“We are not too positive on the situation in Thailand, though more upbeat on Thailand on a relative basis,” says Alex Klein Tank, adviser to the Elite Fund, which is a $100 million Thai-focused fund run by the Finnish-based Finnish-based PYN Fund Management, run by Helsinki-based Petri Deryng.
“For the last three to four years, Thailand has underperformed the region by 30-40%, even with their energy-related stocks performing well,” he says, adding that this was largely a result of the uncertainties caused by the military coup at the same time other countries hit all-time highs.
“Our target now for the SET (Stock Exchange of Thailand) index is 1,200 and that will be driven by earnings growth.”
Alex Klein Tank was interviewed by Simon Osborne of AsianInvestor who also asked him if he thought Thailand would be able to catch up?
“Yes, we think it can,” he replied.
“The performance of the Thai market has historically been showing very low correlation to the rest of the world during the last five years. Thailand grew 4.8% last year and the government hardly did anything to help achieve that number, so there is potential now as the new government takes initiatives.”
Mr. Tank further explain, that the focus mainly is on the Thai property developing market, which is being driven by higher consumer demand in the low- and mid-range.
“We’re looking at small and mid-sized developers like Supalai Plc, a company which doubled sales in the first quarter of this year. Property underperformed in the 2003 market peak, but with the recent elimination of certain property taxes we think the timing is good for 2008 and I think for sure a number of them will double in price this year.”
“Another good example is Property Perfect, a stock into which we invested quite early. In 2007, this stock had Bt6 billion ($191 million) in revenues, profits of THB400 million ($13 million) and market capitalization of Bt3 billion ($96 million) and that looks very attractive for our standards. The stock was at Bt16 ($0.50) in 2003, and recently was at Bt4 ($0.13), though has moved up to Bt6 ($0.19).”
“This year, Property Perfect is projected to almost double its profits and post a 50% increase in sales. The stock now trades at a 5x P/E and a 10% dividend yield,” said Mr. Tank, who has a limit at max. 10%, of a portefolio.
“Our largest position is a 7% stake in Shin Satellite, which accounts for 18% of Elite’s portfolio. We think this is going to be Shin Satellite’s year as the IPStar satellite revenues come in.”
