The Thai Capital Fund, Inc. (the "Fund") (NYSE Amex: TF), an
emerging markets closed-end management investment company seeking
long-term capital appreciation through investment primarily in
equity securities of Thai companies, today announced its results
for the quarter ended September 30, 2011 and commented on the
economic outlook for Thailand.
The Fund's investments in Thailand are made through a wholly
owned investment plan (the "Investment Plan") established under an
agreement between SCB Asset Management Co., Limited ("SCBAM"), the
Fund's investment manager, and the Fund. The Fund's investments
through the Investment Plan are managed by SCBAM, located in
Bangkok, Thailand.
Third Quarter Earnings Results
For the quarter ended September 30, 2011, the Fund earned net
investment income of U.S. $321,000 (equivalent to income of U.S.
$0.10 per share) resulting in net investment income for the nine
months ended September 30, 2011 of approximately U.S. $744,000
(equivalent to income of U.S. $0.22 per share). Net realized and
unrealized losses from investment activities and foreign currency
transactions for the quarter ended September 30, 2011 were
approximately U.S. $6,513,000 (equivalent to a loss of U.S. $1.84
per share). As a result, the net realized and unrealized losses for
the nine months ended September 30, 2011 were approximately U.S.
$11,199,000 (equivalent to a loss of U.S. $3.20 per share).
In comparison, for the quarter ended September 30, 2010, the
Fund earned net investment income of U.S. $260,000 (equivalent to
income of U.S. $0.08 per share), resulting in net investment income
for the nine months ended September 30, 2010 of approximately U.S.
$888,000 (equivalent to income of U.S. $0.28 per share). Net
realized and unrealized gains from investment activities and
foreign currency transactions for the quarter ended September 30,
2010 were approximately U.S. $12,991,000 (equivalent to a gain of
U.S. $4.12 per share). As a result, the net realized and unrealized
gains for the nine months ended September 30, 2010 were
approximately U.S. $17,232,000 (equivalent to a gain of U.S. $5.46
per share).
On September 30, 2011, the total net assets of the Fund were
approximately U.S. $32.7 million. The net asset value ("NAV") per
share on that date was U.S. $9.16, based on 3,564,814 shares
outstanding. In comparison, on September 30, 2010, total net assets
were approximately U.S. $55.1 million. The NAV per share on that
date was U.S. $17.36, based on 3,172,313 shares outstanding.
Assuming the reinvestment of the U.S. $2.70 per share dividend paid
on June 23, 2011, the Fund generated a negative investment return
of 20.74% for the nine months ended June 30, 2011, when measured
against the NAV per share of U.S. $14.89 calculated on December 31,
2010. In comparison, the Stock Exchange of Thailand ("SET") Index
decreased 14.18% during the same period, in U.S. dollar terms.
As of September 30, 2011, the Fund had 97.28% of its net assets
invested in Thai equities and 6.23% in Thai cash instruments. The
remaining assets were made up of 0.57% in short-term U.S. dollar
time deposits and liabilities in excess of other assets of negative
4.08%.
As of October 21, 2011, the Fund had total net assets of
approximately U.S. $33.0 million, equivalent to a NAV per share of
U.S. $9.26. On that same date, the closing price for the Fund's
shares on the NYSE Amex was U.S. $8.15, representing a trading
discount of 11.99% to its NAV per share.
Third Quarter Market Review &
Outlook
For the quarter ended September 30, 2011, the SET Index closed
at 916.21, a decline of 125.27 points or 12.03%. The key
performance factors in this quarter were the concern about greater
risk in the European debt crisis and the global recession outlook,
despite the positive factors of greater domestic political
stability and consumption boosting policies issued by the new Thai
government.
In July, the SET Index posted a strong performance, mainly
driven by political clarity after the Puea Thai Party won a
majority in the election and formed a coalition government with
high stability. External factors became more supportive as the
European Union approved the second bailout plan for Greece and
fully backed the Greek sovereign debt. On the U.S. side,
uncertainty remained high during the month due to the U.S. debt
ceiling concerns, which pressured Asian stocks. However, Thailand
outperformed global markets as a result of strong second quarter
2011 earnings reports from the banking sector and positive
political developments.
In August, the Thai market was very volatile with a strong
downward trend. Foreign equity outflows were seen throughout the
month as the U.S. credit rating was downgraded by Standard &
Poor's and continued strains in the European banking system and
financial markets weighed on market sentiment. However, Thai stocks
still outperformed regional peers amid the global correction,
supported by local political optimism and hopes for domestic
stimulus policies.
In September, global factors were negative and significantly
weighed on the performance of Thai stocks. There continued to be a
lack of clarity on a longer-term resolution for the debt crisis in
Europe. The market also reacted negatively to the announcement of
certain stimulus measures by the United States Federal Reserve, as
they were interpreted as a signal of a significant downside outlook
for the growth of the U.S. economy. In Thailand, the Thai political
situation had no impact on the market, and the new government began
rolling out the populist measures being campaigned for during the
election in July. However, heavy rainfall has already caused
flooding in many areas.
In the short-term, there are significant risks in the market,
mainly from the European debt crisis, which have caused many
investors to move out of risky assets into safer assets.
We expect that investors will be able to predict more
confidently whether the developments in the Euro zone debt crisis
will turn positive or negative in late October once the European
Financial Stability Fund is launched and Greece's creditors
announce their decision with regard to Greece's next installment
payment due October 13th.
There is also risk in Asia with negative news flow about China.
The weaker property prices, funding stress for property developers
and softer economic data have intensified concerns over a 'hard
landing' in the Chinese economy.
In Thailand, the supporting factor is the announcement and
implementation of new government policies. The large majority in
parliament gives the new coalition government greater stability and
the political engine to push ahead its economic policies. Most of
the policies are considered to be positive to the stock market
since the main focus of these policies is to support domestic
consumption and investments. Despite the likelihood that these
policies could lead to higher inflation, the lagging impact of
monetary tightening could be seen afterward to control inflationary
pressure.
Looking forward to the third quarter 2011 earnings announcements
in October and November, there are downside risks to earnings
revisions that could negatively surprise investors. Risk factors
include higher than expected inventory losses in crude oil and
petrochemical products related firms, lower net interest margins
pressured by higher funding costs and weaker than expected loan
growth at commercial banks, as well as the effects of flooding on
domestic consumption related stocks.
Reacting to the news flow regarding both external and internal
risk factors, we expect the SET Index to move in the range of
800-1000 points during the last quarter of 2011. In terms of
valuation based on forecasted earnings per share growth of 20.5%
for 2011 and 14.1% for 2012, the Thai stock market is trading on
price-to-earnings ratio for 2011 of 10.4x, price-to-earnings ratio
for 2012 of 9.1x, price-to-book value ratio of 1.66x with dividend
yield of 4.61% (Source: Bloomberg forecast as of 9/30/2011).
Investment Strategy
Compared to the beginning of the year, currently the market
outlook is considered less encouraging. However, policies of the
new Thai government focusing on domestic consumption and investment
should provide support for the market. We expect that the Thai
market along with other Asian markets should continue to outperform
the markets of developed economies as the Asian region is still
expected to be the region to provide growth for the global economy.
As a result, albeit in this cautious environment, we see the recent
market correction as an opportunity for investors to bottom-fish
stocks, specifically those with growth and defensive features.
The equity classifications of the Fund held at September 30,
2011 were:
Percentage of
Industry Net Assets
1. Energy 20.92%
2. Banks 20.68
3. Property Development 10.80
4. Food and Beverage 10.48
5. Commerce 9.83
6. Construction 7.42
7. Petrochemicals 7.30
8. Communication 5.97
9. Health Care Services 2.88
10. Media & Publishing 1.00
The ten largest equity positions held by the Fund at September
30, 2011 were:
Percentage of
Issue Net Assets
1. The Siam Cement Public Co., Ltd. 7.42%
2. PTT Public Co., Ltd. 6.60
3. Charoen Pokphand Foods Public Co., Ltd. 6.21
4. CP ALL Public Co., Ltd. 5.75
5. Kasikornbank Public Co., Ltd. 5.70
6. PTT Chemical Public Co., Ltd. 5.33
7. Advanced Info Service Public Co., Ltd. 5.29
8. Bangkok Bank Public Co., Ltd. 5.22
9. Krung Thai Bank Public Co., Ltd. 4.88
10. Thai Oil Public Co., Ltd. 4.38
QUARTERLY RESULTS OF OPERATIONS*
Net Realized And
Unrealized Gains Net Increase
(Losses) on (Decrease) in
Investments and Net Assets
For the Quarter Net Investment Foreign Currency Resulting From
Ended Income (Loss)* Transactions* Operations
---------------- ----------------- -----------------
Total Per Total Per Total Per
(000's) Share (000's) Share (000's) Share
------- ------- -------- ------- -------- -------
March 31, 2011 $ 76 $ 0.02 $ (1,734) $ (0.50) $ (1,658) $ (0.48)
June 30, 2011 347 0.10 (2,952) (0.86) (2,605) (0.76)
September 30, 2011 321 0.10 (6,513) (1.84) (6,192) (1.74)
------- ------- -------- ------- -------- -------
For the Nine Months
Ended September 30,
2011 $ 744 $ 0.22 $(11,199) $ (3.20) $(10,455) $ (2.98)
======= ======= ======== ======= ======== =======
March 31, 2010 $ 122 $ 0.04 $ 3,735 $ 1.18 $ 3,857 $ 1.22
June 30, 2010 506 0.16 506 0.16 1,012 0.32
September 30, 2010 260 0.08 12,991 4.12 13,251 4.20
December 31, 2010 (67) (0.02) 2,457 0.74 2,390 0.72
------- ------- -------- ------- -------- -------
For the Year Ended
December 31, 2010 $ 821 $ 0.26 $ 19,689 $ 6.20 $ 20,510 $ 6.46
======= ======= ======== ======= ======== =======
PER SHARE SELECTED QUARTERLY FINANCIAL
DATA
Share
For the Quarter Ended Net Asset Value Market Price** Volume**
------------------- ------------------- --------
High Low High Low (000's)
-------- -------- -------- -------- --------
March 31, 2011 $ 15.12 $ 13.15 $ 14.00 $ 11.22 301
June 30, 2011 15.33 10.77 13.31 9.08 141
September 30, 2011 11.93 9.16 10.37 8.07 187
March 31, 2010 $ 12.84 $ 10.92 $ 10.82 $ 8.65 180
June 30, 2010 13.22 12.28 11.30 9.80 193
September 30, 2010 17.36 13.16 15.18 10.61 351
December 31, 2010 18.60 14.77 17.38 12.75 510
* Net of Thai withholding tax. ** As reported on the NYSE
Amex.
The Thai Capital Fund, Inc. Contact: John J. O'Keefe
Telephone: (800) 933-3440 or (201) 915-3054 www.daiwast.com Email
Contact
Thai Capital Fund (AMEX:TF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Thai Capital Fund (AMEX:TF)
Historical Stock Chart
From Jul 2023 to Jul 2024