UOBKayHian

Thailand Daily
Monday, May 31, 2010

KEY HIGHLIGHTS Key Indices

Symbol Close Chg %Chg
Update SET 737.28 8.34 1.14
Central Pattana (BUY/Bt19.00/Target: Bt29.50) Page 2 SET50 514.05 5.92 1.17
Fundamentals remain strong, supported by organic growth. Value (Btm) - SET 22,307.76
Top 5 Sector

AT A GLANCE BANK 285.42 4.04 1.44

PETRO 602.87 6.22 1.04
Corporate Page 4
PROP 103.47 2.25 2.22
PTTEP: Ready to start tests in Indonesia. ENERG 16,183.92 185.26 1.16
ICT 64.85 0.57 0.89
Sector Page 4
Top Volume
Chg Volume
Industry: Two projects in Map Ta Phut seeking to restart. Price
Symbol (Bt) (%) (‘000)

PTT 242.00 2.11 6,200.6

Economics/Politics Page 4 PTTCH 89.25 0.00 16,172.8
Interest rate: BOT likely to keep rate unchanged. BANPU 574.00 (1.37) 2,449.2
GDP: Positive forecasts overcome fears of a lengthy slump. CPF 17.40 0.00 62,247.9
SCC 239.00 1.27 4,271.0
Top Gainers
Price Chg Volume
Symbol (Bt) (%) (‘000)

BLISS-W1 0.03 50.00 1,857.5

GEN-W1 0.04 33.33 2,752.0
ASCON-W1 0.09 28.57 1,749.7
BLISS 0.05 25.00 22,383.2
LIVE 0.07 16.67 246.7
Top Losers
Price Chg Volume
Symbol (Bt) (%) (‘000)

GL-W1 1.86 (38.00) 1.6

NEP-W1 0.02 (33.33) 386.1
GJS-W1<NP> 0.03 (25.00) 560.0
GEN-W2 0.11 (8.33) 120.4
DISTAR 0.34 (8.11) 24,016.1
Key Statistics
-------------%Chg--------------
Commodity Current
Price 1m 3M YTD

Brent crude* 74.6 (15.6) (5.5) (7.9)

Dubai crude* 71.5 (14.5) (3.8) (8.6)
Baltic Dry Index 4,078.0 22.5 48.9 35.7
Gold Spot*** 1,210.8 2.7 8.3 10.4
*(US$/bbl), *** (US$/toz)

Foreign Portfolio Investment In Equities

(Thailand)
Day MTD Net YTD Net YTD Net
(Mil US$) (Mil US$) (Mil US$) YoY%

(98.2) (1,833.9) (651.1) (461.4)

Source: Bloomberg

Foreign Exchange Rate - THB/US$ (onshore) = 32.57

Interest Rate (%) - TH 1-day RP = 1.25

Thai Lending Rate (%)* - MLR = 5.88

* Based on Bangkok Bank’s rate

Please see important notice on last page Page 1 of 5

 Thailand Daily
Monday, May 31, 2010
Central Pattana
Fundamentals remain strong
We reaffirm our BUY rating on CPN. Visible growth continues given strong
organic growth. Maintain BUY with a target price of Bt29.50, offering 55%
THAILAND
upside. Central Pattana (CPN TB)
Corporate Events
BUY
Central Pattana (CPN) recently revealed that it will postpone the renovation Current Price: Bt19.00
of the Central Ladprao mall, which was earlier slated to shut down this month, Target Price: Bt29.50
to Feb 11 so as to cushion the losses incurred by Central World (CTW) due
to a fire caused by the rioting of the Red Shirts on 19 May 10. Sector Property
Development
Stock Impact 52-Wk Avg Daily Vol. ('000) 2,529
52-Wk Avg Daily Val. (US$m) 1.6
The fire caused severe damage to two of the five major parts of the complex, Market Cap (Btm) 41,397.5
which are mainly at the Zen department store. The department store has an (US$m) 1,271.4
area of about 18,800sqm, accounting for about 10% of total CTW’s space.
Major Shareholders (%)
However, all buildings are required to undergo an assessment of concrete Central Holding Co.,Ltd 27%
damage expenses. Most parts of the mall could resume operations as
normal but the severely damaged parts could take longer. According to FY09 NAV/Share (Bt) 6.55
CPN’s management, CTW should be able to rebuild itself within the next six FY09 ROE (%) 15.9
FY09 Net Debt/Share (Bt) 0.80
months. Note that CPN has not realised revenues from the Zen department
store as it is under a long-term lease with the previous owner. The Results Due
department store is still operating under Central Retail Corporation (CRC). 1Q: May 2Q: Aug
CPN will be responsible for the reconstruction of parts of Zen that belong to it, 3Q: Nov Final: Feb
which come up to only 10% of CTW’s total space. Price Chart
Insurance could cover losses. CTW has two types of insurance. Its (lcy)
CENTRAL PATTANA PUB CO LTD
(%)
terrorism insurance coverage goes up to about US$100m, or Bt3.3b 26
Central Pattana Pub Co Ltd/SET Index
150

maximum (done through the Thai Setakij Insurance Co.). The insurance 24 140

130
covers terrorism, riots and malicious damage to the property of CPN, 22
120
including the Shopping Mall, Plaza of the Central World. All-in insurance 20
110
covers damage to property, rebuilding, fire, robbery and business interruption, 18
100

and compensates for any loss of opportunity or revenue during the shutdown 16
90

of the complex. The amount under this insurance will be claimed depending 14 80

12 70
on the real expenses incurred for damage. As of now, the government has 15
Volume
clarified damage occurring under the first type of insurance plan. Thus, CTW 10

should be able to claim under the first type of insurance in the preliminary 5

stage, but we will have to wait for confirmation from the company with 0
May 09 Jul 09 Sep 09 Nov 09 Jan 10 Mar 10 May 10
regards to whether it will gain from the second type as well.
Source: Bloomberg
CTW’s losses could be cushioned by the delay of Central Ladprao’s
renovations. Both CTW and Central Ladprao are major revenue Analyst
contributors to CPN. CTW contributes 19-20% while Central Ladprao Thailand Research Team
contributes 17-18% to CPN’s revenue. Central Ladprao was previously  (662) 659 8301
scheduled to close for major renovations for six months starting Jun 10 but research@uobkayhian.co.th
this plan has been postponed to Feb 11. We believe Central Ladprao’s
operations could compensate for CTW’s losses this year but will pare down
its net profit for next year instead.

Net EPS EV/

Year to Turnover EBITDA Profit EPS Growth PE EBITDA DPS Yield
31 Dec (Btm) (Btm) (Btm) (Bt) (%) (x) (x) (Bt) (%)
2008 8,599 4,327 2,186 1.00 22.0 18.9 12.9 0.33 1.7
2009 10,934 4,808 4,952 2.27 126.5 8.4 9.6 0.58 3.1
2010F 11,732 5,682 2,305 1.06 (53.3) 17.9 8.7 0.34 1.8
2011F 12,541 6,115 2,640 1.21 14.2 15.7 6.6 0.39 2.1
2012F 14,171 7,020 2,970 1.36 12.4 13.9 5.8 0.44 2.3
Consensus Net Profit – FY10F: Bt2,130m
– FY11F: Bt2,631m

Please see important notice on last page Page 2 of 5

 Thailand Daily
Monday, May 31, 2010
Earnings Revision
We will revise down our earnings forecasts again when more information is
made available. Our net profit estimate for this year is based on the closure P/B – Standard Deviation
of Central Ladprao for six months with CTW operating as normal. Despite
(PBV)
the consequent change, we believe the impact on net profit this year is still 7.0
not significant as Ladprao’s contribution is large enough to compensate for 6.0 +3SD : 6.11

CTW’s losses. 5.0 +2SD : 4.83

4.0 +1SD : 3.55
However, from our preliminary assessment, the delay of Ladprao’s closure 3.0 M ean : 2.27
next year for six months will likely pare down its 2011 net profit by 8-10% 2.0
-1SD : 1.00
1.0
from Bt2.65b, assuming CTW can reopen earlier next year. In the worst- 0.0 -2SD :-1.56
case scenario, if CTW’s full operations have to be delayed by one year to -1.0
2H11 and the Ladprao mall is closed, the impact on net profit should be Jan-05 May-06 Sep-07 Jan-09 May-10

larger by about 30%. However, CPN should be able to make insurance

claims, so the impact should not be severe. Source: Setsmart, UOB Kay Hian

Valuation/Recommendation
Maintain BUY with a target price of Bt29.50. CPN’s share price should be P/B Band
under pressure in the near term but it remains a strong shopping centre
development player with healthy organic growth. Thus, we maintain our BUY (Bt)
recommendation with a target price of Bt29.50 based on DCF valuation 60
P/BV 6.1x
(WACC 9.4%, terminal growth 2.5%), which offers 55% upside. 50

40
Profit & Loss P/BV 4.5x
30
Year to 31 Dec (Btm) 2008 2009 2010F 2011F 2012F 20
P/BV 2.8x

Turnover 8,599 10,934 11,732 12,541 14,171 10 P/BV 1.2x

EBIT 2,864 2,698 3,928 4,230 5,120
0
Pre-tax Profit 2,488 1,953 3,160 3,211 4,320 Jan-02 Feb-04 Mar-06 Apr-08 May-10
Net Profit 2,186 4,952 2,305 2,640 2,970
EPS (Bt) 1.0 2.27 1.06 1.21 1.36
Source: Setsmart
Balance Sheet
Year to 31 Dec (Btm) 2008 2009 2010F 2011F 2012F
Current Assets 5,392 3,937 5,634 5,968 6,326
Total Assets 43,784 50,895 46,912 49,140 53,125
Current Liabilities 8,351 6,583 6,224 6,354 6,242
Long-Term Loans 11,674 14,859 13,038 13,763 14,656
Shareholders' Funds 14,449 18,674 19,169 21,966 24,787
Total Equity & Liabilities 43,784 50,895 46,912 49,140 53,125

Cash Flow
Year to 31 Dec (Btm) 2008 2009 2010F 2011F 2012F
Operating 3,542 6,124 4,581 4,284 4,695
Investing (5,155) (8500) (5,000) (5,000) (4,000)
Financing 1,399 909 (329) (614) (148)
Net Cash In/(Out) Flow (214) (1,467) (748) (1,330) 547
Begin Cash & Cash Equiv. 3,983 3,769 2,302 1,554 224
End’g Cash & Cash Equiv. 3,769 2,302 1,554 224 771

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 Thailand Daily
Monday, May 31, 2010
Corporate
PTTEP: Ready to start tests in Indonesia. PTT Exploration and Production Plc (PTTEP) will start the seismic
tests of its four new petroleum blocks in Indonesia after receiving exploration and production licences two weeks ago,
according to CEO Anon Sirisaengtaksin. Of the four blocks, only the one located in Malunda is wholly owned by
PTTEP. The rest are ventures with Canada-based Talisman (Asia) Co, in which PTTEP holds 67% in South Mandar,
40% in Sadang and 30% in South Sageri. PTTEP and its Canadian partner signed production sharing contracts with
the Indonesian government on May 18. PTTEP has earmarked an exploration budget for this year of Bt12b for a total
of 32 wells worldwide including the new projects in Indonesia. Mr Anon said that 17% of the 32 wells were in pre-
exploration or seismic testing, while the rest were in early stages of exploration. It expects to increase oil and gas
production to 300,000 barrels of oil equivalent per day (boed) by 2014 from 254,000 now, and to 900,000 boed by
2020, including liquefied natural gas. (Source: Bangkok Post)

Sector
Industry: Two projects in Map Ta Phut seeking to restart. The operators of two projects in the Map Ta Phut
industrial estate are planning to submit court petitions to resume operations, said Sorayud Petchtrakul, an adviser to
the industry minister. Currently, 14 projects are seeking help from the government. The two that hope to win court
approval are a hydrogen-production project owned by MTP HP JV (Thailand) Ltd, a JV of Solvay SA and Dow
Chemicals Ltd, and a chloralkali production and improvement project by Vinythai Plc. They will hold talks with the
Prime Minister's secretary next week about asking the attorney general to file a petition to the court. Many upstream
projects are still suspended, including some in basic chemicals such as hydrogen, which does not cause a lot of
pollution, Mr Sorayud said. These operators should be able to submit requests to the court. "If these projects cannot
proceed it will affect downstream projects," he said. Although Vinythai has not yet finished conducting health and
environmental impact assessments (HIA and EIA), it wants to start construction in tandem with performing the
assessments. He said more than 40 companies were now conducting EIAs and HIAs and were expected to finish
them this month. (Source: Bangkok Post)

Economics/Politics

Interest rate: BOT Likely to keep rate unchanged. The Monetary Policy Board is expected to continue to keep
the policy rate unchanged at 1.25% during the upcoming meeting on 2 June due to the recent political uncertainty at
home and the renewed concern on global economic stability from the Euro debt crisis. Any interest rate hike, if any,
may happen in 3Q10. (Source: Krungthep Thurakit)
Comment: The delay in interest rate hike will be positive to finance companies specialising in hire purchase lending,
such as TISCO and TCAP in which the majority of their loans are fixed. The delay in interest rate hike will help to
keep their funding costs low, hence, positive for their NIM.

GDP: Positive forecasts overcome fears of lengthy slump. There is unlikely to be a strong recovery in
tourism and private consumption in 2H10 due to the recent political violence but exports will continue to shore up GDP
growth, the Bank of Thailand (BOT) said yesterday. The BOT's 2010 GDP growth projection remains unchanged, with
a possible growth range of 4.3-5.8%. An equally positive forecast was made yesterday by the University of the Thai
Chamber of Commerce (UTCC) when it raised its economic growth projection for this year to 4.5-5.2%. However, the
government's remedial measures for businesses hit by the unrest and an early election are positive signs, and the
economy should return to stronger growth next year. The director of UTCC's Economic and Business Forecasting
Centre said the political violence had dented this year's GDP growth by more than 1.4% because economic growth
was earlier projected to be as high as 6-7%. At this stage, the central bank believes there will be negative impact on
tourism and private consumption in the second half but the export sector will remain a key engine of economic growth.
Export earnings account for more than 60% of Thai GDP. However, Tarisa declined to speculate on the outcome of
the Monetary Policy Committee's next meeting. At its past several meetings, the committee has kept the policy rate
unchanged at 1.25%. In a base-case scenario, UTCC said GDP would expand by 4.5% on export sector growth of
17.1%. In the worst-case scenario, GDP will grow by only 3.5% if there is deterioration in the domestic political
situation and problems in the Euro zone worsening following the Greek sovereign-debt crisis. In the best-case
scenario, GDP will expand by 5.2% based on rapid return to domestic political stability with global economic recovery
remaining undamaged by Euro zone problems. (Source: The Nation)

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 Thailand Daily
Monday, May 31, 2010

We have based this document on information obtained from sources we believe to be reliable, but we do not make any
representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness.
Expressions of opinion contained herein are those of UOB Kay Hian Research Pte Ltd only and are subject to change
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