CPF/CPALL
Twice this past week, CPF let the market know that part of its exchangeable bonds issue in 2016 were exercised and converted into CPALL shares.
Background:
  • USD 300 mn exchange bonds issued in Sept 2016, bondholders can exchange 90,100 CPALL shares for every USD 200,000 of the bond principal (THB 77.34 per CPALL share at USDTHB 34.881).
  • CPALL is now at THB 87/share and the USD/THB is 31.5. So if you were CPF, wouldn’t it make sense to buy back these bonds, exchange them? If you were a bondholder wouldn’t it make sense as well?
  • The total bonds exchange this week are worth USD 131.36 mn, ~44% of the total value.
So what?
  • So that’s ~59 mn CPALL shares to be sold…note that CPALL trades ~20 mn shares a day.
  • So if the remaining value of the bond (USD 168 mn) is exchange it would be ~76 mn CPALL shares to be exercised, and sold.

Source: SET

Korea

Whilst I love the potential of North and South Korea finally becoming one nation again since the cock-up that is the Cold War leading to the split of this country. The media seems to forget the fact that both countries have met on 2 other occasions in the past…

Source: Sentiment Trader

Digital TV

So our wonderful National Council for Peace and Order (NCPO) resolved to help digital TV operators (but have not yet confirmed these details)

  1. Operators will have a 3 year grace period for the license payment at a cost of 1.5% p.a. on the balance owed
  2. Network cost will be cut by 50% for 2 years
  3. Licenses may now change hands

So what?

  • All players benefit, cash can be saved, ROIC for the larger players are larger than 1.5% so its an unexpected positive for them all, but….
  • BEC seems to gain the most b/c they have 3 digital channels, playing THB 270 mn a year, this cost drops by 50%…..whereas for WORK and RS the impact is less positive given the lower payments both companies have.
  • What is most interesting is to see other groups coming to buy the licenses from the smaller players that have flopped.

Politics 101

So it looks like the military is following the politicians playbook on how to win an election. They’ve basically ripped it off Thaksin’s playbook (I suppose it helps that the majority of the advisers/ministers ex-Thaksin), go around the country and work with the local politicians, promise them seats and power in exchange for their support to win the election. Nothing odd about this, it’s a fairly typical strategy. But it’s just rather ironic to see it play out.

Two brothers of the Kunplome clan have been appointed political officials, with the eldest son of ‘Kamnan Poh’ to serve as adviser to the prime minister and a younger one becoming an assistant to a cabinet minister. 

Mr Sonthaya, 55, leader of the Palang Chon Party and former tourism and sports minister, is the eldest son of Somchai Kunplome, alias Kamnan Poh, or the “Godfather of Chon Buri’’, who wielded considerable influence in this eastern province.

Somchai, one of the most powerful figures in Chon Buri, went on the run in 2006 for seven years before being arrested in January 2013 by a team of police commandos as he was travelling in a vehicle in eastern Bangkok.
He was later sentenced by the Supreme Court to 25 years in prison for hiring a gunman to murder Prayoon Sitthichoke, known as Kamnan Yoon, at a wedding reception in March 2003. He was also sentenced to three years and four months in jail for abuse of power in connection with a land plot purchase.
Source: Bangkok Post
Also it is interesting to see how, when it looks like Prayuth would lose an election, it gets delayed, and when it looks like he can win votes, it goes ahead as planned. Just google quickly through the headlines of Suthep, the key players in the North East and you’ll see the story flow quite easily.
So what?
  • I still doubt that elections will go ahead in Feb 2019, still looking at 4Q19 at the earliest.
  • The Future Forward Party could still make a dent in this
  • Pheu Thai and the Democrats – if they were to both be logical, they could easily form a coalition and win any election – but they are children and won’t
  • It’s looking more likely that Prayuth will be in charge again, yay for big business, nay for everyone else.

 

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