Wednesday, August 21, 2013

Jim Rogers' take on Myanmar and Malaysia

Jim Rogers' take on Myanmar and Malaysia
Written by Cindy Yeap of The Edge Malaysia    
Friday, 16 August 2013 00:00

 MYANMAR and Malaysia are the top two Southeast Asian countries commodities guru Jim Rogers is looking at for investment opportunities, and Axiata Group Bhd is one name that will be on his radar, should the home-grown regional telecommunications group be named (at the time of writing) as one of two winners of Myanmar telecoms licences on June 27.

"If Axiata gets [the licence], then I would have to consider it. I don't know enough about the group right now but whoever gets the contract, I would certainly have to consider [for Myanmar exposure]," Rogers tells The Edge in Kuala Lumpur.

"If SingTel (Singapore Telecommunications Ltd) wins, it could make a difference for the company as Myanmar has 65 million people."

Meanwhile, he is excited about the fundamentals for growth he is seeing in Myanmar and Malaysia, among Asean's 10 member countries.

"Malaysia has the second best fundamental situation in Asean after Myanmar — which is totally undeveloped, versus Singapore — which is already very developed. I'm not saying rush in and buy Malaysian stocks today, but the country is making changes — it is headed in the right direction and still has a long way to go, so there are a lot of opportunities," says 70-year-old Rogers, who founded the Quantum Fund in 1973 with billionaire George Soros, and retired at the age of 37.

Axiata and SingTel are among 11 pre-qualified bidders that submitted an application for the two nationwide Myanmar telecoms licences on June 3. Axiata, which favours majority interest in its investments, has not named partners in its bid, while SingTel has teamed up with Royal Myanmar Transport Co and Myanmar Telephone Co Ltd.

Another bidder that has grabbed headlines is Caribbean-based Digicel Group, which is backed by Soros' Quantum Fund. Digicel's partner in the bid is Singapore-listed de-facto stock for Myanmar exposure Yoma Strategic Holdings Ltd, which has businesses from real estate to tourism and retail.

Rogers says his investment in Yoma "years ago" for Myanmar exposure has easily appreciated 20 times, but he is not buying any more at current levels. "If prices fall, I'd buy more, but I'm not buying now," he says of Yoma, for which DBS Research has a "buy" and a S$1.08 target price.

Others in the Myanmar telecoms licence "beauty contest" include DiGi.Com Bhd's Norwegian parent Telenor ASA; India's Bharti Airtel; France Telecom-Orange; Japan's KDDI Corp; Africa's MTN; Millicom International Cellular SA; Qatar Telecom; and Viettel Group.

Vodafone and China Mobile, which were pre-qualified for the bid, pulled out before the final submission, saying that the opportunity "does not meet their strict internal investment criteria".

Winners named on June 27 will have upto nine months to have a commercial launch, after the effective date of the licence, which is expected to be finalised between July and September this year, according to statements from Myanmar's Telecommunications Operator Tender Evaluation and Selection Committee. Bids put in for the spectrum fee make up 33% of marks, while technical submissions form the remaining 67% of a total of 1,500 points.

Winners are also expected to achieve 25% voice and 10% data coverage within the first 12 months, and expand that to 75% voice and 50% data coverage within five years. Mobile phone coverage is currently below 10% in Myanmar, which has the most backward economy in Southeast Asia, but is burgeoning as it opens up to foreign capital after decades of military rule.

However, CIMB Research regional telecoms analyst Kelvin Goh thinks near-term potential income from Myanmar will not make a big difference to Axiata or SingTel, should either company be named winners for the two Myanmar licences.

"The potential for growth is large. With a population of 60 million and 9% mobile penetration, Myanmar is probably the only country with a sizeable population that is largely untouched by mobile telephony. However, we do not expect earnings contribution from Myanmar to be substantial for either Axiata or SingTel, as both companies have large earnings bases," Goh wrote in a June 14 note.

Furthermore, Myanmar has a low GDP per capita of only US$854. He notes that average revenue per user (ARPU) for mobile telecoms in Bangladesh, which has a similar GDP per capita of US$701, is only US$2.20 to US$2.50 per month.

Goh calculates that a Myanmar operation could contribute 2% to 16% of Axiata's 2012 earnings, and 1% to 8% of SingTel's, based on profits booked by Bangladesh mobile phone operators Robi Axiata Ltd (US$28 million and 21% market share) and Telenor's Grameenphone (US$228 million and 42% market share) in 2012.

"There is no certainty that the government will not heavily tax the sector in the future … We believe start-up losses in Myanmar would weigh down any telco's near-term earnings," says Goh, who is "neutral" on SingTel (S$3.67 target price) but has an "outperform" recommendation on Axiata (RM6.60 target price).

"We see no reason to revise our 'neutral' call for SingTel, should it succeed in its bid," he adds.

Rogers has a slightly different take on the risks of betting on the Myanmar telecoms winners, which will be operating in a nascent environment and needs to fork out billions in investments. "There is no such thing as an easy investment … I bought into Yoma years ago because I was optimistic about the future of Myanmar. You can see how much the stock has gone up ... but investors should make their own decisions."

Improvements in telecoms infrastructure is expected to further hasten economic transformation in Myanmar, which will be hosting the 2013 Southeast Asian Games this December and the Asean Summit next year.

The two Myanmar telecoms licences up for grabs have an initial duration of 15 years and are subject to renewal. The two winners will have to meet minimum quality of service requirements, such as call-drop rates of below 2%, and will be competing with two other locally-owned operators, including state-owned incumbent Myanmar Posts and Telecommunications.

This story first appeared in The Edge weekly edition of June 17-23, 2013.

Publish date: 16/08/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

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