Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Wealth Management Connect: Wealth Management (WM) Connect should allow the residents of Hong Kong and the Greater Bay Area (GBA) to purchase WM products in each other's markets. The launch of a GBA financial connection has been the key turning point to convert HKEx from a conduit of capital flows to mainland China to a marketplace for transactions which connect mainland China and global liquidity; and
Consultation Paper Released: On May 6, 2021, mainland China’s financial regulatory authorities released a consultation paper on WM Connect. This should be another avenue to bring additional mainland Chinese liquidity through HKEX. Benefits to HKEX in the beginning will be limited given the initial quotas on residents and limitations on products.

*Wealth Management Connect: Wealth Management (WM) Connect should allow the residents of Hong Kong and the Greater Bay Area (GBA) to purchase WM products in each other's markets. The launch of a GBA financial connection has been the key turning point to convert HKEx from a conduit of capital flows to mainland China to a marketplace for transactions which connect mainland China and global liquidity; and
Consultation Paper Released: On May 6, 2021, mainland China’s financial regulatory authorities released a consultation paper on WM Connect. This should be another avenue to bring additional mainland Chinese liquidity through HKEX. Benefits to HKEX in the beginning will be limited given the initial quotas on residents and limitations on products.

Hong Kong Exchange & Clearing – Making The Connection

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Philippine Stock Exchange / Equity Bottom-Up

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Despite pressures on the Philippines from strict lockdowns and continuing issues with rising cases of COVID-19, <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange Inc (PSE PM)</a> looks increasingly attractive with a powerful combination of rising volumes and a significant pipeline of IPOs in 2021. 
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The exchange has also been a direct beneficiary of COVID-19 as it has encouraged the influx of greater numbers of retail investors, which has boosted market volumes significantly. 
The <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange Inc (PSE PM)</a> currently only has 272 listed companies, which looks quite a low number but is in the process of encouraging more smaller companies to list. 
The rapid increase in IPOs should be positive for margins given the high listing fees that the listing of new shares attracts. We have just seen the approval pass for the US$1bn <a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" data-smartkarma-citation="entities:32188:1" rel="noopener">Monde Nissin Corp (0191881D PM)</a> IPO, which will focus attention on the overall market.
<a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> has outlined a number of new initiatives to increase liquidity and the number of new listings.
The company is also looking to increasingly digitize its business by upgrading its clearing and settlement system and shortening settlement to T+2. 
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<a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" data-smartkarma-citation="entities:23182:1" rel="noopener">Philippine Stock Exchange (PSE PM)</a> is trading at a discount to regional exchanges on 17.1x FY21E PER, which trades on an average forward PER of 29x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus more IPOs in FY2021.
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Despite pressures on the Philippines from strict lockdowns and continuing issues with rising cases of COVID-19, Philippine Stock Exchange Inc (PSE PM) looks increasingly attractive with a powerful combination of rising volumes and a significant pipeline of IPOs in 2021. 

The exchange has also been a direct beneficiary of COVID-19 as it has encouraged the influx of greater numbers of retail investors, which has boosted market volumes significantly. 
The Philippine Stock Exchange Inc (PSE PM) currently only has 272 listed companies, which looks quite a low number but is in the process of encouraging more smaller companies to list. 
The rapid increase in IPOs should be positive for margins given the high listing fees that the listing of new shares attracts. We have just seen the approval pass for the US$1bn Monde Nissin Corp (0191881D PM) IPO, which will focus attention on the overall market.
Philippine Stock Exchange (PSE PM) has outlined a number of new initiatives to increase liquidity and the number of new listings.
The company is also looking to increasingly digitize its business by upgrading its clearing and settlement system and shortening settlement to T+2. 

Philippine Stock Exchange (PSE PM) is trading at a discount to regional exchanges on 17.1x FY21E PER, which trades on an average forward PER of 29x. There are also a number of potential catalysts ahead, the most obvious being higher volumes, driven by increasing retail participation plus more IPOs in FY2021.


Philippine Stock Exchange Inc (PSE PM) - Overlooked and On the Up

*Stake Purchase In Mainland Bank: DBS Group Holdings (DBS.SP) [DBS] for the second time in five months announced a transaction. The latest being its intention to acquire a 13% stake in the privately-held Shenzhen Rural Commercial Bank (SRCB) for CNY 5.29 bn (USD 814.3 mn), in a move that will accelerate its Greater Bay Area expansion strategy;*Very Expensive Transaction: DBS did disclose that this stake will be priced at a stated P/BV of 1.01x. By our calculation, the post-money P/BV amounts to 0.92x – which is still 41.5% (USD 338 mn) higher than the average valuation (0.65x P/BV) for a mainland Chinese bank; and*Deal Distractions Mount: On November 17, 2020, the RBI also announced a draft scheme to merge LVB with DBS Bank India Limited, the 100%-owned subsidiary of DBS Bank Holdings (DBS.SP), which will infuse INR 25 bn into its subsidiary to absorb and recapitalize LVB. While SRCB dos not appear to be riddled with problems the way LVB is, no doubt there will be issues to contend with.  DBS apparently isn’t done with its shopping spree, being in the running for parts of Citigroup's (C.US) consumer business in Asia. Frankly, DBS needs to focus on improving its own legacy issues before it starts both taking on that of other financial institutions.

*Stake Purchase In Mainland Bank: DBS Group Holdings (DBS.SP) [DBS] for the second time in five months announced a transaction. The latest being its intention to acquire a 13% stake in the privately-held Shenzhen Rural Commercial Bank (SRCB) for CNY 5.29 bn (USD 814.3 mn), in a move that will accelerate its Greater Bay Area expansion strategy;*Very Expensive Transaction: DBS did disclose that this stake will be priced at a stated P/BV of 1.01x. By our calculation, the post-money P/BV amounts to 0.92x – which is still 41.5% (USD 338 mn) higher than the average valuation (0.65x P/BV) for a mainland Chinese bank; and*Deal Distractions Mount: On November 17, 2020, the RBI also announced a draft scheme to merge LVB with DBS Bank India Limited, the 100%-owned subsidiary of DBS Bank Holdings (DBS.SP), which will infuse INR 25 bn into its subsidiary to absorb and recapitalize LVB. While SRCB dos not appear to be riddled with problems the way LVB is, no doubt there will be issues to contend with.  DBS apparently isn’t done with its shopping spree, being in the running for parts of Citigroup's (C.US) consumer business in Asia. Frankly, DBS needs to focus on improving its own legacy issues before it starts both taking on that of other financial institutions.

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener"></a><a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> has not been very fortunate in the past few weeks; rising cases in Bangkok that caused the management to call off the BeerCo IPO, dampened investors' excitement on the value unlocking event. Its high debt also is another factor that its share price does not get re-rated compared to its peers. In ASEAN, <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> is trading at a slight discount to <a href="https://www.smartkarma.com/entities/saigon-beer-alcohol-beverage" target="_blank" data-smartkarma-citation="entities:23645:1" rel="noopener">Saigon Beer Alcohol Beverage (SAB VN)</a> although the latter's profitability is much higher with little debt. 
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For Asian beverage investors, there are other stocks with similar profitability profiles with lower debt and much bigger markets (North Asia) such as <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> , <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a> that receive more attention from investors.
 For ASEAN beverage investors, Thai Beverage is one of the bigger and more prominent beverage companies although it is not the most profitable and the debt burden has caused some investors to shun it but it should still be a valid choice especially when it is trading at a discount such as currently. 
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Thai Beverage (THBEV SP) has not been very fortunate in the past few weeks; rising cases in Bangkok that caused the management to call off the BeerCo IPO, dampened investors' excitement on the value unlocking event. Its high debt also is another factor that its share price does not get re-rated compared to its peers. In ASEAN, Thai Beverage (THBEV SP) is trading at a slight discount to Saigon Beer Alcohol Beverage (SAB VN) although the latter's profitability is much higher with little debt. 

For Asian beverage investors, there are other stocks with similar profitability profiles with lower debt and much bigger markets (North Asia) such as Tsingtao Brewery Co Ltd H (168 HK) , China Resources Beer Holdings (291 HK) that receive more attention from investors.
 For ASEAN beverage investors, Thai Beverage is one of the bigger and more prominent beverage companies although it is not the most profitable and the debt burden has caused some investors to shun it but it should still be a valid choice especially when it is trading at a discount such as currently. 


Thai Beverage (Thbev): Delayed Beer IPO and Undervaluation

*Solid March Trading Result: Singapore Exchange (SGX.SP) [SGX] reported strong FY 3Q21 securities and derivatives volumes due to improving market caps and velocity. Securities value traded and average daily trading vale (ADTV) increased 50% and 24% MOM in March, respectively. Derivative volumes also improved 31% MOM to 23.2 mn contracts, reaching a new peak since July 2020; and *A Wrench Thrown Into SGX’s SPAC Plan:  The U.S. Securities and Exchange Commission (SEC) issued accounting guidance for SPACs, calling warrant issuance by SPACs liabilities rather than equity instruments. This could disrupt new SPAC filings, and certainly throw a wrench into SGX’s SPAC plans.

*Solid March Trading Result: Singapore Exchange (SGX.SP) [SGX] reported strong FY 3Q21 securities and derivatives volumes due to improving market caps and velocity. Securities value traded and average daily trading vale (ADTV) increased 50% and 24% MOM in March, respectively. Derivative volumes also improved 31% MOM to 23.2 mn contracts, reaching a new peak since July 2020; and *A Wrench Thrown Into SGX’s SPAC Plan:  The U.S. Securities and Exchange Commission (SEC) issued accounting guidance for SPACs, calling warrant issuance by SPACs liabilities rather than equity instruments. This could disrupt new SPAC filings, and certainly throw a wrench into SGX’s SPAC plans.

Singapore Exchange – Solid Quarter, But SPAC Setback

Singapore

Singapore Exchange Limited owns and operates Singapore's Securities and derivatives exchange and their related clearing houses.  The Company also provides ancillary securities processing and information technology services to participants in the financial sector.

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SGX (SGX SP)

Hong Kong Exchange & Clearing – Making The Connection

HONG KONG EXCHANGES & CLEARING: Mainland China’s financial regulatory authorities released a consultation paper on WM Connect, an avenue to bring...

Thomas J. Monaco

Philippine Stock Exchange Inc (PSE PM) - Overlooked and On the Up

The Philippine Stock Exchange (PSE PM) is probably the most overlooked listed stock exchange in Asia, with the catalyst of higher volumes driven by...

Angus Mackintosh

DBS Group Holdings – Pricey China Deal

DBS GROUP HOLDINGS: DBS is acquiring a 13% stake in the privately-held SRCB for USD 814.3 mn. P/BV amounts to 0.92x – which is still 41.5% higher...

Thomas J. Monaco

Thai Beverage (Thbev): Delayed Beer IPO and Undervaluation

Thai Bev has not been very fortunate in the past few weeks; rising cases in Bangkok that caused the management to call off the BeerCo IPO, dampened...

Henry Soediarko

Singapore Exchange – Solid Quarter, But SPAC Setback

SINGAPORE EXCHANGE: SGX reported strong securities/derivatives volumes on improving market caps/velocity. The U.S. SEC, however, issued SPAC...

Thomas J. Monaco

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