KFM Weekly Investment Update: Friday, 09 March 2018

Local Market Summary:

• Minister for State and Enterprises Hon. William Duma said during a presentation
at the 6th Leadership Summit that the State’s total assets are at K9.3b although
not to expectation due to the economic situation. The current State Owned
Enterprises include Air Niugini, Water PNG, Telikom Kumul Holdings, National
Development Bank, PNG Ports Corporation, PNG Water and Post PNG. Hon.
Duma’s presentation detailed that total assets in 2017 were K8.2b and 2018 K9.3b,
net assets 2017 and 2018 at K5.2b and dividends paid out in 2017 was K46.0m
while in 2018 is K94.6m

• The PNG National Statistics Office released the December quarter Consumer
Price Index (CPI) inflation report this week. CPI inflation for the fourth quarter 2017,
was 1.3% and the rolling 12 month CPI inflation was 4.7%. Main contributors to
the quarterly CPI inflation were Health (7.7%), Recreation (5.0%) and Alcoholsmoke-
betelnut (4.7%) groups. Inflation was driven by increase in proces for pain
killers, electronics, alcoholic beverages and betelnut. Only two groups saw a drop
in CPI, Food-beverages was down 1.7% and Restaurants group was down 0.5%.
CPI town groups saw a general decline from Dec’16 to Dec’17. (See graph)

• Independent Consumer and Competition Commission announced a decrease in
all fuel product prices in the upcoming three weeks. This was attributed to the
decrease in import parity prices (IPP) which the IPP’s drop was caused by the
decline in Mean of Platts Singapore prices for all fuel products. The maximum retail
fuel prices will decrease on average for petrol by 6.42 toea per litre, diesel by 8.34
toea per litre, and kerosene by 2.80 toea per litre

• Nambawan Super (NSL) announced a net profit of K406.0m from its 2017
management thus will credit an additional of 8.0% to its 174,000 contributors.
Chairman of NSL Mr Anthony Smare attributed the favourable results to the Fund’s
diversified investment portfolio and strategic decision to invest offshore. Mr Smare
stated that NSL’s portfolio offshore contributed 37.0% of their profit and other parts
returned 20.0% which portrays benefits of having part of your portfolio overseas
so it can carry you when PNG struggles. Other local investments which contributed
to this profit include Bank South Pacific (BSP) , SP Brewery and Paradise Foods

• Chairman of National Superannuation Fund Mr Hulala Tokome announced the
appointment of its new directors Mr Leon Buskens and Mr Kepas Wali. Mr Buskens
is currently the General Manager Stakeholder for Oil Search whereas Mr Wali is
the Country Manager Corporate Affairs for Harmony Gold (PNG)

• BSP CEO Mr Robin Fleming commended the bank for reaching a milestone net
profit before tax of almost K2.0b for 2017 despite tough economic conditions faced
by the country. He further stated the highlights for BSP during 2017 includes
opening BSP Finance Cambodia and licensing of BSP Life Insurance

• Credit Corporation’s Chairman Sir Wilson Kamit announced a statutory Net Profit
after Tax (NPAT) of K73.6m for the full year 2017 compared to K98.9m in 2016.
The drop in NPAT was mainly due to the fall in revaluation gains from equity
investment. Furthermore, the Annual General Meeting will be held on the 27th of
June, 11:00am at the Grand Papua Hotel, Port Moresby

• This week’s BPNG auction result in Central Bank Bills offered for 28 days only was
under-subscribed by K4.50m out of the total amount of K323.90m on offered. This
indicates that there was a decrease in appetite for shorter dated securities. The
weighted average yield for 28 days remained unchanged at 1.40% from the last
auction week

• This week’s BPNG auction results in Treasury Bills were over-subscribed by
K229.60m out of a total amount of K357.31m on offer. This indicates that there
was an increase in appetite for longer dated securities. Weighted average yields
for 182 days, 273 days and 364 days remained unchanged at 4.72%, 6.76% and
8.04% respectively from the last auction week

• KSi Index decreased by 0.8% to close at 5,542.16 points while the KSi Home Index
remained unchanged to close at 10,900.86 points from the previous week. The
decrease in KSi was attributed to the drop in share price of Oil Search by 2.9% to
end the week

International Market Summary:

• Global markets were anxious when the US President announced increasing import
duties on steel and aluminium as concerns of a global trade war increased. In
Beijing, China’s Commerce Ministry said it ‘resolutely opposed’ the tariffs seeing
this as a huge threat to normal order of international trade. Meanwhile other global
steel producers have revealed that they are unfazed by the US President’s
announcement and believe they can withstand this change without too much
impact to their business and pricing

• Following his announcement last week, US President Donald Trump has pressed
ahead with import tariffs of 25.0% for steel and 10.0% for aluminium exempting
Canada and Mexico. President Trump went on to say that domestic metals
production was vital to the country and that this would be for companies to start
moving their productions plants to the US

Click the link below to view the full report in PDF.

pdfKFM Weekly Investment Update: Friday, 23 of February 2018

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