailand's largest axle-shaft manufacturer for pickups with a market share of 80 per cent. Moreover, it supplies shafts to Siam Kubota, the country's largest tractor producer.
The brokerage recommends "buy" for the stock, with a 12month target price of Bt13.
The government's plan to lower the ratio of students to computers from 38:1 to 20:1 will create demand for 200,000 PCs. IT City, the computer peripherals and equipment distributor, will therefore stand to gain.
For the consumption sector, Big C Supercentre and Siam Makro will be winners from the Thai Khemkhaeng programme, as about Bt20 billion will be allocated to village funds.
Wednesday, October 28, 2009
Thainox share sale rumoured to Posco
Thainox Stainless Plc, Southeast Asia's largest stainless steel producer, said yesterday that its top shareholder was in sale talks, stoking speculation of a possible $370-million sale to the world's sixth-largest steelmaker.
Thainox did not identify a possible buyer, but a source at the South Korean steelmaker Posco told Reuters on Wednesday that talks to buy a further stake in Thainox were in the final stages.
The Mahagitsiri Group, which owns 51.7% of Thainox and represents one of Thailand's richest families, was in talks for a possible sale of shares to an undisclosed party but was undecided, a stock exchange statement said.
Prayudh Mahagitsiri, the company's chairman and chief executive, and a key power-broker in the government led by deposed former prime minister Thaksin Shinawatra, declined to comment on the reports.
The news sent Thainox shares (INOX)up 11.5% to a four-year high of 1.65 baht in the morning session on the Stock Exchange of Thailand. The shares closed yesterday at 1.50 baht, up two satang, in trade worth 86.4 million baht. The stock has risen nearly 69% this year on speculation about a possible sale.
"We were informed that they are in the process of negotiation on the terms and conditions of the share sale transaction, and until now they have reached no conclusion," it said in the statement to the SET.
Posco had no official comment yesterday regarding the possible acquisition of Thainox Stainless Plc.
But an industry source close to the matter said:"If share prices are rising [as in the current situation], it will be hard for Posco to acquire Thainox."
Posco currently owns 15% of Thainox.Analysts say the South Korean steelmaker is seeking to acquire the Thai company to expand its cold-rolled coil capacity and overseas presence.
But any acquisition that raises Posco's stake to 25% or more would require it to offer to buy the remaining shares, according to Thai market regulations.
Earlier this week, Korean media quoted unidentified industry sources as saying Posco would buy 85% of Thainox for between 400-500 billion won ($342 million to $427.5 million). But the company source said that the rumoured acquisition prices were not correct.
Thainox did not identify a possible buyer, but a source at the South Korean steelmaker Posco told Reuters on Wednesday that talks to buy a further stake in Thainox were in the final stages.
The Mahagitsiri Group, which owns 51.7% of Thainox and represents one of Thailand's richest families, was in talks for a possible sale of shares to an undisclosed party but was undecided, a stock exchange statement said.
Prayudh Mahagitsiri, the company's chairman and chief executive, and a key power-broker in the government led by deposed former prime minister Thaksin Shinawatra, declined to comment on the reports.
The news sent Thainox shares (INOX)up 11.5% to a four-year high of 1.65 baht in the morning session on the Stock Exchange of Thailand. The shares closed yesterday at 1.50 baht, up two satang, in trade worth 86.4 million baht. The stock has risen nearly 69% this year on speculation about a possible sale.
"We were informed that they are in the process of negotiation on the terms and conditions of the share sale transaction, and until now they have reached no conclusion," it said in the statement to the SET.
Posco had no official comment yesterday regarding the possible acquisition of Thainox Stainless Plc.
But an industry source close to the matter said:"If share prices are rising [as in the current situation], it will be hard for Posco to acquire Thainox."
Posco currently owns 15% of Thainox.Analysts say the South Korean steelmaker is seeking to acquire the Thai company to expand its cold-rolled coil capacity and overseas presence.
But any acquisition that raises Posco's stake to 25% or more would require it to offer to buy the remaining shares, according to Thai market regulations.
Earlier this week, Korean media quoted unidentified industry sources as saying Posco would buy 85% of Thainox for between 400-500 billion won ($342 million to $427.5 million). But the company source said that the rumoured acquisition prices were not correct.
SIAM MORTAR TO SPEND UP TO BT700M ON CAPACITY BOOST
Siam Mortar, a construction-materials unit of Siam Cement Group, is planning to invest Bt600 million to Bt700 million to boost its annual production capacity of ready-to-use mortar by 500,000 tonnes by 2011.
The expansion is expected to serve its future growth of 20-25 per cent per year, despite shrinking demand in the overall cement market.
Managing director Rewat Suriyapananont said Siam Mortar currently operated at 80 per cent of production capacity of 1.3 million tonnes per year. It has three production plants, of which two are
located in Saraburi and the other in Nakhon Si Thammarat.
"We need to expand our production capacity and conduct aggressive marketing strategies if we plan to double our sales in five years," he said.
The new plant could be located in the central region, where demand is high, he added.
Although overall cement consumption is expected to fall by 5 per cent this year, Rewat is confident his firm's mortar sales will maintain growth of 10-15 per cent to 1 million tonnes thanks to high-quality products and innovative solutions for customers.
"Even though our sales growth is increasing, the growth in 2009 will still be lower than the [average] 20-25 per cent over the past five to six years, as a result of the economic slowdown. However, we believe that our sales growth will rise to 20 per cent next year, since property developers have returned to proceeding with their incomplete projects in big cities like Phuket," he said.
About 80 per cent of Siam Mortar's sales are from big property projects, with the remainder generated by private houses and the house-renovation market.
"Since the economic crisis erupted, we realised we should focus more on the private housing market. Despite a small volume of cement demand, it has more sustainable growth than large property projects," he said.
Hence, the company plans to change the sales proportion to generate 40 per cent of sales from property projects and 60 per cent from private housing and the renovation market.
He said the future trend of the cement market would be to develop eco-friendly products that would be good for both the environment and inhabitants' health.
"SCG Cement has allocated a budget of Bt200 million for research and development each year, because we will change ourselves from a cement-maker to a solution provider. For example, we will not only sell cement but also wall and floor systems in the future, in order to better utilise customers' budget and time," he added.
Presently, the total market for mortar cement is worth about Bt2 billion, with a volume of 2 million tonnes per year. It is predicted to expand by 10 per cent this year.
Siam Mortar has a 50-per-cent share of the market, followed by TPI Polene with 40 per cent and Siam City Cement with 10 per cent.
The expansion is expected to serve its future growth of 20-25 per cent per year, despite shrinking demand in the overall cement market.
Managing director Rewat Suriyapananont said Siam Mortar currently operated at 80 per cent of production capacity of 1.3 million tonnes per year. It has three production plants, of which two are
located in Saraburi and the other in Nakhon Si Thammarat.
"We need to expand our production capacity and conduct aggressive marketing strategies if we plan to double our sales in five years," he said.
The new plant could be located in the central region, where demand is high, he added.
Although overall cement consumption is expected to fall by 5 per cent this year, Rewat is confident his firm's mortar sales will maintain growth of 10-15 per cent to 1 million tonnes thanks to high-quality products and innovative solutions for customers.
"Even though our sales growth is increasing, the growth in 2009 will still be lower than the [average] 20-25 per cent over the past five to six years, as a result of the economic slowdown. However, we believe that our sales growth will rise to 20 per cent next year, since property developers have returned to proceeding with their incomplete projects in big cities like Phuket," he said.
About 80 per cent of Siam Mortar's sales are from big property projects, with the remainder generated by private houses and the house-renovation market.
"Since the economic crisis erupted, we realised we should focus more on the private housing market. Despite a small volume of cement demand, it has more sustainable growth than large property projects," he said.
Hence, the company plans to change the sales proportion to generate 40 per cent of sales from property projects and 60 per cent from private housing and the renovation market.
He said the future trend of the cement market would be to develop eco-friendly products that would be good for both the environment and inhabitants' health.
"SCG Cement has allocated a budget of Bt200 million for research and development each year, because we will change ourselves from a cement-maker to a solution provider. For example, we will not only sell cement but also wall and floor systems in the future, in order to better utilise customers' budget and time," he added.
Presently, the total market for mortar cement is worth about Bt2 billion, with a volume of 2 million tonnes per year. It is predicted to expand by 10 per cent this year.
Siam Mortar has a 50-per-cent share of the market, followed by TPI Polene with 40 per cent and Siam City Cement with 10 per cent.
Tuesday, October 20, 2009
Aussie firm shifts to Phuket
Australia-based swimming pool producer Autumn Solar Pty Ltd will shift its manufacturing base to Phuket to benefit from the Asean Free Trade Area.
The relocation involves a joint-venture with a local pool producer and investment of 50 million baht.
Managing director Steve Merrett said the move from Ulladulla, a coastal town in New South Wales, Australia, to Phuket would help reduce manufacturing costs by 15% to 20% due to lower wages,cheaper raw materials and savings in transportation costs.
The relocation would start this month by moving salt chlorination system production. Full production would be completed within two years when it will close its factory in Australia, he said.
The firm also plans to close a plastics factory in China which will shift to the new centre in Phuket, he said.
"It's an opportunity to have Thailand as our manufacturing base," he said."We can import materials from Australia with zero tax and export the products to China, our main market, and the rest of the world without tax as well."
The firm currently exports 90% of the equipment made at the Ulladulla plant to China, Thailand, Vietnam, Europe and the US. Autumn Solar had a turnover of US$55 million last year, he said.
The company yesterday announced a joint venture with JD Pools 2004(Thailand) which will establish a firm with registered capital of 50 million baht.
Thanusak Phungdet, chief executive of JD Pools, said the firm's factory in Phuket would double to 10,000 square metres with Autumn Solar's relocation.
The company plans to increase its exports from 20% of production to 50%in three years. It targets annual sales of 1 billion baht with the joint venture.
The Thai pool market this year is estimated at about 2 billion baht, up 10%to 15% on last year. JD Pools expects sales of 600 million baht this year, up 12% on 2008 but below its 15% target.
The relocation involves a joint-venture with a local pool producer and investment of 50 million baht.
Managing director Steve Merrett said the move from Ulladulla, a coastal town in New South Wales, Australia, to Phuket would help reduce manufacturing costs by 15% to 20% due to lower wages,cheaper raw materials and savings in transportation costs.
The relocation would start this month by moving salt chlorination system production. Full production would be completed within two years when it will close its factory in Australia, he said.
The firm also plans to close a plastics factory in China which will shift to the new centre in Phuket, he said.
"It's an opportunity to have Thailand as our manufacturing base," he said."We can import materials from Australia with zero tax and export the products to China, our main market, and the rest of the world without tax as well."
The firm currently exports 90% of the equipment made at the Ulladulla plant to China, Thailand, Vietnam, Europe and the US. Autumn Solar had a turnover of US$55 million last year, he said.
The company yesterday announced a joint venture with JD Pools 2004(Thailand) which will establish a firm with registered capital of 50 million baht.
Thanusak Phungdet, chief executive of JD Pools, said the firm's factory in Phuket would double to 10,000 square metres with Autumn Solar's relocation.
The company plans to increase its exports from 20% of production to 50%in three years. It targets annual sales of 1 billion baht with the joint venture.
The Thai pool market this year is estimated at about 2 billion baht, up 10%to 15% on last year. JD Pools expects sales of 600 million baht this year, up 12% on 2008 but below its 15% target.
Wednesday, October 14, 2009
Starmark eyes 10% growth
Starmark Co, a manufacturer of kitchen fittings, is maintaining its 10% sales growth target this year on the back of improving sentiment among both project developers and retail clients, said managing director Nantana Srisakulpinyo.
Fourth-quarter sales in the local furniture market are set to improve with a better economic outlook coupled with the approaching high season for furniture purchases, said Ms Nantana.
"Project clients have regained their confidence in investment and next year we expect the number of residential projects we're going to deal with will increase by 15% from this year," she said.
Project clients account for about 60%of sales and retail buyers 40%. But Starmark plans to boost the contribution of retail clients to 45% of sales next year as the segment has ample room to grow and also provides a better sales margin.
Spending per individual on Starmark kitchen fittings is estimated at about 150,000 to 200,000 baht.
Currently, Starmark has 45 retail outlets nationwide. It plans to add three next year, including one at Crystal Design Center.
The kitchen furniture market in Thailand has been growing at about 10% to 15% each year for the past three to five years as many international brands have continued to enter the market, said Ms Nantana.
Local furniture manufacturers are also investing more in the kitchen furniture segment as consumers are paying increasing attention to kitchen design and decoration, she added.
The company yesterday launched the "New Hygienic Thai Kitchen 2010" kitchen fittings series to tap demand for Thai-style cooking.
Fourth-quarter sales in the local furniture market are set to improve with a better economic outlook coupled with the approaching high season for furniture purchases, said Ms Nantana.
"Project clients have regained their confidence in investment and next year we expect the number of residential projects we're going to deal with will increase by 15% from this year," she said.
Project clients account for about 60%of sales and retail buyers 40%. But Starmark plans to boost the contribution of retail clients to 45% of sales next year as the segment has ample room to grow and also provides a better sales margin.
Spending per individual on Starmark kitchen fittings is estimated at about 150,000 to 200,000 baht.
Currently, Starmark has 45 retail outlets nationwide. It plans to add three next year, including one at Crystal Design Center.
The kitchen furniture market in Thailand has been growing at about 10% to 15% each year for the past three to five years as many international brands have continued to enter the market, said Ms Nantana.
Local furniture manufacturers are also investing more in the kitchen furniture segment as consumers are paying increasing attention to kitchen design and decoration, she added.
The company yesterday launched the "New Hygienic Thai Kitchen 2010" kitchen fittings series to tap demand for Thai-style cooking.
Sunday, October 11, 2009
China opposes US anti-dumping probe of steel pipes
Beijing is rejecting a move by Washington to launch an investigation into whether Chinese mills are dumping steel pipes on the US market or benefiting unfairly from government subsidies.
The probe comes as the United States and China accuse each other of protectionism, which both say will hurt efforts to end the global economic crisis.
"Blind accusations of dumping or sub-sidies in Chinese imports is lacking in factual basis, which China strongly opposes," China's Commerce Ministry said in a statement on its website on Saturday.
The statement said the problems in the American steel industry were brought on by weakened demand and should not be blamed on Chinese imports.
The US Department of Commerce last week started investigating at the request of US steel manufacturers, who say Chinese manufacturers have sold steel pipe at prices below the cost of production - a practice known as dumping - and have benefited from massive government subsidies.
US manufacturers want tariffs placed on the Chinese imports to offset the alleged subsidies.
President Barack Obama recently ap-proved higher tariffs on US imports of Chinese-made tires to slow the rapid growth of imports that a labour union has blamed for the loss of thousands of American jobs. Beijing filed a World Trade Organisation challenge to Washington's decision. The two also are involved in disputes over access to each other's markets for poultry, paper, music and movies.
The probe comes as the United States and China accuse each other of protectionism, which both say will hurt efforts to end the global economic crisis.
"Blind accusations of dumping or sub-sidies in Chinese imports is lacking in factual basis, which China strongly opposes," China's Commerce Ministry said in a statement on its website on Saturday.
The statement said the problems in the American steel industry were brought on by weakened demand and should not be blamed on Chinese imports.
The US Department of Commerce last week started investigating at the request of US steel manufacturers, who say Chinese manufacturers have sold steel pipe at prices below the cost of production - a practice known as dumping - and have benefited from massive government subsidies.
US manufacturers want tariffs placed on the Chinese imports to offset the alleged subsidies.
President Barack Obama recently ap-proved higher tariffs on US imports of Chinese-made tires to slow the rapid growth of imports that a labour union has blamed for the loss of thousands of American jobs. Beijing filed a World Trade Organisation challenge to Washington's decision. The two also are involved in disputes over access to each other's markets for poultry, paper, music and movies.
Friday, October 9, 2009
Thainox share sale rumoured to Posco
Thainox Stainless Plc, Southeast Asia's largest stainless steel producer, said yesterday that its top shareholder was in sale talks, stoking speculation of a possible $370-million sale to the world's sixth-largest steelmaker.
Thainox did not identify a possible buyer, but a source at the South Korean steelmaker Posco told Reuters on Wednesday that talks to buy a further stake in Thainox were in the final stages.
The Mahagitsiri Group, which owns 51.7% of Thainox and represents one of Thailand's richest families, was in talks for a possible sale of shares to an undisclosed party but was undecided, a stock exchange statement said.
Prayudh Mahagitsiri, the company's chairman and chief executive, and a key power-broker in the government led by deposed former prime minister Thaksin Shinawatra, declined to comment on the reports.
The news sent Thainox shares (INOX)up 11.5% to a four-year high of 1.65 baht in the morning session on the Stock Exchange of Thailand. The shares closed yesterday at 1.50 baht, up two satang, in trade worth 86.4 million baht. The stock has risen nearly 69% this year on speculation about a possible sale.
"We were informed that they are in the process of negotiation on the terms and conditions of the share sale transaction, and until now they have reached no conclusion," it said in the statement to the SET.
Posco had no official comment yesterday regarding the possible acquisition of Thainox Stainless Plc.
But an industry source close to the matter said:"If share prices are rising [as in the current situation], it will be hard for Posco to acquire Thainox."
Posco currently owns 15% of Thainox.Analysts say the South Korean steelmaker is seeking to acquire the Thai company to expand its cold-rolled coil capacity and overseas presence.
But any acquisition that raises Posco's stake to 25% or more would require it to offer to buy the remaining shares, according to Thai market regulations.
Earlier this week, Korean media quoted unidentified industry sources as saying Posco would buy 85% of Thainox for between 400-500 billion won ($342 million to $427.5 million). But the company source said that the rumoured acquisition prices were not correct.
Based on a market price of 1.57 baht,the value of Thainox's remaining 85%stake is about 12.24 billion baht.
Thainox has 300,000 tonnes of capacity and exports 40% of its output to Europe and other overseas markets.
Thainox did not identify a possible buyer, but a source at the South Korean steelmaker Posco told Reuters on Wednesday that talks to buy a further stake in Thainox were in the final stages.
The Mahagitsiri Group, which owns 51.7% of Thainox and represents one of Thailand's richest families, was in talks for a possible sale of shares to an undisclosed party but was undecided, a stock exchange statement said.
Prayudh Mahagitsiri, the company's chairman and chief executive, and a key power-broker in the government led by deposed former prime minister Thaksin Shinawatra, declined to comment on the reports.
The news sent Thainox shares (INOX)up 11.5% to a four-year high of 1.65 baht in the morning session on the Stock Exchange of Thailand. The shares closed yesterday at 1.50 baht, up two satang, in trade worth 86.4 million baht. The stock has risen nearly 69% this year on speculation about a possible sale.
"We were informed that they are in the process of negotiation on the terms and conditions of the share sale transaction, and until now they have reached no conclusion," it said in the statement to the SET.
Posco had no official comment yesterday regarding the possible acquisition of Thainox Stainless Plc.
But an industry source close to the matter said:"If share prices are rising [as in the current situation], it will be hard for Posco to acquire Thainox."
Posco currently owns 15% of Thainox.Analysts say the South Korean steelmaker is seeking to acquire the Thai company to expand its cold-rolled coil capacity and overseas presence.
But any acquisition that raises Posco's stake to 25% or more would require it to offer to buy the remaining shares, according to Thai market regulations.
Earlier this week, Korean media quoted unidentified industry sources as saying Posco would buy 85% of Thainox for between 400-500 billion won ($342 million to $427.5 million). But the company source said that the rumoured acquisition prices were not correct.
Based on a market price of 1.57 baht,the value of Thainox's remaining 85%stake is about 12.24 billion baht.
Thainox has 300,000 tonnes of capacity and exports 40% of its output to Europe and other overseas markets.
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