Letters from Bangkok: Business is Still Hot

Greetings from Bangkok, I am back here in this very busy city to do a bit of personal stuff and look at the way Thais do business as well.

I have to say from what I have seen so far, the global economic slowdown has yet to dampen the Thai's natural entrepreneurial spirit. Having said that there is political debate over a very large so-called "stimulus" package - you would have thought the Thais would have learnt from the failure of every country's respective bailouts that have thus far pumped trillions of borrowed money into failing economies.

Everything is constantly pumping and everywhere one looks, even in areas of abject poverty, people are selling things; whether it be rice, tyres, cars, rags or tummy tucks.

Bangkok really is a paradise for a healthy capitalist like myself!

The Thai Stock Exchange Index closed at 644.2 this last Friday, according to the Bangkok Post , up more than 50% over the last 6 months alone, and one could expect, like other world indexes, including our own NZX, this kind of market over-exuberance is not a sustainable one given the fragile nature of any perceived global economic recovery.

I am going to visit the heart of bureaucracy tomorrow, Embassy row (the Kiwi Embassy and red tape machine on the 15th floor of a very flash downtown building) in downtown Bangkok and plan on taking a look at the operation of their stockmarket as well.


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c Share Investor 2009

Beware of "Black October"

A recent market update by Kingfish Ltd [KFL.NZ] the listed portfolio management vehicle, got me thinking.

In this document they wax lyrical about how well share prices for the companies they hold have done well over the last quarter and they are right, they have done well.

Ryman Healthcare [RYM.NZ] Freightways Ltd [FRE.NZ] Mainfrieght Ltd [MFT.NZ] Sky City Entertainment Group[SKC.NZ] and many others have stacked value on their share prices.

Sky City alone has gained over 40% since its recent $2.51 lows.

Kingfish have all these companies in their portfolio bar Sky City. I own them all in the Share Investor Portfolio.

But rather than reason to get excited if you are an investor with a shorter term horizon you are likely to get a bit of a shock in the back pocket, if stockmarket history is anything to go by.

The month of October is notoriously bad for global markets, the 1929 crash happened in October and so did the 1987 crash - the 2008 crash likewise. Even if you discount those three historical events October is just a bummer month for stocks, it is probably a psychological thing where historical events have self perpetuated into a down month.

Nevertheless it does happen and that month could be the time to start buying again. My wallet is firmly closed, for now.

Take care of yourselves, be careful when deciding to buy and make some money why don't ya.

See you soon.

Recent Share Investor Reading

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• Stock of the Week: Methven Ltd
• Sky City debts levels now more manageable

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c Share Investor 2009

Bruce Sheppard's debt debate points the finger at you

Bruce Sheppard's crusade on NZX listed companies and their debt levels has apparently come to an end but what has it achieved?

Well, it is always good to get frank and open debate about our listed companies, because if you have been reading my comments over the years the NZX and their mates are almost a closed shop as far as communication and disclosure are concerned.

Bruce also highlighted several companies that have either collapsed or a sailing very close to the wind in terms of their debt levels; Cadmus-Provenco, Nuplex Ltd [NPX.NX], Fisher & Paykel Appliances [FPA.NZ] and more.

The non-reply's to Bruce's letters from Sky Network Television [SKT.NZ] and Team Talk reveal more about respective company management and poor attitude to shareholders apart from a possible debt problem.

Nothing substantive in terms of conclusions were made by Bruce but he quite rightly puts the responsibility back on individual investors to do their own homework:

Just as I and the SA are prepared to be judged by what we do, right or wrong, well or badly, so too should companies be judged. So rather than me analysing the responses in detail or providing you with any guidance on the strength or weakness of the companies written to, you must do this for yourself by reading our letters and their replies.

The companies were on my list because I thought, and still think, they have too much debt and are at risk in an economy such as this. That is my prerogative, you will each have your own risk profiles and you will each analyse the prospects and debt profile of these companies for yourself. It is my view that debt is the number one risk faced by equity investors today and that is why I did this work. 

Read the full conclusion @ Stirring the Pot

Why am I interested in Bruce's opinion so much on such matters?

Well, I mostly like what he says, he stimulates debate and he is an influential person.

The main point of Bruce's debt exercise? Looking at issues like debt, company management and company performance are essential when investing and should be done by you dear reader.

Oh, and he also finally disclosed ownership of shares in a couple of companies.

Related Links

Bruce Sheppard's Stirring the Pot


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• Stock of the Week: Methven Ltd
• Sky City debts levels now more manageable

Discuss this Topic @ Share Investor Forum




c Share Investor 2009

Market Quickie: Sky TV Worth Watching

I have given Sky Network Television [SKT.NZ] a very wide birth over the years, I have never really understood a company that spent more than 10 years losing money and has only been making it for the last 3 or 4.

I guess they were building up a business?

I don't like its business model; a company that relies on continuous large amounts of capital to keep competition at bay doesn't make for a good long term return.

Sky is also at the mercy of Government regulation, currency fluctuation, product quality and large capital depreciation.

What I do like though (I am such a negative bugger) is that it is a virtual monopoly-in Pay TV terms -but even that is under threat by new technology (which SKY is trying to take a punt on) via the Internet and satellite TV and product.

It hasn't done well over the last year, with a more than 16% drop in profit to just over $NZ42 million in the half year to 31 Dec 2008 on higher revenue of nearly $350 million. This is due to higher capital costs, which I outlined above.

Why the hell then do I mention the company today if I see little redeeming about it in its day to day operations?

I kinda like its share price.

The shares are well off their low of $3.15 during the last 52 weeks but the corollary to that is that they are off their 52 week high of $5.10 and well off their all-time high of $6.75 in late 2006 (see 5 year chart above)

I reckon this company is worth a good short-term to medium term punt.



Sky Network Television @ Share Investor

Watching Sky Television
Market Quickie: Sky TV Worth Watching

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c Share Investor 2009