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A better approach
to picking winners
Investment advisers generally agree
that among different asset choices, nothing beats equity for
long-term returns. Yet selecting winners from losers is no
easy task. Among the nearly 400 companies listed on the Stock
Exchange of Thailand, past performance clearly shows that
the largest, best-known firms do not necessarily offer the
best returns.
Sector or strategy? What drives
value?
The first two years of this century
have been remarkable for the impact on shareholder wealth.
From the dizzy heights of Internet-driven euphoria to the
lows following Sept 11, global stock markets have seen record
variations.
Total Shareholder Return : the
key to value
Growth in share prices is often
used as a guide to the rate of return to sharholders, but
this can be misleading as investors receive returns in a number
of other ways, including dividends, simple capital transactions
such as rights issues, and complex capital changes such as
share restructuring.
Mixed
bag, even for cement
The returns to shareholders of listed
companies in the Building and Furnishing Materials sector
were mixed over the past year and industry experts say that
a full recovery is some years away.
Caution in telecoms
Uncertainty about the telecoms deregulation
process has affected investment sentiment in the Communications
sector, though the outlook for the cellular market appears
clearer.
Cycle about to start heading
upward
Thailand's electronics sector has
weakened this year in line with the business cycle and the
global economy.
Safe haven in
a storm
Amid an economic decline, the energy
sector is providing better potential and safety than others.
Eight of the nine listed firms surveyed provided positive
returns to their investors over the past 12 months.
Challenges for
hotels
Despite a downturn in the global
tourism industry, with most hotels failing to achieve their
revenue targets, some shares of Thai listed hotels are still
delivering good returns to investors.
Easing of oversupply
a good sign
The property sector is set to improve
further next year, especially middle-class housing, due mainly
to a limit of new supply and falling interest rates on home
loans.
Turning tide
lifts most boats
A combination of higher freight
rates, lower interest rates, and foreign-exchange gains are
expected to provide a silver lining for Thai shipping companies
into next year, while global tensions are likely to continue
affecting the national airline.
Arresting the
decline
Even while bank profitability has
recovered some ground over the past year, few expect a rapid
return to the boom years, when Thai banks dominated the market.
BY
INVITATION
Value-based
management at Banpu
For many years Banpu had been attempting
to instil a shareholder value culture into our organisation.
We had hired human-resources and other consultants and had
even begun the process of implementing a balanced scorecard
approach. We then decided to ask L.E.K. Consulting to conduct
a shareholder-value audit of Banpu's organisation from both
an internal and an investor perspective.
A few smart
survivors
The re-entry of non-performing loans,
high operating costs and a low revenue base are the major
constraints on Finance and Securities stocks, according to
analysts.
Lack of shares a problem
Insurers expect steady growth for
the near future, as individuals and companies become more
sophisticated in their risk planning.
Meet L.E.K.
Consulting
L.E.K. Consulting is an international
corporate advisory firm with around 450 professionals worldwide.
The company is run as a single resource unit with 15 offices
throughout Europe, the United States and Asia-Pacific. There
are more than 60 professionals in the Asia-Pacific region,
based in offices in Sydney, Melbourne, Auckland, Singapore,
Bangkok, Shanghai and Beijing.
Returns to crow
about
Many listed companies in the SET
agribusiness sector are expected to show a poorer performance
due to the weak economy, but companies in the sector remain
attractive to investors.
Improved prospects
in store
The Commerce sector outlook is better
than forecast earlier this year and opportunities next year
are expected to be about the same.
Lukewarm reviews
The outlook for the Entertainment
and Recreation sector remains cloudy due to the economic downturn
and cuts in advertising spending, particularly since Sept
11.
Prosperity on the
menu
Peace or war, boom or bust, people
eat and drink, a fact reflected in the positive and quick returns
for investors in 15 of the 22 companies in the Food and Beverage
sector.
Institutions avoid
illiquid small caps
Poor liquidity and a low free float
of shares are major barriers to shareholder returns for listed
companies with small capitalisation. Both local and overseas
institutional investors pay little attention to small-cap stocks
because they are difficult to buy and sell at reasonable prices.
Privatisation momentum
critical
By all benchmarks, the government's
privatisation drive has made a roaring start, with overwhelming
demand for share offerings of both Internet Thailand and PTT
Plc.
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