Defensive stocks in a cautious environment. Food for thought!

Here are in fact indirect beneficiaries or they have no effect from the current economic slowdown. (See comment on President Rice in just previous write up). Further imagine the scenario in late '97 and '98 of falling local interest rates just while dividends here are rising. Besides these are often tax preferred dividends, due to Board of Investment privileges. We remain convinced interest rates will drop, perhaps dramatically, by 1998. For one, the recent limited currency controls, targeting the speculators, will benefit temporarily, Thailand with greater control over Thai monetary policy.

Below are some numbers. We first narrowed this list to 15 companies which are capitalized at around 420 mill. US $ or, a bit over 10 Billion, Thai Baht.

On trailing last 4 quarters earnings, average p/e is: 4.6Average annualized dividend, over past 4 Q's : 9.9 %Average price to book value: 0.82

We further pruned our list down to four, capitalized at 130 mill US $ or 3.2 Bill. Here are the real "jewels":

Their average p/e is : 2.5Their average yield is: 12.2Their price to book is: 0.68

We know that these are among best values on the Thai stocks exchange currently and want to be on record of adding these to our now preferred purchases.

The company’s earnings are defensive because they are not very economically cyclical. In any western stock market they would sell at a premium to the averages just for being "earnings defensive". Especially when consumer spending is dropping. Instead, in Thailand they are selling at ridiculous low prices !

It is the same old "Chicken and Egg’story: the funds do not buy them because they are too small and so the Thai public do the same: ignore them. For years already they sit at rock bottom market prices despite growing above average. The key difference now is the current bear market which brings this to light. As a group, the dividends should roar while the local interest rates, inevitably drop. Then the dawn of revaluation will set in. In the meantime accumulate and focus on these.

Saturday, June 14, 1997

Below is a raw list with address and brief company description:

THAI UNION FROZEN PRODUCTS PUBLIC COMPANY LIMITED 979/12 FLOOR M, S.M.TOWER, SAMSENNAI, PAYATHAI, BKK. 10400Telephone :2980024, 2980537-41, 2980553Fax :2980548-50Sector :Foods Authorized Capital :500.00 M.BAHTPaidUp Capital :- Common Stock- Preferred Stock500.00 M.BAHT0.00 M.BAHT Foreign Limit :40.00 %Foreign Available :9019230 SHARES Dividend Policy :Not lower than 50% of net profit Additional Information : TUF Major Activities: Producer and exporter of frozen products such as tuna loin, fish fillet, petfood and shrimp.

PRESIDENT RICE PRODUCTS PUBLIC COMPANY LIMITED278 SRINAKARIN RD., HUA MARK, BANGKAPI, BANGKOK 10240Telephone :3744730 (20 Lines)Fax :3747956Sector :Foods Authorized Capital :120.00 M.BAHT PaidUp Capital : - Common Stock- Preferred Stock120.00 M.BAHT0.00 M.BAHT Foreign Limit :20.00 %Foreign Available :1477102 SHARES Dividend Policy :Not lower than 40%Additional Information : PRMajor Activities : Manufacturer & exporter of instant rice vermicelli, kua teaw, kua chap, pre-cooked rice porridge and pre-cooked rice soup

SIAM FOOD PRODUCTS PUBLIC COMPANY LIMITEDAddress :VIBOON THANI BLDG.1, FL. 9TH,3195/14 RAMA 4,KLONGTOEY, BANGKOK 10110Telephone :6613440-7Fax :6613422Sector :Foods Authorized Capital :300.00 M.BAHT PaidUp Capital : - Common Stock- Preferred Stock210.00 M.BAHT0.00 M.BAHTForeign Limit :25.00 %Foreign Available :1871960 SHARESDividend Policy :About 60-70% of net profitAdditional Information : SFPMajor Activities : Business of the company are in the nature of processing agricultural produce for exports. 1. Main Business is to produce and sales of canned pineapple, canned fruit salad and concentrate pineapple juice. 2. Besides the company also produce and sales natural pineapple juices and various canned fruits juices.

MALEE SAMPRAN FACTORY PUBLIC COMPANY LIMITEDAddress :ABICO TOWER, FL.4, 401/1 PHAHOLYOTHIN ROAD, PATHUM THANI 12130Telephone :9925800 (16 LINES)Fax :9925816-7Sector :Foods Authorized Capital :650.00 M.BAHTPaidUp Capital : - Common Stock- Preferred Stock500.00 M.BAHT0.00 M.BAHT Foreign Limit :30.00 %Foreign Available :13505100 SHARES Dividend Policy :About 50% of net profit each year Additional Information :

MALEEMajor Activities : Manufacturer and Exporter of canned pineapple, canned tropical fruits, canned tropical fruit cocktail/salad, canned foods canned vegetables, fruit juice in cans and tetra brik, pineapple juice concentrate in aseptic bag under the brand names MALEE, FIRST CHOICE, HUNTER AND FARMERS. Exports were also being made under customers own labels such as LIBBY'S, SAFEWAY, HAGOROMO, TAISUCO, TYPHONE, etc.

THAI WAH FOOD PRODUCTS PUBLIC COMPANY LIMITEDSecurity Symbol :TWFP Company Name :THAI WAH FOOD PRODUCTS PUBLIC COMPANY LIMITEDAddress :21/63 THAI WAH TOWER, 6TH FL.,SOUTH SATHON RD.,SATHON, BANGKOK 10120Telephone :2850031, 2850482-4Fax :2850485Sector :Foods Authorized Capital :109.55 M.BAHT PaidUp Capital : - Common Stock- Preferred Stock95.06 M.BAHT0.00 M.BAHT Foreign Limit :49.00 %Foreign Available :1752367 SHARES Dividend Policy :At 50% of net profit Additional Information : TWFPMajor Activities : Manufacturer of food products by using mungbean as the principal raw material. The company is one of the major manufactures of mung bean vermicelli is sold under own brand names: "Name Grade","Double Dragon","Phoenix," and "Double Kilin". The bean sheet is sold under "Double Dragon" and "New Grade" brands. The company also carries other household commodity products such as starch and tapioca pearls under "New Grade" brand and other products like mung bean flour and protien which is residue from bean from the factory used as raw material for manufacturing animal feed, and also used as essence in sauce production. Moreover, the company is also the sole subcontracted producer of an instant vermicelli under famous brandname "Goonk Gink" of Siam Kwang Phaisan Marketing Co.,Ltd.