Rising trend toward late October resistance

Rising trend toward late October resistance
Bangkok Post (15 October 2007)

Bank index provides the clearest clue, while performance of ATC and RRC at key barriers will also signal whether rise can continueExactly as we noted in the last review on Oct 1, the long-term cycle indicates a rising zigzag until February 2008, yet there may be important correction along the way. This may happen when we go up to the late October or mid-November resistance. The SET is about to test the previous high at 896, which is both an important psychological and an important technical barrier, but the odds that the SET should go above 896 and continue rising until late October are good. On that note, the SET50 already began to breach the similar resistance last week. As for the stop-loss line, this would be when the SET falls below 862, along with the SET50 falling below 630, during trading hours. In such a case, cancel the scenario of the rising trend toward late October. And also do a pre-emptive cutback, when the ratio of the SET divided by the S&P reaches 0.596. The target for the SET by late October is not very clear, but could be around 977. The possible targets for the SET banking index, however, are relatively clear and can be used to help gauge the market's upside. The targets for the bank index by late October should be either close to 320 or 337, which are respectively 3.63% and 9% up from last week; and, it is more likely to be the latter. Also watch the major resistance against the P/E of the bank sector at 17.20 (the symbol is PEbank, in Bisnews). Other sectors, aside from banking, are also important, but their indices do not show the clear targets at this point. However, on looking at the oil sector, we may expect TOP, as an indicator, to test the previous high at 95.50, and it may go above that. In any case, if the SET energy index can go above this week's critical resistance at 22,629-22,829, the upside for the sector should be quite significant by late October, or beyond. Updating two stocks, which are among the indicator stocks that can be used to help gauge the market's trend, namely ATC and RRC, on which we were bullish but which have experienced corrections, there is no stop-loss signal yet. The stop-loss signal for ATC is on closing below 71 (adjusted from 71.50), and the stop-loss signal for RRC is on closing below 22.40. If simultaneous stop-loss signals occur in both ATC and RRC, it would be a negative warning that the SET may not continue up until late October. In such a case, cut back on the overall and diversified exposure, and go back to the sidelines for awhile. The odds, however, are that ATC and RRC will go up to test the barriers at 80 and 26.50, and the breakouts above those levels will constitute a very positive signal for the market. Other indicator stocks are still looking positive at this point. In particular, BBL should head up to test the 133 or the 137 resistance, which are the key resistances, and which are respectively 6.40% and 9.6% up from last week's closing. Note, however, that around 137 is a dangerous resistance zone, especially if BBL hovers around that zone in late October. Overall, the late October and mid-November resistances are not impasses, but can be seen as a crossroads, and will have to be updated when we get there. Let us now go to the charts behind some of the above scenarios. Chart A shows the bullish potential of the market which extends until February 2008. And, this is consistent with the likelihood that the major foreign selling may not come until late November or until mid-March, as shown in chart B. However, we have to be careful of the possible corrections along the way. And, based on charts C and D, a correction may occur after we hit the late October or the mid-November resistance. If there were to be such a correction, the SET could fall by 100 points or more, until we hit the support around mid-December. The December cycle support is based on the cycle in world oil prices.
That means that if there were to be a correction down to mid-December, we may expect another rebound back up to the February high, but the interim drawdown until mid-December could be significant. That should also answer the question concerning the Dec 23 political calendar in Thailand. That is, no matter what the outcome on the Dec 23 general election could be, the SET should go up, backed by the strength of the oil price, which should come in mid-December. As to how high the market will go by February 2008, this can be gauged from the P/E. If the SET's P/E can go above the 12.73 level, along with the P/E of the bank sector going above 17.20, the upside by February could be astronomical, based on charts E and F. In the big picture, and given the current bullish odds until late October or February, notice also that the SET is currently stronger than the combined gold and oil prices, as shown in chart G. Anant Tantuvanich and Pattarawan Vangmingmart are with the Market Timing Department at Kasikorn Securities.

INBrief: True names new CFO

INBrief: True names new CFO
Bangkok Post (15 October 2007)

COMMUNICATIONS :Noppadol Dej-Udom has been named chief financial officer of True Corp effective Jan 1. Mr Noppadol, previously general manager of True's online business, will succeed William Harris, the CFO since 2001. Mr Harris will step down from True to spend more time with his family in the US but will remain on the board of True Move, the mobile unit of True Corp. Mr Noppadol, 40, holds an MBA from Sasin and an undergraduate degree from Rensselaer Polytechnic Institute

'War room' set up ahead of grilling

'War room' set up ahead of grilling
Bangkok Post (15 October 2007)

Directors allegedly profited from dealFormer directors of TOT boards have unofficially set up a ''war room'' to prepare for questioning by investigators looking into the affairs of deposed prime minister Thaksin Shinawatra, his family and the telecom business he founded. The executives want to defend themselves in the event the Assets Scrutiny Committee (ASC) links previous TOT boards to deals that benefited the Shin Corp empire at the expense of the state telecom enterprise. One strategy the directors have in mind is to highlight the introduction of prepaid mobile-phone service in 2001, with TOT's blessing. They point out that the service helped create a mobile-phone boom and enrich TOT through higher revenue-sharing payments. A former TOT director confirmed that the ASC was focusing on the Thaksin government's conversion of part of the concession fees paid by mobile operators to an excise tax, which allegedly enriched Shin's cellular flagship, Advanced Info Service. The ASC sees the move as an abuse of authority and a violation of the law and therefore wants the directors' testimony to indict the former prime minister. The committee has also highlighted the reduction in the revenue-sharing payment from prepaid service to 20% from 25%, and a roaming agreement between Advanced Info Service and Thai Mobile, the stillborn cellular joint venture of TOT and CAT Telecom. The former director said that TOT's own investigations had calculated the financial damage inflicted on TOT from agreements with Shin companies at almost 100 billion baht, and forwarded its findings to the ASC. The damages include:

F42 billion baht from excise tax collection;
F32.3 billion from amendments of concession agreements with AIS;
F7.6 billion from the Yellow Pages concession with TeleInfo Media, another Shin subsidiary;
F210 million from the iPSTAR satellite concession.

The source said that several former directors and ministers had already testified before the ASC, raising concern that some testimony might contradict other versions. As a result, they talked and agreed to set up a ''war room'' to gather evidence and review facts and testimony to ensure everyone was speaking the same language. For example, he said, the ASC claims changes in prepaid revenue sharing caused TOT's revenues in the 11th year of the AIS concession to drop by 32.33 billion baht. He said that the war room has prepared documents to counter this claim, highlighting how the huge jump in prepaid users had helped TOT, which earned more than 20 billion baht from prepaid revenue sharing last year _ four times as much as in 2001.
In addition, he questioned an ASC claim that AIS gained an advantage from airtime fee reductions since the lower costs were passed on to customers and that all operators benefited, not just AIS. Former TOT union president Mitr Charoenwal said he was also invited to testify four times, focusing on project approvals by former TOT boards, amendments of the AIS-TOT concession, roaming agreements and third-generation service.

Thailand To Talk With England On Extradition Of Ex-PM

Thailand To Talk With England On Extradition Of Ex-PM
The Wall Street Journal (13 October 2007)

BANGKOK (AP)--Thai prosecutors flew to England Friday to discuss with their British counterparts the possibility of extraditing ousted Prime Minister Thaksin Shinawatra to face corruption charges back home. "The purpose of the trip is to consult with British prosecutors to see if the charges (that Thaksin faces) in the Supreme Court are considered offenses that could be subject to penalty in both countries, and whether that could be a basis for his extradition," Thai Attorney-General Chaikasem Nitisiri told reporters. In general, countries will only extradite a suspect if he is charged with an offense that is a crime in the country where he is taking refuge as well as the country seeking custody. Extradition is usually a lengthy and complicated procedure, and most Western countries are also reluctant to agree to it in cases involving political figures. Chaikasem said four prosecutors are expected to be in England for nine days to discuss legal procedures, which are based on a 1911 bilateral extradition treaty signed by the two countries, but that they would not ask for extradition during this trip. Thaksin has been living in exile since he was overthrown in a bloodless coup in September last year. His wife, Pojamarn, later joined him in London. Anti-graft bodies set up by the coup leaders have launched several investigations into his alleged corruption. Thailand's Supreme Court in August issued arrest warrants for Thaksin - who served as prime minister from 2001-2006 - and his wife relating to a controversial 2003 land deal. Thaksin was charged with conflict of interest because Pojamarn bought the land from a government agency while her husband was prime minister. A Thai criminal court issued arrest warrants last month for the couple involving charges of concealing their assets in a public company. By law, Cabinet members are barred from possessing more than a 5% stockholding in publicly listed companies. Thaksin was overthrown after months of demonstrations calling for his resignation because of alleged corruption and abuse of power. Since then, the military-appointed government that succeeded him has launched several investigations into his alleged corruption and has frozen millions of dollars of his family's assets.

BOT may relax stake cap for ACL Bank

BOT may relax stake cap for ACL Bank
The Nation (15 October 2007)

The Bank of Thailand (BOT) says it will consider relaxing the foreign-shareholder ceiling of 25 per cent for ACL Bank. "ACL Bank must inform the central bank how the new [foreign] shareholder would help improve it or add anything it lacks," assistant governor Sorasit Soontornkes said last week. The central bank will generally consider any such request on one of two conditions: the local bank must be undergoing either rehabilitation or expansion. He said ACL Bank would have to explain how the new foreign partner could improve its business or provide desired benefits based on a business plan. For example, the partner might help the bank develop its information-technology system or improve its future operations. Earlier, the central bank said ACL Bank's request would come under the current Commercial Bank Act, which caps foreign shareholding at 25 per cent. Bangkok Bank (BBL) is being required by the BOT to reduce its shareholding in ACL Bank from 19 per cent to zero, in order to comply with the one-presence principle of the Financial Sector Master Plan. ACL Bank is required to submit to the BOT a profile of the new foreign partner buying BBL's stake in it, while BBL must report the name of the party to the BOT. Meanwhile, TMB Bank and BankThai have already sent the central bank their recapitalisation plans and are expected to complete the process by the end of the year, Sorasit said. The BOT next week will also meet with the Thai Bankers' Association to discuss obstacles the SME Fund has faced and which regulations have restrained its lending.

CAT readies for CDMA-service launch

CAT readies for CDMA-service launch
The Nation (13 October 2007)

CAT Telecom's board has instructed the state agency to fine-tune its marketing plan ahead of the planned launch next month of cellular services via its Code Division Multiple Access (CDMA) 2000 1-x network in 51 provinces. Board director Air Vice Marshal Piriya Siriboon said the board told CAT to add more details to the plan but declined to elaborate further. The cellular service will be limited to voice service, he added. CAT might have to buy wireless content from Hutchison-CAT, its joint venture with Hong Kong telecom giant Hutchison Telecom, since it has yet to develop its own content. Hutchison-CAT provides cellular services via a separate CDMA network in 25 provinces under the brand name "Hutch". CAT has yet to reach a conclusion with Hutchison-CAT on a marketing collaboration between their two networks. The state agency, which has positioned the CDMA service as its main revenue source, plans to set up a joint venture for marketing between the networks. Meanwhile, CAT plans to inform China telecom-equipment supplier Huawei Technologies, which installed its CDMA network, that the service debut next month does not mean its acceptance of the network delivery from Huawei. CAT plans to impose a fine on Huawei for alleged late delivery of the complete phase two of the network installation. Their contract sets the fine for late delivery at Bt90 million per day. Victor Wang, Huawei's president and CEO for the Asia-Pacific, said this week that Huawei had submitted an explanation to CAT to resolve the "misunderstanding".

CAT unhappy with president

CAT unhappy with president
The Nation (13 October 2007)

Board meeting on October 19 to decide Phisal's fate The board of CAT Telecom is unhappy with president Phisal Chorpokaudom's performance because of his indecisiveness, said a source at the state agency. The board evaluated the one-year performance of the president yesterday. Phisal took office last November 21. The source said the board would convene next Friday to decide Phisal's fate. Up till now, CAT has yet to impose a fine on China's telecom equipment supplier Huawei Technologies for alleged late delivery of the complete phase two of network installation. According to the network installation contract, the fine is Bt90 million per day for the project's late delivery. Huawei installed a Code Division Multiple Access (CDMA) 2000 1-x cellular network in 51 provinces for CAT and delivered the second phase to CAT by the deadline of January 26. CAT interpreted the installation contract to mean that the entire network, plus the required high-speed software, had to be delivered by the deadline. Huawei came up with a different interpretation of the contract, which it said stated that Huawei had to deliver the second phase by January 26, while the required complementary high-speed software would be completely installed in the network next year. Currently, Huawei is in the process of fine-tuning its position in the dispute with CAT. CAT has also yet to reach a conclusion with Hutchison-CAT on possible marketing collaboration between their two separate networks. Hutch, the joint venture of CAT and Hong Kong's telecom giant Hutchison Telecom, has offered cellular service via a separate CDMA network in 25 provinces. CAT has targeted the CDMA cellular service to be its main revenue source in the future. In a separate matter, Defence deputy permanent secretary Saprang Kalayanamitr yesterday said he had no plan to resign from his posts as chairman of TOT and Airports of Thailand until the new government takes office. But he declined to say whether he was satisfied with the performances of both state agencies after nine months in office. TOT achieved a net profit of just over Bt4 billion during the first eight months of this year, indicating it may well fall short of its year-end target of Bt8.168 billion.

TOT mulls vehicle leasing business

TOT mulls vehicle leasing business
The Nation (15 October 2007)

TOT's board last week instructed the state enterprise to conduct a feasibility study into setting up a vehicle leasing business to cut its fleet costs, which average about Bt2 billion a year. The board said the new unit could become another revenue source by leasing vehicles not only to TOT but also other companies. The board also approved TOT's plan to hold an e-auction for the vehicle leasing service with a budget of Bt886 million.

Railway into Laos
The first-ever friendship railway linking Thailand and Laos is set to be completed on schedule in April to strengthen ties both trade and investment between the countries. According to the Vietnam News Agency, half of the construction work is already finished. A recent fact-finding report to Lao Prime Minister Bouasone Buphavanh said the remaining work for the 3.5-kilometre railway - connecting the existing Thai railroad track in the centre of the Lao-Thai Friendship Bridge to Tha Na Laeng train station in Dongphosy village in the outskirts of Vientiane - was under way. During this phase, railway stations, immigration offices, railway lounges, restaurants, water systems and other supporting facilities will be built. The railway is estimated to cost 55 billion kip (Bt185 million), 70 per cent of which is soft loans from the Thai government.

Two options tabled for overseas-call prefixes

Two options tabled for overseas-call prefixes
The Nation (15 October 2007)

A meeting on Friday between the national telecom regulator and private operators devised two options to pave the way for a further opening up of the overseas-call market. One option is for the National Telecommunications Commission (NTC) to allocate the 006 prefix to True International Communications and the 004 prefix to DTAC Network, said the agency's interconnection-charge institute director, Pitjapol Jantasaro. CAT Telecom surrendered the 004 prefix to the NTC last week. Both True and DTAC Network have received licences but are yet to receive a prefix. The only one available is 006. The NTC will wait for CAT and TOT to return inactive prefixes. Pitjapol said TOT would return the 002 prefix, which will be handed to TT&T. If TOT does not surrender the prefix, another option is 102. The second option would see the commission replace all overseas-call prefixes with four-digit ones, he said. An NTC source said it expected to approve the first option because the second involved additional promotional costs for the companies.