Bargains of the Century now ripe for picking
"I like big exporters who have their raw material locally sourced; any further possible currency weakness would only fuel earnings and current dividends even higher", says Paul Renaud. Here are long established companies with good track records and much benefiting from the Baht devaluation; yet, due to their relative smaller capitalization size they are all but ignored by US, Canadian, Japanese and European institutional investors. What a shame.
In Thailand, none of the biggest capitalized companies are pure exporters. Yet precisely these are reaping the big benefits: Example companies are manufacturers of multi-level circuit boards, instant rice noodles, cosmetics, exports of furniture made from local matured rubber trees, frozen shrimp & canned tuna, canned mixed fruit, frozen vegetables, large sized computer monitors and processed pineapples, natural rubber, and far more. Thailand is in fact a world leader and or lowest cost producer in several of these. Most of these favored SET listed firms were never "privileged" in securing foreign currency. This is another positive.
Artificially, their shares price are highly depressed. Here are some reasons why these are selling at rock bottom lowest valuations:
Global and international institutions (both originating from the US and elsewhere in the developed world) dominate stock trading and investing on most developing countries' stock exchanges. Mega funds practice "country allocation" and "top down investing" to the highest degree. This "top down" investment practice now in motion for a decade has resulted in huge and unprecedented market inefficiencies and so new incredible opportunities. Untold distortions are present in SE Asia, which nobody is talking or writing about!
The crisis in SE Asia belongs almost exclusively to the largest market capitalized companies: A study by the SEC in Thailand has shown that in 1995, 95% of all portfolio investment go to the largest 20 firms. All other 434 listed firms are completely ignored. All pure exporting firms are so ignored due to their relative smaller size. No large capitalized firm in Thailand is a pure exporter!
Shrewd seasoned US residents can now purchase these shares from within the US; Charles Schwab nation-wide, through their international desk in Phoenix, will buy any foreign stock any client wishes, or so they maintain. So while most all US and Canadian stockbrokers still insist that the best way to own foreign shares is "through an international fund", we believe some investors can do much better and take advantage of these unusual opportunities. Thaistocks.com recommends to buy the "local’shares and then convert them into "foreign’shares.
The low stock price valuations on many of these favorites are indeed staggering, consider:
In Thailand for example smaller and mid size listed companies are valued at around 10% of the value on an average US stock listed on the New York Stock Exchange. All the while, earnings of exporters in Thailand are often growing faster than the average company in the US. Phrased differently, for every 1 Thai Baht in just past earnings one pays 3 -7 Thai Baht in current stock price. In the US, or every $1 in just past trailing earnings one pay's around $40-50 in stock price.
Documented & researched at our web site; trailing P/E's of 3-6 and prices to book of less than 0.5 . Several just posted impressive 2 Q. earnings results. There are many and they are immensely under-researched.
Across the ocean:While US investors often want these days to own US shares with little "sales exposure coming from depressed Asia"; we at Thaistocks.com much notice that our favored firms here in Thailand, generate near all their growing revenues from exporting to the stable region of the US and Europe.
'Where else in the world can you find such "diamonds in the rough’still growing due to massive exporting? '
Thaistocks.com is a unique & independent investment advisory service Paul A. Renaud says: "I am a proven expert in the Thai stock market with 10 years of on location experience and a previous successful career with Morgan Stanley as US stock broker & portfolio manager… With the new bold Banking reforms now in place and Thailand focussing on the micro-economy…", Paul believes Thailand should be one among the first recovering from Asia economic crisis. Watch and see he proclaims "Certain Export companies will revalue themselves in a massive way".
Best regards
Paul A. Renaud
Seattle, Bangkok, Phuket.- from Morgan Stanley, USA- to 10 years on location, analyzing SE Asia Stock Markets.
