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KFM Weekly Investment Update: Friday, 15 May 2015

LOCAL MARKET SUMMARY:

•Indonesian president Mr Joko Widodo and his wife were in PNG for a 2 day visit. He
emphasised on the need for cordial relations with PNG. PNG and Indonesia will forge
cooperation and friendship among Melanesian countries in the region

•Oil Search (OSH) chairman Mr Richard Lee announced at its AGM today that 2014 was
the year the company transformed from a medium sized oil and gas producer to a significant
LNG exporter. To date OSH has produced more than 6.0m tonnes of LNG and has
delivered more than 90 LNG cargoes, the unprecedented production exports culminating
in a record profit of U$353.2m. Mr Lee reiterated market consensus, stating that the
global decline in oil prices had dampened returns however, “cost reduction” strategies
would underpin OSH’s operations beyond 2015. He indicated that OSH is focused on its
“core” assets in PNG to provide organic growth opportunities, driven by the 2nd LNG
project and subsequent promising developments in the periphery

•Bank South Pacific (BSP) in a statement said their new personal loan rate is 31% effective
today. This was a cut by 5% from the previous 36% fixed rate. BSP said the new rate will
be calculated on the daily balance, charged monthly and fixed for the term of the loan

•CPL has reported positive results from its new retailer Jack’s of PNG, after a month since
opening, they have announced a turnover of more than K1.0m. The retail business is the
group’s partnership with Jack’s of Fiji. Group CEO Ravi Singh said CPL is truly becoming a
multi_-format retailer, apart from supermarkets, hardware and pharmacy; Jack’s clothing
store has been a great success and has plans to expand in Port Moresby

•Kina Asset Management announced the Net Tangible Asset at K1.08 as of 30/04/15

•Financial results from Nautilus Minerals for the first quarter shows that it is well set to
advance its seabed mining of rich volcanic copper and gold rich minerals in PNG waters.
CEO Mike Johnston said the company is pleased with its progress since the beginning of
the year with the build of its seafloor production equipment. Going forward the company
will remain focused on the build of the PSV (production support vessel) and the delivery
of the equipment that is to be integrated in it

•InterOil recorded a net loss of $21.9m (K60.5m) for the first quarter 2015 compared to
net profit of US$318.6m (K878.5m) in the pcp. This was largely attributed the cost of
acquiring the seismic extensive exploration portfolio during the quarter. Nevertheless,
IOC’s balance sheet remained strong and well positioned to the next exciting phase of
growth, with liquidity of US$628.0m (K1.7b)

•Westpac Pacific’s first half results of the year have been affected by the Foreign exchange
controls in PNG and have affected higher net interest margins, the bank has announced.
This has led to Westpac having recorded an overall group result of A$3.78bn (K8.03bn)
cash profit in the period

•This week’s BPNG auctions in Treasury Bills were oversubscribed by K35.1m out of the
K150.0m on offer across both 182 and 364 terms. Weighted average yields were 4.6% for
182 days and 7.4% for 364 days from last week’s auctions

•BPNG has sent GIS bidding invitations to registered bidders for K200m worth of bonds.
The auction offers series: 2018, 2020, 2022, 2023 for K50.0m each at indicative yields of
9.8%, 10.8%, 11.1% and 11.6% respectively

•The KSi index ended flat for the week at 3,606.59 while the KSi Home Index ended lower
at -0.1% during the week to close at 9,763.12

INTERNATIONAL MARKET SUMMARY:

•In the US, all three major indexes gained more than 0.1%, after US economic data painted
an improving employment picture, but subdued producer price inflation quashed bets
that the US central bank would raise interest rates sooner rather than later this year
(refer graph)

•European stocks finished lower, with German stocks surging at the close as the head of
the European Central Bank reiterated commitment to the bank’s massive stimulus program
for the Eurozone

•ASX closed lower, ending a two-day recovery rally, as a leap in the AUD to a four-month
high sparked some profit taking in the miners. The ASX 200 slipped 0.3 points to 5696.5,
but closed well off the day’s low of 5663.5, while the broader All Ords fell 0.3% to 5692.4

•Stocks in Tokyo fell on concerns about a slower US recovery, while shares in China remained
resilient despite a batch of weaker than expected economic data, and a rise in
shares of Internet giant Tencent Holdings propped up Hong Kong

•Oil pared its weekly advance with both brent and light up 0.6% and 1.9% respectively,
amid speculation that market’s will rebound above $60 a barrel and will sustain a global
supply glut

•Copper price closed slightly higher, supported by economic data out of China

•Gold prices extended their rally (up 2.4%) to a three-month high, as disappointing inflation
_on data fuelled hopes that the Federal Reserve will put off raising US interest rates

•PGK/USD closed by 0.8% at 0.3760 and PGK/AUD depreciated by 2.5% to close at 0.4597

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pdfKFM Weekly Investment Update: Friday, 15 May 2015

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