Contents
Capital Punishment........................................................................................................ 3
Can that plan be financed? 3
Company ....................................................................................................................... 6
Chi Mei Optoelectronic 6
China Oilfield Services 10
China Resources Power 14
CNBM 18
GMR Infrastructure 22
Guangzhou R&F Properties 26
Huaneng Power 30
Hyundai Steel 34
Indosat 38
Maanshan Iron & Steel 42
Power Grid Corp of India 46
Reliance Communications 50
Reliance Petroleum 54
Siam Cement 58
Tata Communications 62
Tata Power 66
Tata Steel 70
YTL Power 74

Capital Punishment
Our original Survivors & Thrivers top picks focused on the companies best
positioned to survive the economic crisis and come out the other side in
stronger competitive shape. This piece looks at the darker side of financial
stress to identify those companies most likely in need of scaling back their
ambitions in the current troubled environment.
When we launched the Survivors & Thrivers theme in November, the focus was on
those companies that had the balance sheets, cash flows and proven track records to
navigate this economic crisis from a position of relative strength. They were the ones
that BNP Paribas analysts had the highest conviction of not only emerging intact on
the other side of this severe recession, but doing so with greater market share than
when they went in and the momentum to grab even more as economies recovered.
We remain stalwart believers in those 28 names, believing them to be the core of any
long-term Asian equities portfolio.
The analysis was of course about those companies that were exceptional, generally
the best in their chosen activity. There were only 28 of them out of the more than 500
Asian stocks under research coverage at BNPP, and they represented the core BUY
list that we believe investors should be adding to every time the markets dip.
This report in the Survivors & Thrivers series, however, is about companies at the
other end of the spectrum, the stocks under coverage which no doubt have what it
takes to survive, but are constrained by stretched balance sheets and shrinking cash
flows. Their options are limited, and it is reasonable to expect a sharp contraction in
capex budgets and cash dividends, and if market demand permits, sizeable equity
offerings.
Can that plan be financed?
We chose to focus in this analysis on the largest non-financials across Asia, those with
a market cap of at least USD2b. This resulted in an initial list of 150 stocks from our
research database to concentrate on. We compared these names for gearing, both
including and excluding intangible assets, as well as cash flow forecasts for 2008 and
2009, including capital investment and dividends, before narrowing down to the final
list of 18 companies that in our opinion look financially constrained: