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14/06: Daily updates of the Lao Securities Exchange
1. Executive Summary
The Lao Securities Exchange
Another day has passed the Lao securities market, but the old story has not really developed anew. BCEL stagnated at 8,150 Kip, though its volume gained some momentum to 39K shares (23%); turnover also enjoyed its resurgent moments with LAK 321 million. All the while, EDL-Gen was being rubbed down to 5,300 Kip (-0.93%), and even lower at one point. Trading volume was oiled back to almost 22K shares, gushing turnover upward to LAK 114 million from the yesterday’s LAK 0.5 million.
Travel agents struggle as inflation bites
A number of travel agents are struggling to stay profitable because of the high inflation rate in Laos, according to an industry representative. Laos is experiencing unexpectedly high inflation, which in April hit 9.24 percent - greater than the increase in GDP. The main forces driving inflation are the cost of fuel, food and construction materials such as cement. The price of fuel has risen by about 20 percent compared to last year and resulted in higher transport costs, which now represents nearly half of the cost of tour services.
Better prospects for domestic healthcare
More people are now using Lao medical services rather than travelling to neighboring countries, because they feel there has been an improvement in the quality of care. Those who can afford it have often crossed the border to obtain medical treatment because they feel foreign physicians have more experience, skills, and access to better equipment than local hospitals or clinics. It's true that in the past local physicians did have less experience than foreign doctors but this is no longer the case.
2. The Lao Securities Exchange
The Lao stock market
Demands on BCEL might have been oscillating sporadically, but they could not escape the downward trend. In the 19th trading week, the average demand was roughly 282K shares per day. Since then, this figure has been on constant contractions: down to 98K shares by the 20th week, to 97K shares by the 21st week and to 43K shares by last week. The public bank has recently been in a habit of keeping a fair amount of demand surplus even at a low price, but there was only a handful of those surpluses remained today. The situation hinted to the fact that the demand side is losing its patience, and the supply side is running out of its bargaining chips. However, the market has not sensed much sell-off activities on BCEL; hence the bank might still be okay at the current price, especially when the foreign sector started to reinforce the shares with stable demands.
EDL-Gen was giving off a different vibe as the suppliers immersed in panic trading, even though the total amount of supply actually decreased to 41K shares (-31%). The demand side saw the cheap offers and swallowed them up like a hungry shark. EDL-Gen is facing a strong downward pressure, and tomorrow’s sessions might force another price fall on the company. On the fundamental level, the generation company is on track with its projected revenues. The company should be able to generate at least LAK 500 billion in net profits (or an EPS of 576 Kip) by the end of 2011, and to more than double its current electricity generating capacity by next year.
The LSX Index 1,104.06 -8.39 [-0.75%]
The 75 bps retracement has pushed the Lao benchmark back to the 1st of June or to the 1,104 index points. However, compared to yesterday total volume nearly doubled to 61K shares (+90%), launching market’s turnover forward to a round-off LAK 435 million (+66%).
lanexang securities
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