Timely update on an early favorite
Timely update on an early favorite. A clear OGC update first released for members only on August 22 and now for all to view here. The SET benchmark has fallen since but Ocean Glass seems on the rise. As first published for our members on August 22, '01.
| We spoke to Management of OGC (29) due to this favorite falling below 30 Baht, in the past few days. My strong buy view, today is reinstated. August 22' 01 2:25 PM. I belive there are no significant changes in the company's operations. Hence my renewed strong buy view at current prices. This after moving to a "hold" when the stock soared above 30 in the 2 Quarter this year. We much note, second quarter earnings are historically always lower due a regular seasonal effect.
"Investors fail to better understand our financial statements". OGC, Managing Director. The company now exports over 70% of its total products, with some 40% of that going directly to China. China up until the big event of the Olympic games remains by far the favorite growth story in the World! OGC does not see significant competition from within China as demand of foreign made drinking glasses is often preferred. With transportation cost being a major factor few can compete like OGC in China. Management confirms that the company's energy price unit costs, as compared to revenues, should remain stable. Energy prices are not going to affect significantly earnings prospects for the foreseeable future, unless there is a new energy crisis of massive proportions. This was a concern a few weeks ago, according to an analyst I visited in BKK. I am relieved this information is wrong according to OGC. The company is committed to a high dividend policy, yet management is/must explore expansion plans but they cannot comment on these as no decisions have been made nor do any seem imminent. (Note OGC is pretty much producing at full capacity and the growth in earnings above 7-8 Baht per share, will only come from new expansion.) One risk factor with OGC is the Thai Baht currency. But just the opposite of what you may fear. Meaning, if the Baht vs. US Dollar rate soars to say 38 Baht per Dollar, then OGC will start loosing its competitiveness. But iF the Baht drops further (like ABN AMRO predicts), then OGC will only become more competitive. A 10% further drop of the Baht vs. $, would double their net profit margin. Hence OGC is a very good hedge for Baht weakness worriers. A riks foreign investors rightfully so, most often have on their mind. |
Never fall in love with one stock, as it does not know you own it. J ***
On the new NVDR's. We have written about "NVDR" before. See for example Newsflash index on May 7 and April 26th.'01. Since on some stocks the Foreign portion is full, a foreign investor may have no choice but to convert to NVDR's, I think. The alternative is to not get dividends or rights offerings, as under new SET rules only NVDR's are guaranteed those important benefits to foreigners. Also in the near future, converting to NVDR's will cost you a brokerage commission, so do it now. AS a new NVDR holder, you (a foreigner) loose your voting rigths, -no more no less.
Last but not least, we lately often get mail asking if some stock we researched (which just went up in market price), is still rated a buy in my view? This is a bit of an unfair question. I like a stock at current levels at the time I publish my report. We do not point out stocks which we think can only rise a few percentage points. But when they soar, you should write-us thanking our analysis, not pressing us for a new opinion; this after it just did what we thought the stock should do. J
Best Regards to all our viewers,
Paul Renaud
