Uncategorized

No.11 (July 8, 2019)

Market Industry Trends

Cambodia’s rice exports to China exceed those to EU. Cambodia exported more rice to China than the EU for the first time during the first half of this year. The Kingdom’s rice exports during the first six months of this year amounted to 281,538 tons – up 3.7% from the same period last year. Among the 50 export destinations during the period, the Kingdom exported 118,401 tons to China or 42.06 per cent. The EU, which was the leading market for Cambodian rice exports, imported 93,503 tons (33 per cent). Cambodia exported a total of 626,255 tons of rice last year, of which 43 per cent, or 269,127 tons, was exported to the EU while some 17,000 tons (27 per cent) was exported to China. (Phnom Penh Post).

EuroCham Cambodia Launches White Book. The European Chamber of Commerce in Cambodia (EuroCham Cambodia) has launched the third version of its White Book for 2019 to advise European investors doing business in the Kingdom. The White Book is a set of recommendations on trade and investment policies compiled by EuroCham Cambodia. It will submit the book to the government for it to consider the regulatory and structural constraints faced in doing business in the Kingdom. (Phnom Penh Post).

Net Profit Margin up on all CSX listed stocks. The net profit margin of all stocks listed on CSX showed a significant increase last year, with an average of 20.89 %, led by the Phnom Penh Autonomous Port (PPAP). PPAP topped the rank with a 39.09 % increase, followed by Phnom Penh Water Supply Authority (PWSA), Phnom Penh Special Economic Zone (PPSP) and Sihanoukville Autonomous Port (PAS), whose figures stand at 27.77 %, 19.86 % and 16.54 % respectively. Grand Twins International (Cambodia) Plc (GTI), on the other hand, had the lowest net profit margin with 1.2 %. Compared to 2017, the average net profit margin of all listed stocks increased by more than 40 %. Net profit margin is equal to how much net profit generated as a percentage of revenue. All stocks have shown a positive performance during the last three years, in terms of revenue and net income, except for GTI, which saw a drop in net income in 2017. (Phnom Penh Post & CSX).

EU signed trade deal with Vietnam. The EU signed the trade deal with Vietnam on July 7, 2019. The accord was negotiated back in December 2015, but EU member states only gave their approval last week at a ministerial meeting. The deal will remove virtually all customs duties on trade between the two countries. EU-VN trade represents equivalent value of Euro50B in goods and Euro4B in services. EU investors will now have the opportunity to take advantage of a rising economy like VN and are keen to secure access to 95 million consumer. Beyond the clear economic benefits, this deal also aims to strengthen respect for human rights as well as protecting the environmental and workers’ rights in Vietnam. (Phnom Penh Post).

Global Supply Chains to be re-routed to Asean region. Chinese investment in the region’s manufacturing sector will intensify in the upcoming decade as China uses its Belt and Road Initiative (BRI) to re-orientate the global supply chain towards Asean in response to its trade battle with the US, a geopolitical expert predicts. (Phnom Penh Post).

Market Deals

CP all negotiates for 7-eleven stores in Cambodia and laos.. Thailand’s largest convenience-store operator CP All Plc released a report to the Stock Exchange of Thailand (SET) on Monday on its negotiations for a Master Franchise agreement in relation to the establishment and operation of 7-Eleven stores in Cambodia and the Lao People’s Democratic Republic. The company said the contractual parties are in the process of negotiating the terms of the Master Franchise Agreement and have agreed to an extension of the negotiation for a period yet to be agreed. This original period was due to expire by the second quarter of this year. (Phnom Penh Post).

AMRU inks $15M deal with International Finance Corp. (Phnom Penh Post). Amru Rice (Cambodia) Co Ltd, a local rice exporter and leading organic paddy producer, signed a more than $15 million loan agreement with the International Finance Corporation on June 26. The loan would be used to expand milled rice warehouses, drying silos, as well as to strengthen its packing standards, processing, quality and safety, and to increase capital to purchase paddy. The company plans to export 20,000 tonnes of organic milled rice to the EU, US, China and Hong Kong this year, and 40,000 to 50,000 tonnes next year. In the first six months of this year, the company exported more than 4,000 tonnes of organic milled rice, earning nearly $4 million. It expects to export 10,000 tonnes by the end of the year. (Phnom Penh Post).

KrisEnergy Starts 3D Seismic survey. Singapore-based firm KrisEnergy Ltd, which operates Cambodia’s Block A offshore oil development project, has started a 3D seismic survey in the area, a company press release said on Tuesday. It announced the commencement of a 1,200sqkm survey in the offshore Cambodia Block A concession, where KrisEnergy is developing the Apsara oil field. It claimed in late March that it will meet its schedule to extract its first drop of oil late this year. KrisEnergy first became a stakeholder for Block A in 2010, before buying the stake owned by Chevron for $65 million. It owns 95 per cent of the Apsara oil field in Block A, with the government owning the remainder. Minister of Economy and Finance Aun Pornmoniroth said in August 2017 that Block A is believed to hold about 30 million barrels of oil, which could be extracted over the course of nine years. (Phnom Penh Post).

SECC issues first of new license to CIC partners. Cambodian Investors Capital Partners Plc (CIC Partners) on Thursday announced that it obtained a license from the Securities and Exchange Commission of Cambodia (SECC) as the first “fund management company” in the Kingdom. CIC Partners is a subsidiary of Cambodian Investors Corporation Plc, a group of about 300 local investors, which was established in early April 2013. During the acceptance ceremony on Thursday, CIC Partners board director Kuy Vat said the firm would contribute to solving the challenges facing the Kingdom’s small and medium enterprises, particularly receiving finances from institutions. He added that CIC Partners will create a mechanism with quality, effectiveness and efficiency for investors and he expect many more to join the group. (Phnom Penh Post).

Macro-economy

CDC Approves $1.8B investment. The Cambodia Development Council (CDC) has approved more than $1.8 billion in investment projects during the first six months of this year, research by The Post has shown. According to its calculations, the CDC’s data shows that during the period from January to this week, there were 102 investment projects approved, which can create up to nearly 130,000 jobs upon their completion. The projects are mostly investments in garments, footwear, bags, hotels, commercial centers and entertainment venues. Secondary projects include plastic manufacturing plants, medical equipment, solar panel components, and rubber processing plants, fruit processing plants, toys, carton processing plants, construction material factories, agro-industry farms, husbandry, cigarette factories, and yarn and electric wires. The ongoing trade war between the US and China has made many foreign companies, especially Chinese-owned ones, search for manufacturing sites outside China to avoid tariffs imposed by the US. (Phnom Penh Post).

///.

No.10 (June 19, 2019)

Market Industry Trends

China set to help Kingdom’s bike industry pedal forward. A brand new factory is emerging on a 20ha plot in Phnom Penh as part of a plan to shift production of millions of bicycles from China to Cambodia. How fast it is completed, however, will depend on the meeting between Chinese President Xi Jinping and US President Donald Trump at the Group of 20 (G20) summit in Japan later this month, if it ever happens. (Phnom Penh Post).

China mulls importing Kingdom’s agro-products. China is considering importing more Cambodian agricultural products following recent agreements to import mangoes and bananas, said Li Jianwei, the director-general of the Animal and Plant division of China’s General Administration. This week, China signed an agreement with the Ministry of Agriculture, Forestry and Fisheries to import Cambodian mangoes. (Phnom Penh Post).

NBC selects three banks for pilot Cambodia-Thailand QR code Payment system. The implementation could begin late this year. The three banks are Acleda Bank, Foreign Trade Bank (FTB) and Cambodian Commercial Bank Ltd. NBC and its Thai counterpart signed a memorandum of understanding (MoU) previously. The system would boost the use of the local currency and hedge foreign-exchange risks. Cambodians travelling to Thailand and Thais travelling to Cambodia can be able to make payments without having to use cash. (Phnom Penh Post).

Facebook takes on the world of cryptocurrency with ‘Libra.’ Facebook is leaping into the world of cryptocurrency with its own digital money, designed to let people save, send or spend money as easily as firing off text messages. “Libra” – described as “a new global currency” – was unveiled on Tuesday in a new initiative in payments for the world’s biggest social network with the potential to bring crypto-money out of the shadows and into the mainstream. An eponymous non-profit association based in Geneva will oversee the block chain-based Libra, maintaining a real-world asset reserve to keep its value stable. The initiative has the potential to allow more than a billion “unbanked” people around the world access to online commerce and financial services. (Phnom Penh Post).

Vietnam’s first homegrown car set to be delivered its first cars on 17 June 2019. VinFast said it will supply a domestic market that is rapidly expanding thanks to a mushrooming middle class with a growing appetite for cars – though it will face stiff competition from well-established players like Toyota and Ford. The carmaker is a subsidiary of Vietnam’s largest private conglomerate, Vingroup, which is owned by the country’s richest man, a press-shy billionaire who started his career selling dried noodles in Ukraine. (Phnom Penh Post).

China’s Huawei Technologies Co has applied to trademark the “Hongmeng” operating system (OS) in a number of countries including Cambodia in a bid to launch its homegrown operating system as a replacement for the Android OS. (Reuters).  

Richest Thais on track to sit on $401B, says report. Thailand’s richest people are set to get even richer, with projections that their combined wealth will top $400 billion next years, making up 71 per cent of the country’s nominal GDP. A report forecast that the country’s high-net-worth individuals (HNWI) – those with assets exceeding $1 million – are expected to make more offshore investments, focusing on equities and mutual funds in the next five years. The SCB Julius Baer Wealth Report Thailand 2019 said the combined worth of the top tier in the economy was $341 billion last year and would see a healthy gain to $401 billion next year. SCB Julius Baer aims to capture 10 per cent of the Thai HNWIs in the next five years with what it calls its holistic wealth management service. (Phnom Penh Post).

VN to be among the most dynamic market by 2030. With an emerging market economy and continued strong growth, Vietnam is set to become one of the most dynamic markets in the world by 2030, according to Euro monitor International, a global market research company. (Phnom Penh Post).

ABA reports $71.8 net profit. ABA Bank, a member of the National Bank of Canada group, recorded a net profit of $71.8 million in 2018, up 55 per cent from $46.2 million in 2017, its annual report released on Monday stated. (Phnom Penh Post).

Market Deals

Tanncam buys 65% Vibe stake. Tanncam Investment Co Ltd, an Uzbek-owned investment group registered in Cambodia with holdings in the healthcare, e-commerce, consulting, and food and beverage sectors, has acquired a 65 per cent stake in Vibe Cafe Hospitality. The company has not disclosed the value of the share in the deal which was closed on June 9. Vibe Cafe Hospitality is Cambodia’s leading vegan and health food restaurant group with two outlets in Phnom Penh and one in Siem Reap. In addition to vegan and health food restaurants, the group is a wholesale distributor of its proprietary products, a leading provider of rejuvenating cleansers and lunchboxes, and an innovator in unique health food and vegan recipes. The group recently entered into the franchising and restaurant consulting business. (Phnom Penh Post).

China Eastern set for debut in Asia’s budget air travel scene. AIRASIA Bhd and other regional budget airlines will face a new powerful competitor when China Eastern Airlines Company Ltd, one of the world’s Top 10 airline groups, expands its budget air travel to the Asian region outside China. (Phnom Penh Post).

Macro-economy

Construction stays strong. Cambodia’s construction sector remained strong during the first four months of this year following a nearly 20 per cent drop last year, according to the responsible Ministry’s figures. In the first four months of this year the construction investment capital amounted to $2.742 billion, an increase of 67.37% over the same period in 2018, thanked to the stable macro-economy, growth, and investor confidence. Most of the construction projects are office buildings and shared accommodation buildings. (Phnom Penh Post).

ASF could bankrupt VN Livestock sector. African swine fever has not only caused Vietnam’s livestock farming households to fall into debt, but has also made it difficult for animal feed dealers to collect their payments. If the epidemic continues, the domino effect could bankrupt the country’s livestock industry. A number of shops selling animal feed have been put in a bind because they have to sell animal feed to farmers on credit, while paying the manufacturers on receipt of the grains. (Phnom Penh Post).

Asian markets rise with eyes on Fed policy meeting. ASIAN markets mostly rose on Tuesday but gains were limited, with investors treading uneasily as they await the conclusion of a crucial US Federal Reserve (Fed) meeting this week. While geopolitical tensions and the Sino-US trade war continue to make waves, the key focus for now is what the US central bank plans to do with monetary policy as the tariff stand-off shows signs of impacting the world’s top economy. The latest weak data saw manufacturing activity in New York state plunge into contraction this month and hit its lowest level since late 2016, reflecting steep drop-offs in new orders, backlogs and employment. (Phnom Penh Post).

Regulations

Draft oil bill unanimously approved. At the government’s request, the National Assembly has unanimously decided to retain the full original content of a draft bill on the management and production of oil, as the development of the Kingdom’s coastal and marine oil and gas. (Phnom Penh Post).

No.9 (June 4, 2019)

Market Industry Trends

Venture capital firm ooctane identifies start-ups to fund. OOctane, a Cambodian venture capital firm backed by local logistics company Worldbridge group, has identified potential start-ups in the kingdom to fund, saying it has reserved $55 million for Cambodia’s growing number of entrepreneurs. the firm last first launched in June 2018 with Worldbridge Group’s founding chairman Sear Rithy investing $5 million of his own men in the fund. Now the fund has total capital of $55 million raised from friend network of Mr. Rithy.  (Phnom Penh Post)

CSX trading breaks all-time record with $29.6M volume. Stock trading at the Cambodia Securities Exchange (CSX) on May 22, 2019 broke an all-time record since its opening in 2012, as volume reached 9.45 million shares, or 120.12 billion riel ($29.6 million). A CSX press release said PAS’ stock contributed the most to Tuesday’s trading at 120.02 billion riel. Of the amount, only 0.02 billion riel was traded through the Auction Trading Method (ATM) and the remaining 120 billion riel through the Negotiated Trading Method (NTM). (Phnom Penh Post).

China steel company relocates to Cambodia. China state-owned iron and steel company China Baowu steel group corp Ltd has unveiled plans to relocate its blast furnaces from Xnjiang Autonomous region in the northwest of China to Cambodia, which will be the first overseas Baowu production plant. Baowu is looking at the feasibility of shipping two blast furnaces, with a combined capacity of 3.1 million tonnes, along with two converters to turn iron into steel, to Cambodia late this year. (Phnom Penh Post).

Malaysian poultry producer to set up Cambodian operation. Malaysia-based poultry producer Leong Hup International Bhd unveiled its plans to set up operations in Cambodia, where it already exports chicks and chicken feed, after successfully raising $247 million from its initial public offering (IPO) on the Malaysian stock exchange. A Reuters report about the firm’s debut on Bursa Securities last week quoted its chief financial officer Chew Eng Loke as saying that sales of chicks and chicken feed in the Kingdom have been promising and a warehouse is under construction to boost growth. (Phnom Penh Post).

Market Deals

JICA committed to support development of Pas port. Japan International Cooperation Agency (JICA) has expressed commitment to support the development of the Sihanoukville Autonomous Port (PAS) by continuing to provide grant aid and loans after it transferred its shares of PAS to Japanese logistic firm Kamigumi Co., Ltd., When the port listed on the Cambodia securities exchange in June 2017, JICA bought a 13.5% stake – the first time it had acquired equity in an assistance target. (Phnom Penh Post).

Second corporate bond by LOLC listed on CSX. Cambodia’s second corporate bond issued by microfinance firm LOLC (Cambodia) Plc officially listed in the Cambodia Securities Exchange (CSX) on Friday, after it was completely purchased by institutional investors when the subscription period ended on April 26. LOLC issued two types of bonds – namely FX-indexed bonds and fixed-coupon bonds – and successfully raised 80 billion riel ($20 million) for the growth of its lending business. Underwritten by Yuanta Securities, the bonds were subscribed with an interest rate of eight per cent per annum for FX-indexed bonds and nine per cent per annum for fixed-coupon bonds with a maturity date of three years. A total of 800,000 bonds were issued, valued at 100,000 riel per unit. (Phnom Penh Post).

CIMB, CapBridge to provide firms access to private capital. CIMB Bank Bhd’s recent memorandum of understanding (MoU) with Singapore’s CapBridge Pte Ltd will facilitate capital raising and trading of shares for private companies through the latter’s investment platform and the 1exchange (1X) private securities exchange. This MoU will see CIMB Bank and CapBridge collaborating to offer the bank’s customers in Malaysia, Singapore, Indonesia, Thailand and Cambodia access to private capital and liquidity through the holistic CapBridge private capital ecosystem, CIMB said in a statement on Sunday. The CapBridge Investment platform is a private capital raising platform for growth stage and pre-initial public offering (IPO) companies, while 1X is a trading platform which facilitates a buyer-seller match for private securities listed on the exchange by using block chain to register and track the shareholdings of investors who trade on the platform. The wide-ranging partnership provides a unique value proposition to CIMB’s small- and medium-sized enterprise (SME) and mid-sized corporation clients looking to raise capital and have part of their shares traded, while remaining private and in full control of their businesses. (Phnom Penh Post).

ABA set to be the third bond issuer on CSX. Advanced Bank of Asia Limited (ABA Bank), a National Bank of Canada Group member, will become the third bond issuer in the Cambodian capital market after it obtained approval from the National Bank of Cambodia (NBC), it announced on May 31. Insiders have said the move shows that the Cambodian capital market is becoming more attractive to investors. ABA Bank plans to raise 100 billion riel ($25 million) through its first corporate bonds issued in the Kingdom’s capital market. The bonds will have a maturity date of three years with an annual coupon rate of seven to 7.75 per cent. Net proceeds from the bond issuance will be used for operating expenditures as well as growth in the lending business, according to the bank. (Phnom Penh Post).

Macro-economy

Cambodia export to US surpass $1B in Q1 for first time. According to the latest trade data from the US government, Cambodian exports from January to March 2019 amounted to $1.12 billion – up 24% from $903.6 million during the same period of 2018. Major exports include suitcases and handbags under GSP program since July 2016. Cambodia imported from the US amounted to $122 million. (Phnom Penh Post).

CBC reports $6.7B in consumer credit. The total outstanding balance of consumer credit in Cambodia reached $6.7 billion at the end of March – a 7.4 per cent increase from the end of December – the latest report from the Credit Bureau of Cambodia (CBC) said. The CBC said some 1.14 million Cambodians applied for consumer credit at the end of March, an increase of 5.3 per cent from the end of December. As of March, non-performing loans after 30 days (NPL 30) reached 1.24 per cent, a slight increase on the 1.18 per cent recorded at the end of December. Consumer credit encompasses personal finance loans (51.2 per cent of all outstanding consumer credit loans), mortgages (47.6 per cent) and credit cards (1.1 per cent). Consumer credit outstanding at $6.7 billion accounts for roughly 36 per cent of the total out-standing balance of individual loans in the market. (Phnom Penh Post).