Market Overview

GE, Chevron and Other Companies Doing Business in Myanmar


As mentioned on Benzinga on Wednesday, legendary investor Jim Rogers stated that he sees the troubled Asian nation of Myanmar, also known as Burma, as possibly the best investing opportunity in the world.

"I see enormous opportunities there because they're now opening up," Rogers said to "It's like when China opened up in 1978. There were unbelievable opportunities going forward.”

A civilian government took over the country last year after decades of military rule. And after a 15-year ban, earlier this month the United States eased restrictions to allow U.S. companies to do some business in Myanmar. Human rights groups and Nobel Peace laureate Aung San Suu Kyi remain opposed to the policy change.

General Electric (NYSE: GE) will become the first U.S. company to resume doing business in Myanmar, with a deal announced last week to provide X-ray machines for cardiology and topography to a pair of private hospitals in the country. The company also is pursuing a deal to supply the country with two 25-megawatt gas turbines to improve outdated power grids as well as an upgrade to older GE technology and infrastructure sold to the country before the sanctions were imposed.

Shares of GE have traded mostly near $19 or $20 since early in the year. Fourteen out of 16 analysts polled by Thomson/First Call recommend buying shares. Their consensus price target is more than 10 percent higher than the current share price. GE also offers a dividend yield of about 3.5 percent.

Chevron (NYSE: CVX) has been involved in Myanmar since the company's 2005 takeover of Unocal. Chevron is a minority partner, along with French energy giant Total (NYSE: TOT), in the operation of the Yadana gas project - one of just two producing offshore projects in the country. Headlines this week include Myanmar's invitation to foreign energy firms to explore 23 offshore oil and gas blocks.

Chevron shares are trading near the same price they were at the beginning of the year, despite rising about 4 percent in the past month. 16 out of 21 analysts recommend buying shares, and their mean price target is about 10% higher than the current share price.

Baker Hughes (NYSE: BHI) and Schlumberger (NYSE: SLB) supply products and services to the oil and natural gas industry. Both companies have offices in Rangoon - also known as Yangon - which is the former capital of Burma. German engineering and technology company Siemens (NYSE: SI) has supplied gas turbines to Total for a platform in the Yadana gas field.

Caterpillar (NYSE: CAT), the world's largest maker of earth-moving equipment, already sells bulldozers and excavators in Myanmar through an independent dealer. Caterpillar plans to increase its presence in the country by lending money to its local dealer to help finance sales of Caterpillar equipment. Caterpillar's sales in Asia have been weak this year because of falling demand in China.

After dropping more than 27 percent since the beginning of March, when it was trading near the 52-week high, Caterpillar stock has underperformed the broader markets. Still, 19 out of 23 analysts rate the stock at Buy or Strong Buy. Their price target is more than 30 percent higher than the current share price.

The president of Alcatel-Lucent's (NYSE: ALU) Asia-Pacific unit recently told Reuters that the company was "observing and watching the developments in Burma with a lot of interest." Alcatel reportedly worked with the former regime in Myanmar to develop mobile networks.

Toyota Motors (NYSE: TM) and Lloyd's Banking (NYSE: LYG) have or have had ties to Myanmar as well.

Posted-In: Long Ideas Short Ideas Topics Global After-Hours Center Markets Analyst Ratings Trading Ideas Best of Benzinga


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