Asian Weekly News

Week ended 11 May 2012

Australia: Australian and New Zealand Banking Group posted upbeat half-year results driven by loan growth and lower provisions. Westpac reported solid half-year results with a rise in cash earnings. However, both lenders faced margin pressure in their domestic businesses, largely underpinned by higher costs, which are expected to remain elevated because of fierce competition.

China/Hong Kong: In first-quarter news, Baoshan Iron and Steel showed a recovery in the automobile sector following the rebound in demand. China Merchants Bank’s robust results were lifted by better interest margins and stable credit costs. Standard Chartered’s revenue grew due to contributions from its consumer and wholesale banking divisions and cost controls. Mainland lenders will be given more time to shore up their capital bases, with Chinese central bank’s deliberate delay in implementing new capital rules. Giordano proposed consolidating the shareholdings of its overseas businesses to keep profits within the group. Sun Hung Kai Properties non-executive director Walter Kwok was arrested in a corruption probe that had seen his younger brothers, Thomas and Raymond, similarly questioned a month ago. Not for the first time, shares in a China-listed company fell sharply after it was accused of wrongdoing by short-sellers. Nothing has yet come to light.

India: Hero MotoCorp posted favourable results, arising from an increase in sales and profits. Hindustan Unilever delivered improved profits amid good cost management.

Indonesia: In first-quarter news, Holcim Indonesia delivered robust results on the back of better demand for cement. Ace Hardware enjoyed sales growth and higher margins. The company added five new stores in the first three months to its network. Indo Tambangraya Megah’s production volumes slowed. The company also allocated about US$200 million to acquire two coal companies in East Kalimantan to boost reserves. Unilever Indonesia delivered upbeat growth with improved margins.

Japan: Shin-Etsu Chemical will invest US$120 million to build a factory in the US, which will be operational in 2014. This will supplement its existing plant in Germany.

Korea: DGB Financial's first-quarter results were affected by lower interest margins and higher provisions.

Malaysia: Aeon Credit Services reported robust results with positive earnings growth due to across the board improvements and higher operating margin.

Singapore: Raffles Medical Group‘s earnings rose, driven by contributions from both hospital and healthcare services units. Singapore Post’s results met our expectations, reporting steady revenue growth despite a decline in profits because of start-up costs in its new businesses. Venture Corp’s first-quarter results disappointed, with a decline in both revenue and earnings. On a positive note, working capital improved.

Thailand: Big C Supercenter will raise 4 billion baht through a private placement to fund capital expenditure and repay debt. The company’s first-quarter results improved following the integration of the acquired Carrefour stores and lower taxes. Dynasty Ceramic's first-quarter earnings disappointed, mainly due to rising energy costs. Phatra Capital posted a weaker-than-expected operating performance, because of lower brokerage income and higher costs.

We hold all the above companies highlighted.