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KFM Weekly Investment Update: Friday, 12 September 2014

Local Market Summary

• The National Government is set to acquire 5.0% in the Woodlark Island Gold project in Milne Bay. This was announced by Kula Gold CEO Mr Stuart Pether. Mr Pether further noted that government has indicated its interest in a further acquisition up
to 25.0% through the states’ nominee Petromin PNG Holdings.

• The 2015 Budget will include very generous incentives, including tax holidays, for selected industries like tourism, agriculture and manufacturing, Prime Minister Peter O’Neill announced during the PNG Business Advantage 2014 summit in Port
Moresby this week.

• The Government’s plans to sell 50% of its shares in PNG Power Ltd is part of its strategy to privatise entities facing difficulties as announced by Public Enterprises and State Investment Minister Ben Micah.

• The Department of Works will spend K7b on major road infrastructure projects over the next 5 years in the country, Secretary David Wereh announced this week. The Government’s road investment programme was spread over five years to 2018. In addition to this, National Capital District (NCD) Governor Powes Parkop announced this week that NCD is spending K810.0m to improve roads in Port Moresby.

• Papua New Guinea cocoa industry has been aided by the European Union with a funding of €5.0m (K15.0m) under a project with the World Bank. The funding will benefit about 16,000 farmers.

• The fuel prices for September have decreased slightly from last month, the Independent Consumer and Competition Commission has revealed. The price of petrol decreased by 24.0t to K3.5 per litre compared to K3.7 per litre last month for Port Moresby. Diesel and kerosene prices have each decreased by 2.0t.

• The new SP Brewhouse will be producing 33,813 cartons of cans and bottles per day. The brewhouse was built at the cost of K84.0m and was officially opened this week by SP Brewery chairman Sir Joseph Tauvasa and NCD Governor Powes Parkop.

• Credit Corporation Ltd reported a NPAT of K28.7M (2013:K41.3M) for the six months period ending 30 June 2014. Cash operating profit after tax K39.9M (2013:K39.2M), net profit slipped due to investment revaluation that arose from reduction of BSP share price from K7.98 to 7.70 during the half year. The Board has expressed confidence that the company will achieve budget expectation despite challenging trading condition experience in the first half 2014.

• The Net Tangible Asset of Kina Asset Management Ltd as of August 31 2014 after the dividend payment was K1.05.

• This week’s BPNG auctions in Treasury Bills were under subscribed by K24.9m with 182/364 days weighted average yields rate been flat from last week to 4.5% and 7.2% respectively.

• The KSi index and KSi Home Index were up by 0.3% and 1.7% for the week at 3,746.79 and 8,065.08 respectively

International Market Summary

• The Australian dollar this week hit a near six-month low on growing signs that both the US and the UK will begin lifting interest rates well before the Reserve Bank of Australia. The Australian dollar was around US91.64¢, its lowest local level since March 26, when it touched US91.54¢ (see chart in the PDF attachment below).

• Japan’s second-quarter gross domestic product shrank an annualized 7.1%, the worst performance in more than five years. The decline is traced to reverberations from April’s sales tax boost, reflected in falling retail sales and household spending
in July. The worse-than-expected result raises further doubts about another tax boost planned for next year.

• An off-market share buyback of $1b by Telstra could cost the federal budget hundreds of millions of dollars in tax credits. The Institute of Public Accountants predicts that more companies will follow Telstra, in a resurgence of buyback offers not
seen since the global financial crisis hit.

• Gold, Brent crude and Light Crude declined by 2.7%, 2.8% and 0.6% respectively to U$1,236.60, US$97.95 and US$93.01

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

pdfKFM Weekly Investment Update: Friday, 12 September 2014

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