|
||
| A stable generator of value By SHARAD APTE and VORALAK SUWANVANICHKIJ T he SET continued its wild ride in 2005. The weighted-average return of the overall index was 20.2% in the past year, compared to negative 1.7% in 2004 and the remarkable 211.7% gain generated in 2003. Such performance supports the notion that, while investor jitters have subsided, the investment climate remained cautious, well below the hubris that rallied stock prices in 2003.  Underpinning 2005's gains were rising corporate earnings, growth in exports, and increased government spending on infrastructure. These phenomena, however, were tempered by oil price hikes, rising interest and inflation rates, Southern unrest and political tension. Other lingering concerns included avian flu and the impact of the tsunami on tourism. On the whole, however, 2005 was a better year than 2004. This past year, eight individual sectors -- including agribusiness, commerce, electronic components, energy and utilities, food and beverages, health care services, and insurance -- out performed the index average. Another 11 sectors, while returning less than the SET's 20.2% average, managed to generate positive shareholder value, returning positive average TSRs. In comparison, only eight sectors managed this feat in 2004. In 2004, the top sectors included personal products and pharmaceuticals (with aone-year market-cap weighted average 104% TSR), health care services (72%), and communication (27%), marking a shift toward consumer-related segments. This trend continued in2005,with health care, food and beverages, and agribusiness emerging as the winners. Interestingly, the health care services sector, comprising hospital operators, generated the highest returns for investors over one-, three-,andfive-year horizons, with weighted average TSRs of 57.9%, 91.9%, and75%,respectively.Thecreation of the highest returns over multiple time periods may signify not only healthy trends in the market, but strong underlying management. On an individual basis, WattanaKarnpaet, the operator of two 100-bed hospitals in Udon Thani and Nong Khai, returned 160%, and earned a position among the five top-performing companies in 2005. Its three-andfive-yearTSRs were also positive, albeit more modest, at 31.1% and 27.6%, respectively. Food and beverages, another top sector in 2005, posted a weighted-average TSR of 51.9%, up from minus 13% in 2004. Agribusiness also improved significantly from 2004, returning 51.2%, compared to 6% in 2004. To a large extent, these gains reflect recoveryfrom2004’s drought. Improvementsin agricultural production boosted overall agribusiness exportsand pushed down input costs for the food and beverage industry. The poorest performing sectors in2005 included packaging (losing 14.8%), petrochemicals and chemicals (losing 19.8%) and professional services (losing 21.6%). Continuing their negative run, these same sectors respectively returned averages of -18%, -10%, and -28% in 2004. Yet in that same year, other sectors fared worse: entertainment and recreation (-28.5%), professionalservices(-27.8%),andpaper and printing materials (-26.6%) were amongst the poorest performers. Looking beyond the one-year holding period, the SET yielded three, five, and 10-year TSRs of 43.1%, 32.6%, and 2.2%, respectively. Apartfromthe 10-year return figure, which includes the financial crisis, thesehighreturnssuggestthatthemarket has become a relatively stable generator of long-term value. As always, weathering ups and downs can pay off for those investors who buy and hold Sharad Apte is the managing director of Southeast Asia and Voralak Suwanvanichkij is a consultant with L.E.K. They can be reached at 02-654-3500 or via e-mail at s.apte@lek.com and v.suwanvanichkij@lek.com
|
| © Copyright The Post Publishing Public Co., Ltd. 2006 Privacy Policy Comments to: Webmaster Advertising enquiries to: Internet Marketing Printed display ad enquiries to: Display Ads Full contact details: Contact us |