KAF

Date announced 28/10/2010
Quarter 31/08/2010 Qtr 1
FYE 31/05/2011

STOCK KAF
C0DE  5096 

Price $ 1.53 Curr. PE (ttm-Eps) 8.47 Curr. DY 4.90%
LFY Div 7.50 DPO ratio 43%
ROE 9.6% PBT Margin 96.8% PAT Margin 71.8%

Rec. qRev 10406 q-q % chg 21% y-y% chq 3%
Rec qPbt 10077 q-q % chg 83% y-y% chq 22%
Rec. qEps 6.23 q-q % chg 56% y-y% chq 14%
ttm-Eps 18.06 q-q % chg 4% y-y% chq 158%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 7.00 Avg. L PE 5.00
Forecast High Pr 1.61 Forecast Low Pr 1.19 Recent Severe Low Pr 1.19
Current price is at Upper 1/3 of valuation zone.

RISK: Upside 20% Downside 80%
One Year Appreciation Potential 1% Avg. yield 7%
Avg. Total Annual Potential Return (over next 5 years) 8%

CPE/SPE 1.41 P/NTA 0.81 NTA 1.89 SPE 6.00 Rational Pr 1.08



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Net interest income, Indon ops boost Maybank earnings

Saturday November 13, 2010

Net interest income, Indon ops boost Maybank earnings

PETALING JAYA: Malayan Banking Bhd (Maybank) posted a 16.6% rise in net profit to RM1.03bil for the first quarter ended Sept 30 compared with the same quarter last year due to an increase in net interest income and expansion of Indonesian operations.

The bank said in an announcement to Bursa Malaysia yesterday that revenue was 9.56% higher at RM5bil.

Maybank said the 9% or RM146.9mil increase in net interest income was mainly due to improvements in operations from higher net interest income margin in the Malaysian operations arising from increases in the overnight policy rate as well as the expansion of Indonesian operations.

It added that net income from the insurance business, which increased by 20.5% or RM88.8mil, was due to lower claims incurred.

It said income from Islamic banking operations decreased by 11.3% to RM338.2mil due to higher provision for profit equalisation reserves in the Islamic business, which was mitigated by an increase in the growth of assets that increased gross income.

Non-interest income was 1.8% higher at RM1bil compared with the previous corresponding quarter due to contributions from realised gain arising from sale of securities of RM36.4mil and higher loans-related income of RM35.4mil.

The bank said this was mitigated by a fall in commission, service charges and fees amounting and foreign exchange loss.

It added that allowance for losses on loans, advances and financing decreased by 36.6% to RM264.7mil mainly due to higher recovery during the period.

Overhead expenses increased by 4.4% to RM1.55bil mainly due to higher personnel costs which were mitigated by a decline in establishment and marketing costs as well as lower administration and general expenses, it said, adding that personnel costs increased by 23.1% to RM832.7mil due to the timing of crediting of salary in arrears and cost of living allowances arising from the conclusion of the new staff collective agreement.

The bank said although loans and debt securities grew by 4.4% on an annualised basis, this was expected to gain momentum towards meeting the target of 12%, particularly for the global wholesale banking and Malaysian consumer portfolio.

Meanwhile, Maybank president and chief executive officer Datuk Seri Abdul Wahid Omar said in a press release that the bank would focus on key markets across the region where there were significant opportunities to bring its unique brand of products and facilities to stakeholders.

“This quarter’s results continue to bear testimony to the group-wide transformation efforts that we have embarked on since 2008,” he added.

Abdul Wahid said the bank had made significant progress in the Indonesian operations, where loans growth was ahead of target at 30% and Singapore, which was on target at 5%.

“With increasing organisational confidence in our transformation journey, we’ll accelerate our growth efforts, leveraging synergies, enhancing productivities and shortening customer turnaround times in our preferred segments,” he said.

Abdul Wahid said barring unforeseen circumstances, the bank’s performance for the financial year ended June 30, 2011 (FY11) was expected to be better than FY10 and on track to meet the targeted 14% return on equity.

http://biz.thestar.com.my/news/story.asp?file=/2010/11/13/business/7419005&sec=business

Vietnam: Instead of depositing gold at banks, people will keep gold under their pillows

Last update 03/11/2010 09:30:00 AM (GMT+7) 

Instead of depositing gold at banks, people will keep gold under their pillows

VietNamNet Bridge – While some experts believe that the Circular No 22, forbidding commercial banks from lending cash against gold collateral, will bring positive effects to the market, others argue that the legal document will take a big volume of gold out or circulation, which will be a big waste.

New legal document will help stabilize gold and foreign currency markets 

SBV halts lending against gold collateral 

New circular will put pressure on the marketWhen issuing the new regulation on borrowing and lending in gold, Nguyen Ngoc Bao, Director of the Monetary Policy Department under the State Bank of Vietnam said that to date, 23 credit institutions have mobilized and lent in gold. By the end of September 2010, the total deposits in gold had reached 92.6 tons, worth 73 trillion dong. Meanwhile, the outstanding loans in gold had only accounted for 60 percent of the mobilized capital.

With the new decision, commercial banks, especially the ones in the south, now have to stop accepting more deposits and think of taking back the loans in gold.

Experts have warned that in the context of the current high and fluctuating gold prices taking back a big volume, estimated at 55 tons will have big impacts on the market.

An expert from Bao Tin Minh Chau Company said that recently, when the State Bank allowed to import only several tons of gold, this was enough to cool down the market. However, the estimated 55-ton volume of gold banks are going to take back is too big.

As such, the demand for gold will increase, while the quotas for importing gold are not likely to be granted. Even if the State Bank allows to import gold, the volume will not be large .

Governor of the State Bank of Vietnam Nguyen Van Giau, before issuing the new legal document, said that gold mobilization and lending can be seen only in Vietnam.

In reality, the demand for mobilizing capital in gold and lending in gold are quite commonplace in Vietnam. Therefore, when the central bank prohibits gold borrowing and lending, banks will lose profit, while deposits will lose a safe investment channel.

New regulation will not be able to prevent uncertainties

The State Bank of Vietnam, when issuing the new legal document, said that the new policy aims to settle the problems in gold circulation and reduce the gold and foreign currency speculation, thus helping stabilize the market.
However, experts still have doubts about the possible effects of the new document.

In Vietnam, gold can be divided into two kinds: merchandise gold and the gold kept among people. Merchandise gold is being used as a type of currency which is used to trade, contribute capital and to lend to others. Meanwhile, a big volume of gold is still lying among people as their assets.

Once banks are not allowed to lend in gold, they will not accept gold deposits any more. As such, instead of depositing gold at banks, people will keep gold under their pillows. This also means that a big volume of capital will be put out of circulation and control, which should be seen as a big waste.

The State Bank believes that the new regulation will stop people from hoarding, because they cannot deposit it for profit. However, some experts do not think this will happen, saying that it is not so easy to change the way of thinking of Vietnamese people, who have the habit of hoarding gold as their assets.

Le Khac

http://english.vietnamnet.vn/en/business/1040/instead-of-depositing-gold-at-banks--people-will-keep-gold-under-their-pillows.html

Vietnam: High grade apartment prices going down on profuse supply

Last update 08/11/2010 04:29:23 PM (GMT+7)

High grade apartment prices going down on profuse supply

VietNamNet Bridge – The more profuse supply and the lack of investment capital both have forced real estate developers to ease sale prices to attract more buyers.

Real estate developers have to slash sale prices

FLC Company has announced the plan to put apartments at FLC Landmark Tower project on Le Duc Tho Road in Tu Liem District on sale for the second phase. The apartments are being offered at 28 million dong per square metre. The registrations to buy the apartments should be made from November 1, 2010 to November 15, 2010.

According to FLC, the price of 28 million dong per square metre has been kept unchanged if compared with the price set for the second phase of sale, even though the prices of construction materials, and the prices of gold and dollar have increased sharply. Meanwhile, buyers would get the credit support from the Bank for Investment and Development of Vietnam (BIDV) and Techcombank. The two banks promise to give the loans worth up to 85 percent of the values of the apartments.

The fact that the prices remain unchanged – though in fact, if set against the dollar and gold prices, they have even decreased – shows the difficulties currently faced by real estate developers.

Not only the developer of FLC Landmark Tower decides to keep the sale prices unchanged. Other developers have also been trying to attract customers by launching promotion campaigns and offering other discounts to buyers.

Capitaland Ha Thanh, for example, the developer of Mulberry Lane project in Mo Lao town in Ha Dong District, has decided to offer the price discount of 10 percent to  thouse who buy two apartments at the same time.

Besides, buyers will be able to borrow money from VIBank to purchase the apartments. The values of the loans could reach 65 percent of the values in the contracts, if borrowers mortgage the apartments. The values of loans could even reach 90 percent of the values of contracts, if borrowers mortgage other kinds of assets for the loans.

Most recently, Lam Vien Company also announced that the actual sale prices of the high grade apartments at Richland Southern will be five percent lower than the initially announced prices. Moreover, buyers will also have the right to delay the process of making payment and be exempted from the management fee for the first two years.

Last week, a transaction selling a 170 square metre apartment at TSQ project in Ha Dong District was successfully carried out. The apartment was sold for $1150 per square metre, what real estate brokers in Hanoi consider as the lowest price among all the projects in the last six months (the project is expected to be completed in June 2011).

The gap between the original prices (the prices at which real estate developers sell apartments to buyers in the primary market) and the prices in the secondary market (the prices at which the buyers sell to other buyers in the secondary market) has narrowed by more than 50 percent. For example, the original price of a 104-square metre apartment at Usilk project is $850 per square metre. Previously, the gap between the prices was just 350-500 million dong, while now the gap has reduced to 150-160 million dong ($80 per square metre)

In the golden age of the high grade apartments ( in 2007 and first half of 2008), real estate developers announced new sale prices once every three months, and the new prices were always higher than the previous ones. By doing so, analysts say, they made people think that the prices would increase further in the future, thus prompting them to rush to buy apartments.

However, they have to change their strategy now, when the market has cooled down due to the global economic recession.

According to CBRE, a real estate service provider, in the second half of 2010, 10,000 new apartments in Hanoi were put on sale, raising the total number of new apartments on the primary market to 20,000. CBRE believes that the profuse supply will keep the apartment sale prices stable from now to early 2011.

P.V

http://english.vietnamnet.vn/en/business/1223/high-grade-apartment-prices-going-down-on-profuse-supply.html

Exchange rate paradox occurring only in Vietnam

Last update 05/11/2010 05:17:23 PM (GMT+7)

Exchange rate paradox occurring only in Vietnam

VietNamNet Bridge – The greenback is losing its value against most other currencies in the world, but it is appreciating against the Vietnam dong. The exchange rate paradox is harming the national economy, forcing the government to apply urgent measures to stabilize the market.
Vietnam to use reserves, won't devalue 
The urgent government’s meeting on November 3 evening ended at 9 pm. Several measures were put forward to deal with the uncertainties on the forex market and prevent high inflation.

An unscheduled press conference was convened on the morning of November 4. Le Duc Thuy, Chair of the National Finance Supervision Council was assigned by the Government to inform the press about new policies on forex management. Representatives from the State Bank of Vietnam did not appear at the conference, where a series of new decisions relating to the monetary policies and forex management were announced.

The paradox only exists in Vietnam
The dollar price on the black market has been increasing continuously over the last two weeks, far exceeding the official exchange rate. On November 3, the dollar price once soared to 21,000 dong per dollar, much higher than the ceiling price of 19,500 dong per dollar.

Meanwhile, according to Thuy, the greenback has been losing its value against nearly all other currencies in the international market. In Russia, for example, ruble, not dollar, is required in making payment because people fear that the dollar will depreciate further.

Foreign experts said that with the loosened policy currently applied by the US Federal Reserves (FED), the dollar value would decrease by 20 percent in the time to come.

As such, a paradox exists: the gold price is increasing and the dollar price is decreasing in the world, while the gold price is increasing and the dollar price is also increasing in Vietnam

Overly high dollar credit growth rate is the “culprit”

Thuy said at the press conference that all macroeconomic indexes are very “beautiful”. The GDP growth rate may reach 6.7-6.8 percent, higher than the targeted level at 6.5 percent. The trade deficit would not be as high as previously thought, about 12.5 billion at maximum. 

Therefore, the high price of the dollar is a problem which needs to be solved.

According to Thuy, earlier this year, a lot of businesses rushed to borrow money in dollars. However, the problem was that they did not use the dollar, but they sold dollars on the market, thus causing an artificially high supply on the market. As a result, at that time the dollar price decreased and sometimes was even lower than the official exchange rate.

However, after that, businesses have to buy dollars to pay back debts, leading to increasing demand and the temporarily exhausted supply.

It is clear that to some extend, there exists the imbalance in dollar supply and demand. Besides, the prediction that the inflation rate in 2010 would exceed 8 percent has also made the Vietnam dong weaker.

Dong devaluation will not occur

In current circumstances, the move that people expect from the central bank is the further devaluation of the dong. However, the government has decided that Vietnam will not devalue the dong.

The Asia Development Bank has recently advised Vietnam not to adjust the exchange rate. Government officials have all agreed that adjusting the exchange rate at this moment is not a wise move and could even have very bad consequences.

The Vietnam dong has not become so weak that it is necessary to adjust the dong/dollar exchange rate. The dong devaluation also will not be a powerful tool to help boost exports. Especially, Vietnam is expecting to see exports increase significantly this year.

If Vietnam adjusts the exchange rate at this moment then it will send the inflation rate soaring. If so, the National Finance Supervision Council has estimated that the increase in the price of goods would be double-digits or more. Meanwhile, the top priority task for now is to obtain macroeconomic stability, especially, to control inflation. If the government fails to do that, people will lose their confidence.

However, the State Bank of Vietnam will take necessary measures to cool down the forex market. It will “pump” foreign currencies into circulation to ease the situation.

The announcement has raised the concern that this could make Vietnam’s foreign currency reserves become “thinner”. However, Thuy has reassured the public that the foreign currency reserves are sufficient enough. In the long term, Vietnam needs to increase its foreign currency reserves and will so when there are more favorable conditions.

Le Khac

http://english.vietnamnet.vn/en/business/1169/exchange-rate-paradox-occurring-only-in-vietnam.html

Vietnam: In critical situations, information must be transparent

Last update 08/11/2010 03:35:07 PM (GMT+7)

In critical situations, information must be transparent

VietNamNet Bridge – When the national economy shows signs of uncertainties, experts say, the information released by management agencies must be transparent, while the policies must be consistent in order to stabilize the market and calm the public down. However, these things are still not evident in Vietnam.

Exchange rate paradox occurring only in Vietnam 

At a recent press conference where urgent measures to regulate the national economy were informed, Le Duc Thuy, Chair of the National Finance Supervision Council, stressed that one of the most important measures to stabilize the market is to provide accurate and transparent information in order to create public confidence.
Nevertheless, the two most important agencies in charge of regulating and supervising monetary policies prove to be contradictory with each other. 
Whom to believe?
Le Duc Thuy, Chair of the National Finance Supervision Council told the press that in the first 15 days of October, the Vietnam dong deposits at banks were reduced by 45 trillion dong ($2 billion) in comparison with late September. 
Also according to Thuy, the deposits in foreign currencies have been increasing. By late September 2010, the foreign currency deposit balance had been 40 trillion dong lower than the foreign currency outstanding loans. Meanwhile, the gap between the deposit balance and outstanding loans in foreign currencies had reduced to 20 trillion dong by early October, which meant that the foreign currency deposits had increased by 20 trillion dong. The figure has been explained by the fact that people have withdrawn Vietnam dong to purchase foreign currencies or gold.
However, after that, the State Bank of Vietnam affirmed that some newspapers reported wrong information about the Vietnam dong deposit balance, saying that in fact, the Vietnam dong deposit balance at the banking system has been increasing.

According to the State Bank of Vietnam, by October 15, the Vietnam dong deposits had increased by 0.64 percent (nearly 5400 billion dong) in comparison with September 30, 2010. Therefore, the central bank has accused some newspapers of reporting wrong information.
Regarding the interest rates, Thuy has said that the Government does not strive to slash interest rates at any cost and that it allows commercial banks to set up the deposit and lending interest rates in accordance with the market supply and demand.

However, in a meeting with representatives of the Vietnam Banking Association (VNBA) and representatives from commercial banks on November 5, chaired by the State Bank, when there was a proposal to raise the ceiling deposit interest rate from 11 percent per annum to 12 percent, the State Bank requested VNBA to come forward and to coordinate the implementation.
This has caused conflicting information about the intervention by the State Bank of Vietnam in the implementation of the new interest rates.
After that, an official from the State Bank said that easing interest rates is the decision of VNBA’s members, and that the management agency does not intervene with their decision.
However, people still have doubts about the intervention of the management agencies in banks’ operation. Two weeks ago, commercial banks were put under  pressure to push their interest rates down, though the inflation rate in the first nine months of the year was relatively high.
Macroeconomic stability – the top priority task
Thuy has admitted that the consumer price index (CPI) has been increasing and causing concerns. Macroeconomic stability should be seen as the top priority task, and curbing inflation is the most important goal.
In fact, right at the beginning of October, economists issued warnings about the possible high inflation rates. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management stressed that it was necessary to continue to tighten monetary policies in order to curb inflation. “Everything is very clear: the macroeconomic stability must be the top priority,” he said

At this moment, the most important thing is that management agencies need to do is to provide transparent information and keep consistent policies so as to avoid eroding the public confidence.
Le Khac

http://english.vietnamnet.vn/en/business/1209/in-critical-situations--information-must-be-transparent.html

How much gold kept among Vietnamese people?

Last update 10/11/2010 09:00:00 AM (GMT+7) 

How much gold kept among Vietnamese people?

VietNamNet Bridge – Newly released information that Vietnam has imported 1000 tons of gold in the last 20 years has stirred up the public. Experts now try to guest how many tons of gold are being kept among Vietnamese people and what Vietnam should do to use the huge capital in the most effective way.

The information about the 1000 tons of gold imported in the last 20 years was released by Le Duc Thuy, former Governor of the State Bank of Vietnam, now Chair of the National Finance Supervision Council. The head of the council did not confirm the existence of 1000 tons of gold among the public, but he said: “I am sure that a large volume of gold is being kept in people’s homes”.

Thuy commented that Vietnam should not make a hasty move to prohibit the transactions in gold. The prohibition can only put gold out of the official circulation, while the gold will still exist in the society. Meanwhile, gold should be seen as an important source of capital, and if gold cannot be put into official circulation, it will be “sitting idle”, not making profit, or will be traded on the black market. i.e out of the control of the management agencies. Thuy believes that it would be better to attract the huge capital (gold) into banks instead of prohibiting transactions in the gold.

While the national economy needs more and more capital from different sources for its development and investment, gold trading floors have been shut down and the gold prices have been continuously climbing to new highs. One week ago the State Bank issued a legal document to scale down the activities of mobilizing capital in gold and lending gold.

However, a senior official of the State Bank of Vietnam has denied the fact that 1000 tons of gold is now lying under people’s pillows. “To date, no one can say for sure how much gold is being kept among people,” he said. 

The figure cited by the former Governor of the State Bank is sourced from the World Gold Council and the figure does not include the illegal imports and the import volume through other unofficial channels that the organization still cannot reckon up.

Meanwhile, the general director of a famous gold trading company guesses that people are only keeping 200 tons of gold because when the world’s gold prices were higher than the domestic prices, a substantial volume of gold was illegally exported,. However, he stressed that 200 tons of gold would also be a large volume of capital, worth $10 billion and the capital should be put into business rather than sitting idle.
Meanwhile, VnExpress newspaper quoted a director of a big bank in Hanoi as saying that the management agency needs to consider the specific characteristics of the market in Vietnam. In other countries, gold is considered as a type of good and not a tool of payment. Therefore, the volume of gold kept among people is not very big. Meanwhile, in Vietnam, gold is not only used as a kind of good (jewelry products), but also as a kind of asset (people store gold instead of cash)

If the management agency tries to weed out gold from the official channel, even though people still want to keep gold as their assets, this is really a kind of the management agency’s “voluntarism” which wastes a large amount of capital.

“It will be not the right time to weed out gold from the official channel until gold is no longer favored by people,” he said.

Meanwhile, the central bank, while trying to protect its view that it is necessary to prohibit transactions in gold, said that the massive mobilization and lending in gold have been making the dollarization in the national economy more serious and encouraging speculation.

Governor of the State Bank of Vietnam once declared that in case the market has gold in excess, the central bank may spend money to purchase gold to increase gold reserves.

P.V

Vietnam: Gold and dollar prices escalating, no one benefits

Last update 09/11/2010 04:59:02 PM (GMT+7)

Gold and dollar prices escalating, no one benefits

VietNamNet Bridge – The gold and dollar prices have been increasing continuously, threatening businesses. Especially, the weaker dong does not benefit exporters, even making their business worse.

At 9:45 am of November 9, the gold price jumped to 38.2 million dong per tael, increasing by 2.5 million dong per tael compared with the opening prices (one tael is equal to 1.2 oz). Meanwhile the dollar price soared to 21,250 dong per dollar, the highest level so far.

The dollar prices quoted by commercial banks have been stable, at 19,495-19,500 dong per dollar at Vietcombank, and 19,470-19,500 dong per dollar at Eximbank.

The Japanese yen has also appreciated against the dong. At 8:20 am, the yen price was quoted at 246.63 – 253.99 dong per yen, an increase of three dong per yen in comparison with the week’s opening price. The euro is now trading at 28,101.00 dong per euro.

In principle, the dollar appreciation will benefit exporters, because the weak local currency will make domestic products cheaper, thus more competitive in the world market. But in fact, export companies are now like cats on hot bricks. 

Tran Quoc Manh, Chair and General Director of Sadaco, said the dollar price increases have pushed the prices of input materials, transport fees and labour costs high up.

Manh admitted that the company has earned more money thanks to the dollar appreciation, but the profit is not big enough to cover the higher production costs. Especially, Sadaco, like many other producers in Vietnam, have to import input materials to make final? products in Vietnam. Therefore, they now have to pay more money for the import materials due to the more expensive dollar. Manh stressed that when policy makers think of the monetary solutions to encourage exports, they should consider of the fact that Vietnamese producers have to pay for imported input materials in dollars.

Besides, export companies complain that though they sell foreign currencies to banks, when they need money to make payment for material imports, they cannot buy foreign currencies from banks at the prices at which they had sold themto banks before.

Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewellery Company (PNJ) said in September, her company earned $300 million from gold exports and sold the sum to banks. However, her company now cannot buy dollars from banks at the quoted prices.

“The banks, though admitting that PNJ is a loyal client who should get priority in dollar purchases, still refuse to sell dollars to us, saying that they cannot sellat such low prices,” Cuc complained.

In fact, banks still have dollars to sell, but at the prices set by banks, not the prices quoted by clients. 

Le Dang Minh, Managing Director of Gimeno, a fashion company, said that he has just bought dollars from a bank. Though the quoted price was 19,500 dong per dollar, in fact, Minh had to pay 20,100 dong per dollar. Minh said that he still does not know how to “legalise” the gap of 600 dong per dollar. As the input materials cost 70 percent of the values of his products, the dollar price increases have made the company suffer losses.

However, Minh believes that those who suffer the most now are labourers, whose salaries do not increase in proportion with increases in the goods prices.

Minh does not think that export companies deliberately refuse to sell dollars to banks, thus causing the dollar shortage. He said that only the companies which have profuse capital can keep dollars on their accounts. Meanwhile, small companies like his have to sell dollars to banks right after they earn the money, because they need money to continue production.

Thanh Van

http://english.vietnamnet.vn/en/business/1282/gold-and-dollar-prices-escalating--no-one-benefits.html