CP Group injects B3 billion in new funding into True Move

Bangkok Post (15 December 2007)

The CP Group will provide a three-billion-baht capital injection into the third-ranked cellular provider True Move.

The financing would come from Bitco, the holding company parent of True Move, through a rights offering of six billion shares at 0.50 baht each to CP.

Bitco is currently controlled by True Corp, the CP Group and Wirefree Services Belgium, a subsidiary of France Telecom.

True Corp would have the right to repurchase the Bitco shares on a cost-plus basis at any time over the next 18 months. Pricing for the buy-back clause is 0.53 baht per share if purchased within the first six months, 0.56 baht if exercised within six and 12 months and 0.59 baht if exercised between 12 and 18 months.

The share offering would increase CP's stake in Bitco to 23.92% from 0.76%, while True's holding would be diluted to 75.26% from 98.17%.

True Corp vice-chairman Athueck Asvanund said the capital injection would help relieve liquidity pressures for True Move. He said various options had been explored to ease working capital difficulties, including having the company take on additional loans.

But any additional borrowing would have to secure approval from existing creditors, a process complicated by the holiday season.

True Corp chief executive Supachai Chearavanont said the company would definitely exercise its right to buy back the Bitco shares from CP.

He said the financing would allow True Move to continue with its network and market expansion.

''True Corp is delighted that CP Group continues to show its long-term commitment to True Corp, and its confidence in the growth potential of True Move and the Thai mobile industry,'' Mr Supachai said.

True Move reported 11.2 million subscribers as of Sept 30 with 2.1 million new additions in the third quarter. The company had a market share of 22.7% at the end of the quarter, with a full-year market share target of 33%.

Mr Supachai said True Move was ''nearly cash flow positive'', and that the company's network covered 92% of the population.

True Move reported nine-month net losses of 1.15 billion baht, down from losses of 1.78 billion the same period last year. But the company reported a third quarter profit of 936.3 million baht, compared with losses of 760.5 million last year. Service revenues, including interconnection charges, were 8.4 billion baht in the third quarter, down 3.9% from the previous quarter but up 44% from the year before.

The company's current liabilities exceeded current assets by 12.45 billion baht as of Sept 30, with long-term borrowings of 27.91 billion.

True Move said the issue price of 0.5 baht per Bitco share was the same price used for a debt-to-equity conversion made last month, where Bitco converted 7.06 billion baht in debt owed to True Corp to shares.

Noppadol Dej-Udom, the deputy chief financial officer of True Corp, said the transaction helped strengthen True Move's balance sheet without incurring additional interest costs.
True shares closed yesterday on the SET at 5.95 baht, down 25 satang, in trade worth 148.39 million baht.

Upside still likely, unless SET falls below 826

Bangkok Post (17 December 2007)

World oil prices and shipping indicators should help SET, though some weakness is expected in bankingLook for a rising trend until Dec 28, to Jan 3, but with a possible interim dip down to Dec 25. The upside for Dec 28-Jan 3 time zone is not clear. This bullish scenario will become more likely if the SET energy index goes above 22,230. In any case, also have the stop-loss lines that we will mention below. In the big picture, the oil price is likely to trend higher, and there will be talk of the price going above $100 a barrel again. This will support the Thai energy sector. As to the Dec 28-Jan 3 time zone, it is based on the global trend, which should go up at that point. But note that this time zone will also be a resistance, if we do get there.

Less certain, but looking promising nevertheless, look for a rebound in the Baltic Dry Index to prop up the shipping sector and the SET, particularly if PSL closes above 28.25, along with TTA closing above 51.

As for PTT, a closing above 374 will be very positive. There are important barriers at 374 and 384-386, but once the 374 barrier is taken out, trading should continue up toward 412, despite a temporary stall at 386. On the downside, there is no easy signal to gauge the outcome, but a closing below 346 would be a sign of risk. In any case, a breakout above 374 looks more likely than a closing below 346. Look at chart C.

The stop-loss lines, on aiming up, are when the close of the SET is below 826, the SET50 below 599, TTA below 45.25, PTT below 346, and SCB below 80. Cut back not in one stroke, but gradually, if those signs happen, one by one.

And also cut back, if the Dow closes below 13,248, the S&P closes below 1,460, the Nikkei closes below 15,365, and the Taiwan weighted index closes below 7,987 (four out of four), because it would mean that our bullish assessment of the global trend could be wrong.

In particular, if the Taiwan weighted index closes below 7,987, it would be the beginning of a medium-term double top warning for the Asia Pacific, not only a short-term warning, based on the charts we discussed a few weeks ago.

The second warning would be when the Dow closes below 12,517. Fortunately, the Dow closing below 12,517 does not look very likely, which is why we still ask you to be in the market.

We leave you with this upside outlook and the stop-loss lines, because this column will not be updated here for the next two weeks. However, there will continue to be daily updates in the English Market Timing, www.kasikornsecurities.com.

The above-mentioned Dec 25 cycle has nothing to do with gazing at the political crystal ball to the Dec 23 election. It is a straightforward technical cycle, based on the bank sector, which may become weak again between now and Dec 25, before rebounding afterward. But note that Dec 25 will not be a threat, if SCB can close above the 84.50 resistance.

At this point, this column emphasises the global equities trend, and the rising oil price, over and above Thai politics. In politics, clouds are still likely to linger after the election, and the market is likely to look for the direction elsewhere.

Let us now go to the charts behind some of the above scenarios. In chart A, we see the oil price rebounding from the key cycle support, and the rising trend may continue until March, based on the upper vertical lines in the chart. And, the potential upside for the Nymex nearest oil futures contract is $107-116 a barrel, based on chart B.

Meanwhile, if the SET energy index closes above this week's resistance at 22,195, or next week's resistance at 22,230, it would signal that Thai energy stocks are reacting very positively to the rising oil price, especially if PTT also goes above 374. In such case, the upside for the energy index should extend to 23,300, or higher; in particular, and as an example, PTTEP should go up to test the 173-176 resistance. Its last closing was 158.

While the oil price may be on a rising zigzag until March, there is, however, a resistance against global equities, between Dec 28 and Jan 3, based on charts D and E. That means we may have to back off again, instead of aiming for an uninterrupted rising trend toward March. This will be updated, when this column returns early next year.

Charts D and E show a possible rising global equities trend until Dec 28 or Jan 3, but if we are wrong, there may be a significant interim dip down to Dec 25, based on the bank sector in chart F. The overall picture is depicted in chart G. Either which way, keep the stop-loss lines, as discussed above, while aiming higher.The next analysis column will be published on Monday, Jan 7. We wish all our readers a safe holiday and a happy and prosperous new year.

Anant Tantuvanich and Pattarawan Vangmingmart are with the Market Timing Department at Kasikorn Securities.