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SCG’s Q1 net soars past estimate

Posted by pakin On April - 28 - 2016 ADD COMMENTS

SIAM CEMENT GROUP, the country’s leading industrial conglomerate, yesterday reported a 23-per-cent surge in first-quarter net profit that trounced the consensus estimate.

The continued robust petrochemical business contributed most to SCG’s results, but the improved performance of its packaging and cement units played a big part in the surprise upside.

Kasikorn Securities said SCG’s consolidated first-quarter net profit of Bt13.62 billion was 24 per cent higher than its projection, because of 5-per-cent growth of the country’s cement demand in the three-month period.

Most analysts had expected cement consumption to edge up by only 1-2 per cent in the first quarter.

Roongrote Rangsiyopash president and chief executive officer of SCG, said the government’s infrastructure investment projects had started to affect the country’s cement consumption, although the commercial and residential segments had continued to show flat and negative growth during the first quarter.

“Notably, we saw a lot of sales activities in late March, which I guess was due to [buyers] building up their inventories prior to the long [Songkran] holiday.

“We may have to wait for April and May’s sales figures,” said the chief of SCG, which controls about 40 per cent of the domestic cement market.

SCG expects local cement demand to grow by 3-5 per cent this year. The upper end of the forecast hinges on the government’s capability to push ahead its infrastructure projects.

SCG logged flat sales of Bt110 billion in the first quarter, chiefly due to the fall in petrochemical prices. Profit for the period, however, was up 19 per cent from the previous quarter.

Exports declined 8 per cent to Bt29.57 billion, accounting for 27 per cent of the group’s sales, due to the decline in chemical prices and the start-up of its cement plants in Cambodia and Indonesia, which reduced its shipments from Thailand.

SCG’s higher-than-expected profits came from its investment in research and development, which helped its products fatten profit margins during the upcycle.

Its packaging business has acquired some companies, and expanded into the “end-packaging” segment.

The profit contribution from associated companies in the petrochemical business was also better.

The upcycle in the petrochemical business will continue for two to three more years, he said.

The chemical business contributed two-thirds of SCG’s profit in the first three months, or Bt9.11 billion, up 84.5 per cent year-on-year, followed by the cement-business materials business at Bt3.29 billion (down 7.5 per cent) and the packaging business at Bt1.26 billion (up 42.9 per cent).

Most equity research houses – from Bualuang Securities and KGI to Trinity and PhillipCapital – had forecast SCG to report net profit of about Bt11 billion in the first quarter.

Roongrote said domestic cement prices slid by more than 1 per cent in the first quarter.

Competition in cement and building materials in the region has stiffened, partly due to the increased participation of Chinese players, which hurt producers’ profitability.

SCG’s cement plants in Cambodia have reached near full capacity, and 80 per cent in Indonesia.

The group expects its new cement projects in Myanmar and Laos to take three to six months to reach full capacity after their commencements next quarter and in middle of next year.

SCG was seeking partners to invest in the Vietnamese cement industry rather than building a greenfield plant there. The market in that country is facing a cement glut.

SCG’s stock closed up 0.82 per cent Bt492.

Aeon Mall plans bold Asean expansion

Posted by pakin On March - 24 - 2016 ADD COMMENTS

AEON MALL, the leading Japanese retail group, aims to create a strong footprint in Asia and become the No-1 retailer in Asean by investing in about 10 new shopping malls in the region, including one in Thailand, by the end of the decade.

“Under our 2020 strategy, we are planning to open five new shopping malls in Jakarta, after entering the 250-million-strong market with our first Aeon Mall in Indonesia last year. Meanwhile, the company is also adding three more branches in Ho Chi Minh City, and another in Hanoi,” Mitsugu Tamai, director and executive general manager for Aeon Mall’s Asean division, said yesterday.

The company is also studying the feasibility of business development in Thailand, Laos and Myanmar, and hopes to have its first Aeon Mall property in Thailand by 2020, he said.

Asked about the possible location and investment format for a Thai venture, Tamai suggested that an appropriate site would possibly be in the outskirts of Bangkok due to urbanisation and the growth of communities in such areas, while the project would be undertaken either though its own investment or via a joint venture.

Besides Aeon Mall BSD City in Indonesia, Aeon Mall currently operates at 24 locations in Malaysia and has one other shopping mall in Asean – in Phnom Penh – while another will soon be opened in the Cambodian capital.

In the new Phnom Penh project, Bangkok-based Major Cineplex Group is continuing its collaboration with the Japanese retailer to open another Major Cineplex operation at its second Aeon Mall in the country.

Vicha Poolvaraluk, chairman of Major Cineplex Group, said his company was investing about Bt200 million on a new theatre consisting of 10 screens, including an IMAX laser theatre, and 20 bowling lanes.

Other Thai companies – S&P, Fuji Restaurant, Jaspal and Black Canyon Coffee – are also interested in opening branches at the new mall.

Aeon Mall’s new project, which occupies an area of 100,000 square metres in Phnom Penh’s Pong Peay district, is scheduled to open in the first half of 2018.

Apart from Asean, the leading Japanese retailer is also focusing on China as a key destination for its overseas business expansion.

It currently has 11 shopping malls in the huge Chinese market.

“By 2020, we hope to have more than 10 per cent of our revenue contributed by overseas business, up from 2 to 3 per cent now.

Due to aggressive outlet expansion, the company aims to see a 120-per-cent year-on-year increase in terms of revenue from overseas markets,” Tamai said.

Aeon’s overall revenue came in at about ฅ8 trillion (Bt2.49 trillion) last year.

Junta may have to fix AIS 2G issue

Posted by pakin On March - 9 - 2016 ADD COMMENTS

THE NATIONAL Broadcasting and Telecommunications Commission will ask the junta to exercise its sweeping powers to rescue 8 million stranded users of Advanced Info Service’s 2G network if a meeting today fails to prevent service disruption to these customers when AIS has to switch off its 900-megahertz service.

Takorn Tatasith, secretary-general of the NBTC, said its telecom committee yesterday declined to grant AIS’s request to allow it to continue providing second-generation cellular service on the 900MHz spectrum.

The service will shut down on Monday when the NBTC awards a 900MHz licence to True Move H Universal Communication (TUC) of True Corp.

According to the rules that governed last year’s auction of licences on the spectrum, AIS has to switch off its 2G service once the NBTC awards one of the licences. Two companies won licences at the auction, True Corp and Jasmine International.

TUC has informed the committee that it will pay the Bt8.04-billion first instalment of the licence fee and place the bank guarantees for the remaining instalments on Friday.

The committee ordered the NBTC’s staff to call the parties including TUC, TOT, AIS and its affiliate Advanced Wireless Network (AWN) to an urgent meeting today to brainstorm a way to save all 2G users.

This order followed TUC’s proposal to AIS and AWN to offer AIS the use of its 900MHz spectrum for the remaining 8.8 million 2G users, but AIS would have to pay Bt450 million a month for three months.

The committee acknowledged the proposal and asked NBTC staff to handle the issue and submit the resolution to the committee again this Friday.

The fee is based on the Bt76.3 billion that True paid for the 15-year 900MHz licence, Takorn said.

The NBTC wants AIS to use 10MHz of Jas’s bandwidth and 10MHz of TUC’s to provide 2G service for its customers. AIS is expected to pay about Bt450 million to TUC and Bt420 million to Jas.

If AIS uses Jas’s spectrum before the NBTC grants the licence to Jas, AIS has to pay for the use of Jas’ spectrum to the NBTC first and pay Jas later when Jas gets its licence.

The NBTC will pass the money to the state.

Takorn said that if there is no resolution to the matter, the NBTC would ask the military’s ruling National Council for Peace and Order to step in. It would ensure that all 2G users can continue to use their phones until they move to another operator.

Wilai Keangpradoo, senior vice president for public relations at AIS, said the company had many options to protect its 2G-900MHz users including roaming them on Total Access Communication’s 2G-1,800MHz network.

They recently reached an agreement to ensure that all users will not be affected.

Of the 8.8 million users of its 2G-900MHz service, 8 million are AWN customers roaming with AIS.

Recently, AIS asked the NBTC for an extension for its 8.8 million users by using the 900MHz spectrum range that Jas Mobile Broadband of Jasmine International won at auction. However, Jas has not yet paid the first instalment of the upfront fee for this licence.

Takorn said the NBTC was still waiting for Jas to pay before the due date of March 21. Jas has said it will inform the NBTC of its intentions before March 18.

TRUE MOVE H Universal Communication (TUC) aims to become the top dog in mobile-phone coverage on all frequencies by investing Bt57 billion over three years.

“We expect to see revenue from our mobile-phone services grow more than 17.3 per cent this year.

“We are also aiming to secure a market share of at least 30 per cent, up from the current 21 per cent, within three years,” Suphachai Chearavanont, chief executive officer of True Group, said yesterday.

The capital expenditure budget will be financed by a capital increase from major shareholders, supplier credit, loans and cash.

This year will see the company investing Bt40 billion, of which Bt36 billion will go to installing 20,000 base stations for the 900-megahertz network and Bt4 billion to add 3,000 base stations to its current 22,000 base stations for the 1,800MHz and 2.1-gigahertz networks to cover 98 per cent of the population.

Its third-generation network on 850MHz will run on 16,000 base stations.

True will also seek new users shifting from Advanced Info Service’s the 2G service after launching 2G and 4G services on 900MHz this month.

“We plan to pay the first instalment [of its upfront fee for the 900MHz licence] and place bank guarantees in two weeks,” he said after TUC signed letters of guarantee with six banks for Bt73.04 billion.

The guarantors are Industrial and Commercial Bank of China (Thai) with half of the total, Bangkok Bank, Kasikornbank and Siam Commercial Bank with Bt10.5 billion each, Krungthai Bank with Bt4 billion and Kiatnakin Bank with Bt3 billion.

The five Thai banks insisted that they had no problems with the Bank of Thailand’s single lending limit and could continue to support True in the future.

Arthid Nanthawithaya, chief executive officer of Siam Commercial Bank, said ICBC (Thai) offered to provide 50 per cent of the total guarantee. The Thai banks agreed with the proposal because then they could have more room to assist True if the customer required additional support from financial institutions.

ICBC (Thai) asked the BOT if ICBC Hong Kong could open a standby letter of credit for ICBC (Thai) to support the letter of guarantee to True. Under Thai broadcasting regulations, a letter of guarantee must be issued by a local bank.

Zhigang Li, chairman of ICBC (Thai), said the bank was a believer in the Thai economy and Thailand was a top travel destination for Chinese tourists. The bank is confident that True will become the leader in 3G and 4G in Thailand and the bank will have further cooperation with True Corp in developing telecommunications in Thailand.

The other winner of a 900MHz licence at an auction late last year, Jas Mobile Broadband, is facing difficulties in submitting its letter of guarantee by March 21 because the company has not submitted a new business plan yet.

Chansak Fuangfu, senior executive vice president of Bangkok Bank, said the bank had been contacted by Jas Mobile Broadband but had not made any decision on what to do.

It has to consider three points – Jas’s business plan, the position of the regulator, and other conditions such as collateral.

Another customer, CTH, which failed to secure the broadcasting rights for the English Premier League, continues to pay its debts as usual. However, the situation has changed, so the business plan of CTH should be adjusted, he said.

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