Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>Last week, SGX and the New York Stock Exchange announced a collaboration focusing on dual listings and new products (primarily ETFs)... and all with an overarching ESG imperative.</li>
<li>Typically, these kinds of announcements are met with a healthy dash of skepticism by investors but the SGX/NYSE agreement is a clear exception, deserving atypical early-stage optimism.</li>
<li>Complementary skill sets (Right Partners), once-in-lifetime market opportunities (Right Place), and leveraging existing cabilities to meet current ESG investing demand (Right Products).</li>
</ul>


Last week, SGX and the New York Stock Exchange announced a collaboration focusing on dual listings and new products (primarily ETFs)... and all with an overarching ESG imperative.
Typically, these kinds of announcements are met with a healthy dash of skepticism by investors but the SGX/NYSE agreement is a clear exception, deserving atypical early-stage optimism.
Complementary skill sets (Right Partners), once-in-lifetime market opportunities (Right Place), and leveraging existing cabilities to meet current ESG investing demand (Right Products).


SGX/NYSE Collaboration Agreement: Right Partners, Right Place, Right Products

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services</li>
<li>We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams</li>
<li>Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions</li>
</ul>


Exchanges continue to seek revenue streams outside of the traditional trading fees in post-trading, as well as capitalising on “big data” in financial transactions and data services
We identify three relative value opportunities in exchanges; MexBolsa, B3 and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
Coinbase remains the exchange to avoid, in our view, despite its share price collapse; aside from negative news-flow, its revenue streams are heavily exposed to low volumes of crypto transactions


Global Exchanges – The Quest for Recurring Revenues

<ul>
<li>Combating climate change is a global imperative, and is particularly urgent for Southeast Asia which faces a disproportionate share of the adverse physical, social, and economic impacts.</li>
<li>ASEAN nations have demonstrated a strong commitment to climate action and have made real progress in certain areas, but require substantial climate financing to achieve their targets.</li>
<li>All regional ASEAN banks will play a critical role in climate finance, but those at the forefront of sustainable/green finance are poised to benefit from the region's climate transition.</li>
</ul>


Combating climate change is a global imperative, and is particularly urgent for Southeast Asia which faces a disproportionate share of the adverse physical, social, and economic impacts.
ASEAN nations have demonstrated a strong commitment to climate action and have made real progress in certain areas, but require substantial climate financing to achieve their targets.
All regional ASEAN banks will play a critical role in climate finance, but those at the forefront of sustainable/green finance are poised to benefit from the region's climate transition.


Green Banking in ASEAN: An Assessment of ASEAN Banks' Sustainable Finance Policies

<ul>
<li>Notwithstanding bright spots and positive long-term outlook, the ESG gold rush has created an acute state of chaos. Regulatory flux. Rampant greenwashing. ESG litigation. Elon and S&amp;P.</li>
<li>The silver lining? New ESG-related investing opportunities emerging from all the chaos; stocks poised to benefit, regardless of who else wins or losses. The new shovel-sellers, as it were.</li>
<li>One large opportunity is driven by new greenhouse gas (GHG) reporting regulations, specifcally leading GHG emissions software-as-a-service (SaaS) and platform-as-a-service (PaaS) stocks.</li>
</ul>


Notwithstanding bright spots and positive long-term outlook, the ESG gold rush has created an acute state of chaos. Regulatory flux. Rampant greenwashing. ESG litigation. Elon and S&amp;P.
The silver lining? New ESG-related investing opportunities emerging from all the chaos; stocks poised to benefit, regardless of who else wins or losses. The new shovel-sellers, as it were.
One large opportunity is driven by new greenhouse gas (GHG) reporting regulations, specifcally leading GHG emissions software-as-a-service (SaaS) and platform-as-a-service (PaaS) stocks.


Selling Shovels in a Gold Rush: SaaS Stocks Cashing in on Emissions Reporting Rules

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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For the 5 trading sessions that spanned May 13 to 19, the Straits Times Index (STI) gained 0.8 per cent, with the FTSE China A50 Index adding 0.2 per cent, the Hang Seng Index gaining 2.5 per cent and the FTSE Bursa Malaysia KLCI declining 1.0 per cent.  
Overall, institutions were net buyers of Singapore stocks over the 5 sessions with S$3.4 million of net inflow, following S$145 million of net outflow for the preceding 5 sessions. OCBC, Keppel Corporation, UOB, Singapore Exchange and Singapore Telecommunications led the net institutional inflows for the 5 sessions through to May 19. Share buybacks

There were 17 primary-listed stocks conducting share buybacks over the 5 sessions ended May 19, with a total consideration of S$67,410,124, down from the S$122.8 million for the preceding 5 sessions. 
After buying back 10 million shares on May 12, CapitaLand Investment bought back another 6,106,600 million shares at an average price of S$3.80 per share, while Keppel Corporation led the consideration tally with 3,689,000 shares bought back at an average price of S$6.69 per share.   Director and substantial shareholder transactions

The 5 trading sessions saw over 100 changes to director interests and substantial shareholdings filed for more than 40 primary-listed stocks. This included 20 company director acquisitions with 2 disposals filed, while substantial shareholders filed 8 acquisitions and 4 disposals. UOL Group

On May 12, Wee Investments acquired 200,000 shares of UOL Group at an average price of S$6.99 per share. This took the total interest in the company of UOL Group chairman Wee Cho Yaw from 38.29 per cent to 38.32 per cent. It followed Wee Investments’ acquisition of 500,000 shares also at S$6.99 per share between May 10 and 11. Wee also serves as the chairman of UOL Group, United Overseas Insurance, Haw Par Corporation and Singapore Land Group. Trans-China Automotive Holdings

On May 18, Trans-China Automotive Holdings executive chairman and CEO Francis Tjia acquired 4.0 million shares of the Catalist-listed company at 21.0 cents per share, through Octo Holdings which he wholly owns. With a consideration of S$840,000, this increased his deemed interest in the vehicle dealership group from 77.93 per cent to 78.61 per cent. Tjia has more than 20 years of experience in the industry in China. Frencken Group

On May 19, Frencken Group non-executive non-independent chairman Gooi Soon Chai acquired 200,000 shares of the company at S$1.15 per share. With a consideration of S$230,000, this took his total interest in the integrated technology solutions company from 23.48 per cent to 23.53 per cent.

It followed his acquisition of 50,000 shares on Mar 11 at S$1.53 per share. He was appointed the group’s chairman in August 2016.

Also, on May 19, Frencken Group president and executive director Dennis Au acquired 200,000 shares of the company at S$1.16 per share. This took his interest from 0.89 per cent to 0.94 per cent. His preceding acquisitions were between Mar 7 and 8, with 150,000 shares acquired at S$1.52 per share. Chip Eng Seng Corporation

On May 13, Chip Eng Seng Corporation lead independent director Abdul Jabbar bin Karam Din acquired 292,400 shares of the company at 42.0 cents per share. With a consideration of S$122,808, this took his direct interest in the homegrown property development and construction group to 0.04 per cent.

Abdul Jabbar joined the board on Feb 2, 2018 as an independent director and was appointed lead independent director in April 2021. An executive committee partner with Rajah and Tann Singapore, he heads the firm’s corporate and transactional practice. He has more than 25 years’ extensive experience in mergers and acquisitions, joint ventures, employment, banking and finance, general commercial and private client work, both local and international. Transit-Mixed Concrete

Between May 11 and 12, Transit-Mixed Concrete executive director Lee Sai Sing acquired 833,400 shares at 14.5 cents per share. With a consideration of S$120,843, this increased his direct interest in the provider of concrete pumping services and waste management, from 55.07 per cent to 55.87 per cent. His preceding acquisition was on Dec 21, with 63,400 shares acquired at 13.9 cents per share.

Lee has extensive experience in investing in unlisted and listed Asian equities and serves as independent director at Maxi-Cash Financial Services Corporation. He is involved in advising corporations in restructurings, pre-initial public offerings and initial public offerings and has worked in the fund management industry for many years in major financial institutions like GIC, BNP Paribas Private Bank and Maybank-Kim Eng.

On Apr 27, the company reported that turnover grew by 64 per cent to S$8.24 million for the year ended Feb 28, compared with S$5.01 million in the previous year. JB Foods

On May 13, JB Foods executive director Goh Lee Beng acquired 192,000 shares of the listed company for a consideration of S$95,040. At 49.5 cents per share, this took Goh’s total interest from 1.59 per cent to 1.65 per cent. JB Cocoa Group Sdn Bhd also maintains a 45.52 per cent interest in JB Foods, of which Goh has a deemed interest. This brings her total interest in JB foods to 47.17 per cent.

With over 25 years of experience in the cocoa business, she is responsible for procurement of raw materials and managing the cocoa trading positions, which includes sourcing of cocoa beans and cocoa ingredients, managing the group’s cocoa hedging book, monitoring world cocoa trends, and marketing of cocoa butter. Bonvests Holdings

Between May 11 and 17, Bonvests Holdings executive chairman and managing director Henry Ngo acquired 86,300 shares of the company for a consideration of S$82,737, at an average price of 95.9 cents per share.

The acquisition was made though Allsland, which is wholly owned by Ngo and increased his total interest in Bonvests from 83.77 per cent to 83.80 per cent. Asian Pay Television Trust

On May 17, the CEO of the trustee-manager of Asian Pay Television Trust, Brian McKinley, acquired 300,000 units at 13.3 cents per unit. With a consideration of S$39,900, this increased his direct interest in the business trust from 0.13 per cent to 0.15 per cent.

His preceding acquisitions were on Feb 28, with 200,000 units acquired at 13.7 cents per unit; Nov 19, with 200,000 units bought at 13.6 cents per unit; and on Sept 10, with 400,000 units bought at 13.1 cents per unit. Prior to his appointment as CEO in Apr 2017, McKinley was the CFO of the trustee-manager, an office he held since the listing of APTT in May 2013.

On May 13, APTT reported revenue of S$73.6 million for its Q1 2022 which was down 1.1 per cent from S$74.4 million in Q1 2021, while Ebitda declined 4.8 per cent to S$43.2 million, on higher operating expenses. Broadband revenue for Q1 2022 recorded 16.5 per cent growth from Q1 2021, with continued increases in subscribers, ARPU and revenue in both S$ and NT$.

APTT is the first listed business trust in Asia focused on pay-TV and broadband businesses, with its current investment mandate to acquire controlling interests in and to own, operate and maintain mature, cash generative pay-TV and broadband businesses in Taiwan, Hong Kong, Japan, and Singapore. Dyna-Mac Holdings

On May 13, Dyna-Mac Holdings executive director and CEO, Lim Ah Cheng acquired 168,000 shares of the company at 14.2 cents per share. With a consideration of S$23,856, this increased Lim’s direct interest in the global multi-disciplinary contractor from 0.18 per cent to 0.19 per cent.

On May 12, Dyna-Mac Holdings reported its revenue increased to S$67.5 million in Q1 2022, from S$41.1 million in Q1 2021, mainly due to higher progress achieved for the projects carried out in Q1 2022. At the same time, Q1 2022 gross profit declined by S$0.2 million to S$5.7 million, from S$5.9 million in Q1 2021, mainly due to additional variation works recognised in Q1 2021.

Lim has more than 20 years of extensive working experience in project management, commercial management, yards operations and design engineering in the Oil and Gas Industries and was a Keppel Corporation Scholarship recipient. Prior to joining Dyna-Mac Holdings, he held various senior management positions in Keppel Offshore and Marine group. Oxley Holdings

Between May 13 and 18, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 100,000 shares of the company at an average price of 17.4 cents per share, with a consideration of S$17,435. Low maintains a 28.13 per cent direct interest in the firm and is responsible for the operation of the group including sales and marketing, project development, business development and financial management. He also assists the CEO in charting and executing strategic plans. Inside Insights is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/hong-fok-continues-buybacks-as-joint-ceo-raises-stake-0"> </a><a href="https://www.businesstimes.com.sg/companies-markets/uol-trans-china-automotive-frencken-chairmen-raise-stakes">read </a>the original version.
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    Share buyback


For the 5 trading sessions that spanned May 13 to 19, the Straits Times Index (STI) gained 0.8 per cent, with the FTSE China A50 Index adding 0.2 per cent, the Hang Seng Index gaining 2.5 per cent and the FTSE Bursa Malaysia KLCI declining 1.0 per cent.   
Overall, institutions were net buyers of Singapore stocks over the 5 sessions with S$3.4 million of net inflow, following S$145 million of net outflow for the preceding 5 sessions. OCBC, Keppel Corporation, UOB, Singapore Exchange and Singapore Telecommunications led the net institutional inflows for the 5 sessions through to May 19.  Share buybacks

There were 17 primary-listed stocks conducting share buybacks over the 5 sessions ended May 19, with a total consideration of S$67,410,124, down from the S$122.8 million for the preceding 5 sessions.  
After buying back 10 million shares on May 12, CapitaLand Investment bought back another 6,106,600 million shares at an average price of S$3.80 per share, while Keppel Corporation led the consideration tally with 3,689,000 shares bought back at an average price of S$6.69 per share.    Director and substantial shareholder transactions

The 5 trading sessions saw over 100 changes to director interests and substantial shareholdings filed for more than 40 primary-listed stocks. This included 20 company director acquisitions with 2 disposals filed, while substantial shareholders filed 8 acquisitions and 4 disposals.  UOL Group

On May 12, Wee Investments acquired 200,000 shares of UOL Group at an average price of S$6.99 per share. This took the total interest in the company of UOL Group chairman Wee Cho Yaw from 38.29 per cent to 38.32 per cent. It followed Wee Investments’ acquisition of 500,000 shares also at S$6.99 per share between May 10 and 11. Wee also serves as the chairman of UOL Group, United Overseas Insurance, Haw Par Corporation and Singapore Land Group.  Trans-China Automotive Holdings

On May 18, Trans-China Automotive Holdings executive chairman and CEO Francis Tjia acquired 4.0 million shares of the Catalist-listed company at 21.0 cents per share, through Octo Holdings which he wholly owns. With a consideration of S$840,000, this increased his deemed interest in the vehicle dealership group from 77.93 per cent to 78.61 per cent. Tjia has more than 20 years of experience in the industry in China.  Frencken Group

On May 19, Frencken Group non-executive non-independent chairman Gooi Soon Chai acquired 200,000 shares of the company at S$1.15 per share. With a consideration of S$230,000, this took his total interest in the integrated technology solutions company from 23.48 per cent to 23.53 per cent.

It followed his acquisition of 50,000 shares on Mar 11 at S$1.53 per share. He was appointed the group’s chairman in August 2016.

Also, on May 19, Frencken Group president and executive director Dennis Au acquired 200,000 shares of the company at S$1.16 per share. This took his interest from 0.89 per cent to 0.94 per cent. His preceding acquisitions were between Mar 7 and 8, with 150,000 shares acquired at S$1.52 per share.  Chip Eng Seng Corporation

On May 13, Chip Eng Seng Corporation lead independent director Abdul Jabbar bin Karam Din acquired 292,400 shares of the company at 42.0 cents per share. With a consideration of S$122,808, this took his direct interest in the homegrown property development and construction group to 0.04 per cent.

Abdul Jabbar joined the board on Feb 2, 2018 as an independent director and was appointed lead independent director in April 2021. An executive committee partner with Rajah and Tann Singapore, he heads the firm’s corporate and transactional practice. He has more than 25 years’ extensive experience in mergers and acquisitions, joint ventures, employment, banking and finance, general commercial and private client work, both local and international.  Transit-Mixed Concrete

Between May 11 and 12, Transit-Mixed Concrete executive director Lee Sai Sing acquired 833,400 shares at 14.5 cents per share. With a consideration of S$120,843, this increased his direct interest in the provider of concrete pumping services and waste management, from 55.07 per cent to 55.87 per cent. His preceding acquisition was on Dec 21, with 63,400 shares acquired at 13.9 cents per share.

Lee has extensive experience in investing in unlisted and listed Asian equities and serves as independent director at Maxi-Cash Financial Services Corporation. He is involved in advising corporations in restructurings, pre-initial public offerings and initial public offerings and has worked in the fund management industry for many years in major financial institutions like GIC, BNP Paribas Private Bank and Maybank-Kim Eng.

On Apr 27, the company reported that turnover grew by 64 per cent to S$8.24 million for the year ended Feb 28, compared with S$5.01 million in the previous year.  JB Foods

On May 13, JB Foods executive director Goh Lee Beng acquired 192,000 shares of the listed company for a consideration of S$95,040. At 49.5 cents per share, this took Goh’s total interest from 1.59 per cent to 1.65 per cent. JB Cocoa Group Sdn Bhd also maintains a 45.52 per cent interest in JB Foods, of which Goh has a deemed interest. This brings her total interest in JB foods to 47.17 per cent.

With over 25 years of experience in the cocoa business, she is responsible for procurement of raw materials and managing the cocoa trading positions, which includes sourcing of cocoa beans and cocoa ingredients, managing the group’s cocoa hedging book, monitoring world cocoa trends, and marketing of cocoa butter.  Bonvests Holdings

Between May 11 and 17, Bonvests Holdings executive chairman and managing director Henry Ngo acquired 86,300 shares of the company for a consideration of S$82,737, at an average price of 95.9 cents per share.

The acquisition was made though Allsland, which is wholly owned by Ngo and increased his total interest in Bonvests from 83.77 per cent to 83.80 per cent.  Asian Pay Television Trust

On May 17, the CEO of the trustee-manager of Asian Pay Television Trust, Brian McKinley, acquired 300,000 units at 13.3 cents per unit. With a consideration of S$39,900, this increased his direct interest in the business trust from 0.13 per cent to 0.15 per cent.

His preceding acquisitions were on Feb 28, with 200,000 units acquired at 13.7 cents per unit; Nov 19, with 200,000 units bought at 13.6 cents per unit; and on Sept 10, with 400,000 units bought at 13.1 cents per unit. Prior to his appointment as CEO in Apr 2017, McKinley was the CFO of the trustee-manager, an office he held since the listing of APTT in May 2013.

On May 13, APTT reported revenue of S$73.6 million for its Q1 2022 which was down 1.1 per cent from S$74.4 million in Q1 2021, while Ebitda declined 4.8 per cent to S$43.2 million, on higher operating expenses. Broadband revenue for Q1 2022 recorded 16.5 per cent growth from Q1 2021, with continued increases in subscribers, ARPU and revenue in both S$ and NT$.

APTT is the first listed business trust in Asia focused on pay-TV and broadband businesses, with its current investment mandate to acquire controlling interests in and to own, operate and maintain mature, cash generative pay-TV and broadband businesses in Taiwan, Hong Kong, Japan, and Singapore.  Dyna-Mac Holdings

On May 13, Dyna-Mac Holdings executive director and CEO, Lim Ah Cheng acquired 168,000 shares of the company at 14.2 cents per share. With a consideration of S$23,856, this increased Lim’s direct interest in the global multi-disciplinary contractor from 0.18 per cent to 0.19 per cent.

On May 12, Dyna-Mac Holdings reported its revenue increased to S$67.5 million in Q1 2022, from S$41.1 million in Q1 2021, mainly due to higher progress achieved for the projects carried out in Q1 2022. At the same time, Q1 2022 gross profit declined by S$0.2 million to S$5.7 million, from S$5.9 million in Q1 2021, mainly due to additional variation works recognised in Q1 2021.

Lim has more than 20 years of extensive working experience in project management, commercial management, yards operations and design engineering in the Oil and Gas Industries and was a Keppel Corporation Scholarship recipient. Prior to joining Dyna-Mac Holdings, he held various senior management positions in Keppel Offshore and Marine group.  Oxley Holdings

Between May 13 and 18, Oxley Holdings executive director and deputy CEO Eric Low See Ching acquired 100,000 shares of the company at an average price of 17.4 cents per share, with a consideration of S$17,435. Low maintains a 28.13 per cent direct interest in the firm and is responsible for the operation of the group including sales and marketing, project development, business development and financial management. He also assists the CEO in charting and executing strategic plans.  Inside Insights is a weekly column on The Business Times, read the original version.



UOL, Trans-China Automotive & Frencken chairmen raise stakes

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)

SGX/NYSE Collaboration Agreement: Right Partners, Right Place, Right Products

SGX and NYSE recently announced a collaboration agreement that warrants early optimism. Right partners (complementary skills), right place (market...

Kyle Rudden

Global Exchanges – The Quest for Recurring Revenues

We identify MexBolsa, B3 and Deutsche Borse as exchanges that feature positively multiple times in our value screens and that are diversifying away...

Victor Galliano

Green Banking in ASEAN: An Assessment of ASEAN Banks' Sustainable Finance Policies

ASEAN needs billions (probably trillions) in climate finance, and ASEAN banks are poised to play a vital role. This is an assessment of sustainable...

Kyle Rudden

Selling Shovels in a Gold Rush: SaaS Stocks Cashing in on Emissions Reporting Rules

ESG investing has been complicated by evolving emissions reporting regulations. With the chaos, comes new investment opportunities. Such as in...

Kyle Rudden

UOL, Trans-China Automotive & Frencken chairmen raise stakes

For the 5 trading sessions that spanned May 13 to 19, the Straits Times Index (STI) gained 0.8 per cent, with the FTSE China...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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