A new investment selection near mid year.
June 1 2007.
Today I review a new buy/accumulate buy view on GC listed on the SET, a new selection of Thaistocks.com. Moving forward at mid-year and post Political changes in Thailand.
From a posting to our member lounge at 8: 30 AM, on June 1, 2007
Thai stocks in general remain the most undervalued and I think that with political cancer now removed, June 1 '07 marks the end of a long bearish (in the big caps) market here!
I remain bullish going forward and see some catch up potential in the larger cap.s Thai Interest rates and inflation rates are at record lows and the level of stock valuations is lower now, then in a decade. I believe the events of yesterday are a watershed occurrence which will in time bring much higher levels on the general SET index. After all its all about buying low and selling high.... Thai stocks are not part of the global bubble in shares currently -and so should withstand better any sharp corrections vs. the overbought/heated markets elsewhere. Hang-in there and keep accumulating good Thai stocks, is my take! ***
Today I want to review GLOBAL CONNECTIONS PUBLIC COMPANY LIMITED (GC, 2.90) a company I visited in early April but did not write-up back then as I sensed this selection was not ready yet and needed some more time. Since then GC shares have remained dormant -and so at mid year I now think of a "long term buy" or at least “accumulate buy” is so warranted. This year GC will benefit from some important duty tax reductions. GC does not store dangerous chemicals, it help source and has special knowledge of where to get various speciality chemicals at attractive prices in a reliable way, for its customers. It is a trading distributor so has no earnings effect on chemical cycles. GC is a solution and service provider it employes 87 knowledge worders and 17 wharhouse workers. GC exports to Vietnam and Indonesia
GC is listed in the Industrials / Petrochemicals & Chemicals and you can see their web site at http://www.gc.co.th
GC is the distributing agent of plastic, petrochemical and additive, which are used in petrochemical and plastic transformation process. The company is distributing agent of 24 companies, which are both domestic and foreign leading companies. You can see more of what the company does at the SET web site under company profile. www.set.or.th GC just reported a nice 30% increase in 1 Quarter profits, and so earned 0.11 per share for the first Quarter. IN fact over the past 3 years this company has seen a nice progression in earnings of some 30% per year. With a dividend approaching/expected of around 7% this year GC is rated in the top 30 (if not higher for this year) highest cash dividend paying Thai stocks! GC was listed on the SET in December of 2005 at 2.34 Baht per share. The insiders retain a significant number of shares and there has not been any insider selling or buying this year. Management indicated in April a conservative year 2007 of "earnings growth of 10%", due to "poor politics and some changes in business mix", but the first quarter suggest the momentum is in tact. My estimate so is that GC can earn 0.40 per share this year and so the 2007 p/e is a modest 7.2 times. GC's dividend yield for this year should be some 7%, or well above the SET average yield. The attractive part going forward is that year 2008 should see nice accelerated earnings growth, mgt. so indicates. The current dividend yield is high so to compensate investors awaiting the resumption of high double digit growth into year 2008. GC's stock traded some 10% higher then current levels late last year and going into this year and so this far has not benefited from the SET bounce. Below are excerpts of their recent Investor presentation to me: ----------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- Best Regards, Paul A. Renaud. 
