IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/hi-p-international-ltd" target="_blank" data-smartkarma-citation="entities:9589:1" rel="noopener">Hi P International (HIP SP)</a> is an integrated contract manufacturer. On Friday, HIP announced a voluntary unconditional general offer from its CEO and controlling shareholder, Mr Yao. The offer price of S$2.00 per share is a 13.6% premium to the last trading price of S$1.76 per share (14 December prior to the trading halt). </p><div class="content-highlight"><p>The offeror (including irrevocables) currently holds 83.50% of the outstanding shares and 82.37% of the maximum potential issued share capital. The offeror aims to delist HIP if the free float requirements (at least 10% of public shareholders) are not met and if entitled, exercise its rights of compulsory acquisition. Overall, we think that the offer price is attractive and the privatisation will succeed. </p></div>

Hi P International (HIP SP) is an integrated contract manufacturer. On Friday, HIP announced a voluntary unconditional general offer from its CEO and controlling shareholder, Mr Yao. The offer price of S$2.00 per share is a 13.6% premium to the last trading price of S$1.76 per share (14 December prior to the trading halt). The offeror (including irrevocables) currently holds 83.50% of the outstanding shares and 82.37% of the maximum potential issued share capital. The offeror aims to delist HIP if the free float requirements (at least 10% of public shareholders) are not met and if entitled, exercise its rights of compulsory acquisition. Overall, we think that the offer price is attractive and the privatisation will succeed. 

Hi-P International’s Voluntary Unconditional Offer by the Controlling Shareholder

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

Cross Asset Strategy

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<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: The Insight <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation</a> was improperly attributed to Thomas Monaco. It was published by <a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a>.</strong></em></p>
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<p>The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.</p>
<p>We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  </p>
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<p><strong><a href="https://www.smartkarma.com/insights/smartkarma-corporate-webinar-indo-banks-the-worst-is-over" target="_blank" data-smartkarma-citation="insights:44882" rel="noopener">Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over</a></strong>-<strong> 10th November at 4 pm.</strong></p>
<p>For our next Corporate Webinar, we welcome <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a>'s Group Head of Investor Relations, <a href="https://www.smartkarma.com/profiles/yohan-setio" target="_blank" rel="noopener">Yohan Setio</a>, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a>.</p>
<h2>Indonesia's Recovery and the Next Digital Darling</h2>
<p>This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> as core ways to play this recovery. </p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ),</a> which is the major shareholder of <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.</p>
<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. </p>
<h3>Macro Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-2-top-10-stock-picks" target="_blank" data-smartkarma-citation="insights:40851" rel="noopener">Thai Strategy 2021 (Part 2): Top 10 Stock Picks,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> lays out his top stock picks in Thailand for next year.</p>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-3-sector-outlooks" target="_blank" data-smartkarma-citation="insights:40864" rel="noopener">Thai Strategy 2021 (Part 3): Sector Outlooks,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> provides us with his sector strategy in Thailand for the coming year. </p>
<h3>Equity Bottom Up</h3>
<p>In an Indonesian Insight,<a href="https://www.smartkarma.com/insights/astra-international-asii-ij-an-auto-recovery-story-with-a-golden-digital-twist" target="_blank" rel="noopener"> Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist</a>, CrossASEAN Insight provider<a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener"> Angus Mackintosh</a> returns to look at<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" rel="noopener"> Astra International (ASII IJ)</a> after a conversation with management. </p>
<p>In <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" target="_blank" data-smartkarma-citation="insights:44914" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits one of Indonesia's leading media companies, which has an increasingly digital twist.</p>
<p>In <a href="https://www.smartkarma.com/insights/aem-holdings-optimistic-on-fy21-fair-value-remains-at-5-sgd-41-upside" target="_blank" data-smartkarma-citation="insights:44915" rel="noopener">AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside),</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> revisits <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> after an impressive set of results and remains positive.</p>
<p>In <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> writes on this smaller Indonesian lender with a positive slant.</p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-still-not-a-great-eastern" target="_blank" data-smartkarma-citation="insights:44901" rel="noopener">Oversea Chinese Banking Corp – Still Not A Great Eastern,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> looked in detail at <a href="https://www.smartkarma.com/entities/great-eastern-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern Holdings (GE SP)</a> numbers ahead of <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">Oversea Chinese Banking Corp. (OCBC SP)</a> results. </p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-solid" target="_blank" data-smartkarma-citation="insights:45061" rel="noopener">Oversea Chinese Banking Corp. – Solid,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. </p>
<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener"></a>In<a href="https://www.smartkarma.com/insights/dbs-group-holdings-not-trending-the-right-way-yet" target="_blank" rel="noopener"> DBS Group Holdings – Not Trending The Right Way Yet</a>,<a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" rel="noopener"> Thomas J. Monaco</a> reports back<a href="https://www.smartkarma.com/entities/dbs-group-holdings-ltd" target="_blank" rel="noopener"> DBS Group Holdings (DBS SP)</a>'s post its recent 3Q2020 results with a chequered view.</p>
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<p>In this Thai Insight,<a href="https://www.smartkarma.com/insights/hmpro-expect-government-stimulus-scheme-drive-4q20-recover-qoq" target="_blank" rel="noopener"> HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> circle back to Thailand's leading home improvements player <a href="https://www.smartkarma.com/entities/home-product-center-pcl" target="_blank" data-smartkarma-citation="entities:9906:1" rel="noopener">Home Product Center (HMPRO TB)</a>. </p>
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<p>In<a href="https://www.smartkarma.com/insights/synex-solid-earnings-growth-outlook-but-largely-priced-in" target="_blank" rel="noopener"> SYNEX: Solid Earnings Growth Outlook but Largely Priced In</a>,<a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener"> Country Group</a> provides a view on<a href="https://www.smartkarma.com/entities/synnex-thailand-pcl" target="_blank" rel="noopener"> Synnex Thailand (SYNEX TB),</a> following the recent run-up in the share price. </p>
<p>In this Thai Insight, <a href="https://www.smartkarma.com/insights/scc-strong-3q20-thanks-to-petrochemical-spread" target="_blank" rel="noopener">SCC: Strong 3Q20 Thanks to Petrochemical Spread</a>, our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> return to look at<a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" rel="noopener"> Siam Cement (SCC TB)</a> post 3Q2020 results. </p>
<p>In <a href="https://www.smartkarma.com/insights/mc-prominent-denim-brand-with-new-growth-momentum" target="_blank" data-smartkarma-citation="insights:45077" rel="noopener">MC: Prominent Denim Brand with New Growth Momentum,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a>initiate on this leading Thai denim apparel player. They initiate coverage of <a href="https://www.smartkarma.com/entities/mc-group-pcl" target="_blank" data-smartkarma-citation="entities:17093:1" rel="noopener">MC Group Pcl (MC TB)</a> with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.</p>
<h3>Credit Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/lippo-karawaci-earnings-flash-q3-fy-2020-results-lucror-analytics" target="_blank" rel="noopener">Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results</a>, credit specialist<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> looks at<a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" rel="noopener"> Lippo Karawaci (LPKR IJ)'s</a> after its recent results, which continued to be robust in Q32020. </p>
<p>In <a href="https://www.smartkarma.com/insights/chandra-asri-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44814" rel="noopener">Chandra Asri - Earnings Flash - 9M FY 2020 Results</a> credit specialist <a href="https://www.smartkarma.com/profiles/leonard-law-cfa" target="_blank" data-smartkarma-citation="accounts:7106" rel="noopener">Leonard Law, CFA</a> circles back to this leading chemicals player post 3Q2020 results.</p>


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The Insight BJBR: Positive Fundamental Momentum at a Decent Valuation was improperly attributed to Thomas Monaco. It was published by Paul Hollingworth.



The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  

Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over- 10th November at 4 pm.
For our next Corporate Webinar, we welcome Bank Mandiri Persero (BMRI IJ)'s Group Head of Investor Relations, Yohan Setio, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider Angus Mackintosh.
Indonesia's Recovery and the Next Digital Darling
This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and Astra International (ASII IJ) as core ways to play this recovery. 
Sea Ltd (SE US) is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is Emtek (EMTK IJ), which is the major shareholder of PT Surya Citra Media Tbk (SCMA IJ) but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.
Emtek (EMTK IJ) has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. 
Macro Insights
In Thai Strategy 2021 (Part 2): Top 10 Stock Picks, our Thai guru Athaporn Arayasantiparb, CFA lays out his top stock picks in Thailand for next year.
In Thai Strategy 2021 (Part 3): Sector Outlooks, our Thai guru Athaporn Arayasantiparb, CFA provides us with his sector strategy in Thailand for the coming year. 
Equity Bottom Up
In an Indonesian Insight, Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist, CrossASEAN Insight provider Angus Mackintosh returns to look at Astra International (ASII IJ) after a conversation with management. 
In PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia's leading media companies, which has an increasingly digital twist.
In AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside), CrossASEAN Insight Provider Nicolas Van Broekhoven revisits AEM Holdings (AEM SP) after an impressive set of results and remains positive.
In BJBR: Positive Fundamental Momentum at a Decent Valuation,Thomas J. Monaco writes on this smaller Indonesian lender with a positive slant.
In Oversea Chinese Banking Corp – Still Not A Great Eastern,Thomas J. Monaco looked in detail at Great Eastern Holdings (GE SP) numbers ahead of Oversea Chinese Banking Corp. (OCBC SP) results. 
In Oversea Chinese Banking Corp. – Solid,Thomas J. Monaco revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. 
In DBS Group Holdings – Not Trending The Right Way Yet, Thomas J. Monaco reports back DBS Group Holdings (DBS SP)'s post its recent 3Q2020 results with a chequered view.



In this Thai Insight, HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ, our friends at Country Group circle back to Thailand's leading home improvements player Home Product Center (HMPRO TB). 



In SYNEX: Solid Earnings Growth Outlook but Largely Priced In, Country Group provides a view on Synnex Thailand (SYNEX TB), following the recent run-up in the share price. 
In this Thai Insight, SCC: Strong 3Q20 Thanks to Petrochemical Spread, our friends at Country Group return to look at Siam Cement (SCC TB) post 3Q2020 results. 
In MC: Prominent Denim Brand with New Growth Momentum, our friends at Country Groupinitiate on this leading Thai denim apparel player. They initiate coverage of MC Group Pcl (MC TB) with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.
Credit Insights
In Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results, credit specialist Trung Nguyen looks at Lippo Karawaci (LPKR IJ)'s after its recent results, which continued to be robust in Q32020. 
In Chandra Asri - Earnings Flash - 9M FY 2020 Results credit specialist Leonard Law, CFA circles back to this leading chemicals player post 3Q2020 results.

The Week that Was in ASEAN@Smartkarma - Indonesia's Recovery and the Next Digital Darling

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> published great 9M20 results. Management will give FY21 guidance in January but sounded upbeat on its prospects going into FY21.</p><p>AEM has hired an entire new CEO/CFO/CTO suite over the past 18 months. We believe this highly qualified new C-suit would not have joined AEM if they did not see a clear path of making AEM into a 1 billion USD company going forward. </p><p>YTD the share price of AEM is up by 75% but has come off its earlier highs. Given FY21 guidance uncertainty and muted consensus expectations (2% revenue growth in FY21 and -1% growth in FY22) we like the risk/reward set-up. The downside is protected by <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> becoming a takeover target itself at some point but not before the maximum value has been extracted by the current management team.</p><p>Fair Value of 5 SGD remains (this is based on 10x 2020 EV/EBITDA or 14.7x 2020 P/E). Peers trade at an average of 26.1x 2020 P/E and 16.9x 2020 EV/EBITDA.</p>

AEM Holdings (AEM SP) published great 9M20 results. Management will give FY21 guidance in January but sounded upbeat on its prospects going into FY21.AEM has hired an entire new CEO/CFO/CTO suite over the past 18 months. We believe this highly qualified new C-suit would not have joined AEM if they did not see a clear path of making AEM into a 1 billion USD company going forward. YTD the share price of AEM is up by 75% but has come off its earlier highs. Given FY21 guidance uncertainty and muted consensus expectations (2% revenue growth in FY21 and -1% growth in FY22) we like the risk/reward set-up. The downside is protected by AEM Holdings (AEM SP) becoming a takeover target itself at some point but not before the maximum value has been extracted by the current management team.Fair Value of 5 SGD remains (this is based on 10x 2020 EV/EBITDA or 14.7x 2020 P/E). Peers trade at an average of 26.1x 2020 P/E and 16.9x 2020 EV/EBITDA.

AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside)

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<p>This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.</p>
<p>Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a></p>
</div><h3>Macro Insights</h3><p>In <a href="https://www.smartkarma.com/insights/what-drives-rising-gold-prices" target="_blank" data-smartkarma-citation="insights:42091" rel="noopener">What Drives Rising Gold Prices?,</a> Strategist <a href="https://www.smartkarma.com/profiles/michael-j-howell" target="_blank" data-smartkarma-citation="accounts:2312" rel="noopener">Michael J. Howell</a> analyses driver drivers behind the rising gold price. </p><p>In <a href="https://www.smartkarma.com/insights/political-pit-stop-aug-20-regime-jitters" target="_blank" data-smartkarma-citation="insights:41483" rel="noopener">Political Pit Stop (Aug'20): Regime Jitters,</a> out Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> revisits the political situation in Thailand and identifies potential pitfalls ahead. </p><h3>Equity Bottom-Up Insights</h3><p>In <a href="https://www.smartkarma.com/insights/bank-central-asia-bbca-ij-liability-protection" target="_blank" data-smartkarma-citation="insights:41598" rel="noopener">Bank Central Asia (BBCA IJ) - Liability Protection,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits Indonesia's biggest private bank following a conversation with management. </p><p>In <a href="https://www.smartkarma.com/insights/kino-indonesia-kino-ij-sanitised-recovery" target="_blank" data-smartkarma-citation="insights:42045" rel="noopener">Kino Indonesia (KINO IJ) - Sanitised Recovery,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits one of Indonesia's less well-covered consumer players after a conversation with management and finds a promising outlook.</p><p><a href="https://www.smartkarma.com/entities/kino-indonesia" target="_blank" data-smartkarma-citation="entities:1083:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/procurri-us-ppp-saves-1h20-remains-cheap-at-0-4x-ev-sales-but-no-catalyst" target="_blank" data-smartkarma-citation="insights:42110" rel="noopener">Procurri: US PPP Saves 1H20; Remains Cheap at 0.4x EV/Sales but No Catalyst,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> revisits this IT Hardware player and continues to see the value.</p><p><a href="https://www.smartkarma.com/entities/procurri-corporation-limited" target="_blank" data-smartkarma-citation="entities:24110:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/airport-of-thailand-aot-travel-bubble-mof-and-certify-hub" target="_blank" data-smartkarma-citation="insights:42048" rel="noopener">Airport of Thailand (AoT): Travel Bubble, MoF, and Certify Hub,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits Thailand's airport operator in light of the country's ever-changing tourism strategy.</p><p>In <a href="https://www.smartkarma.com/insights/bts-and-bangkok-airways-utapao-brother-in-arms" target="_blank" data-smartkarma-citation="insights:40027" rel="noopener">BTS and Bangkok Airways, UTaPao Brother-In-Arms,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> comments on <a href="https://www.smartkarma.com/entities/bts-group-holdings-pcl" target="_blank" data-smartkarma-citation="entities:15943:1" rel="noopener">BTS Group Holdings (BTS TB)</a> and <a href="https://www.smartkarma.com/entities/bangkok-airways-co-ltd" target="_blank" data-smartkarma-citation="entities:457:1" rel="noopener">Bangkok Airways (BA TB)</a> after meetings with management. </p><p>In <a href="https://www.smartkarma.com/insights/siam-commercial-bank-surprising-on-the-upside" target="_blank" data-smartkarma-citation="insights:42161" rel="noopener">Siam Commercial Bank: Surprising on the Upside,</a> banking specialist <a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a> zeros in on this leading Thai bank.</p><p>In <a href="https://www.smartkarma.com/insights/temasek-walks-away-from-keppel-deal" target="_blank" data-smartkarma-citation="insights:42047" rel="noopener">Temasek Walks Away from Keppel Deal,</a> events specialist <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> comments on the untimely end to this takeover by Temasek. </p><p>In <a href="https://www.smartkarma.com/insights/keppel-temasek-pulls-the-partial-offer" target="_blank" data-smartkarma-citation="insights:42059" rel="noopener">Keppel: Temasek Pulls the Partial Offer,</a><a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> also comments on Temasek's decision to pull out of this long-standing deal. </p><p>In <a href="https://www.smartkarma.com/insights/sembcorp-industries-a-simple-story-which-looks-complicated" target="_blank" data-smartkarma-citation="insights:42134" rel="noopener">Sembcorp Industries - A Simple Story Which Looks Complicated,</a><a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> comments on this complicated capital raise. </p><p>In <a href="https://www.smartkarma.com/insights/sembcorp-marine-rights-decided-and-virtual-ipo-set-still-avoid" target="_blank" data-smartkarma-citation="insights:42076" rel="noopener">Sembcorp Marine Rights Decided And "Virtual IPO" Set (Still Avoid),</a> events specialist attempts to decipher this extremely complicated restructuring. </p><p>In <a href="https://www.smartkarma.com/insights/b-work-offers-price-upside-and-a-good-dividend-yield" target="_blank" data-smartkarma-citation="insights:42157" rel="noopener">B-WORK: Offers Price Upside and a Good Dividend Yield,</a><a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr Andrew Stotz, CFA</a> initiates coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80.</p><p>In <a href="https://www.smartkarma.com/insights/advanc-2q20-performance-hindered-by-a-drop-in-arpu" target="_blank" data-smartkarma-citation="insights:42036" rel="noopener">ADVANC:  2Q20 Performance Hindered by a Drop in ARPU,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> after recent results. </p><p>In <a href="https://www.smartkarma.com/insights/cbg-trading-on-high-valuation-zone" target="_blank" data-smartkarma-citation="insights:42040" rel="noopener">CBG: Trading on High Valuation Zone,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> maintain their BUY rating and rollover their target price to THB141 based on 35x FY21E PER (Previous TP is THB110), the average of the Thailand energy drink group. </p><p>In <a href="https://www.smartkarma.com/insights/asian-2q20-earnings-reached-its-peak" target="_blank" data-smartkarma-citation="insights:42086" rel="noopener">ASIAN: 2Q20 Earnings Reached Its Peak</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> revisit <a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Seafoods Coldstorage (ASIAN TB)</a> and maintain their ‘SELL’ rating with a new target price at Bt10.3 (from Bt7.2).</p><p>In <a href="https://www.smartkarma.com/insights/planb-expect-net-loss-in-2q20-to-be-bottom-of-this-year" target="_blank" data-smartkarma-citation="insights:42156" rel="noopener">PLANB: Expect Net Loss in 2Q20 to Be Bottom of This Year,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/plan-b-media-pcl" target="_blank" data-smartkarma-citation="entities:24702:1" rel="noopener">Plan B Media (PLANB TB)</a> after a telephone call with management. </p><h3>Credit Insights</h3><p>In <a href="https://www.smartkarma.com/insights/aa-reit-s-bond-first-reit-perpetual-in-the-new-normal" target="_blank" data-smartkarma-citation="insights:42049" rel="noopener">AA REIT S$ Bond - First REIT Perpetual in the New Normal</a>, <a href="https://www.smartkarma.com/profiles/lakshmi-iyer-cfa" target="_blank" data-smartkarma-citation="accounts:9363" rel="noopener">Lakshmi Iyer, CFA</a> reports back after a new bond issue from <a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933:1" rel="noopener">AIMS APAC REIT (AAREIT SP).</a><a href="https://www.smartkarma.com/entities/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933:1" rel="noopener">AIMS APAC REIT (AAREIT SP)</a> issued a perpetual security on August 6th (5.65% SGD125mn deal).  She thinks the deal is interesting for several reasons (timing of the issue, spread on coupon reset, etc.). She does not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt.</p>


This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma
Macro InsightsIn What Drives Rising Gold Prices?, Strategist Michael J. Howell analyses driver drivers behind the rising gold price. In Political Pit Stop (Aug'20): Regime Jitters, out Thai guru Athaporn Arayasantiparb, CFA revisits the political situation in Thailand and identifies potential pitfalls ahead. Equity Bottom-Up InsightsIn Bank Central Asia (BBCA IJ) - Liability Protection, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia's biggest private bank following a conversation with management. In Kino Indonesia (KINO IJ) - Sanitised Recovery, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia's less well-covered consumer players after a conversation with management and finds a promising outlook.In Procurri: US PPP Saves 1H20; Remains Cheap at 0.4x EV/Sales but No Catalyst, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits this IT Hardware player and continues to see the value.In Airport of Thailand (AoT): Travel Bubble, MoF, and Certify Hub, CrossASEAN Insight Provider Henry Soediarko revisits Thailand's airport operator in light of the country's ever-changing tourism strategy.In BTS and Bangkok Airways, UTaPao Brother-In-Arms, our Thai guru Athaporn Arayasantiparb, CFA comments on BTS Group Holdings (BTS TB) and Bangkok Airways (BA TB) after meetings with management. In Siam Commercial Bank: Surprising on the Upside, banking specialist Paul Hollingworth zeros in on this leading Thai bank.In Temasek Walks Away from Keppel Deal, events specialist Travis Lundy comments on the untimely end to this takeover by Temasek. In Keppel: Temasek Pulls the Partial Offer,Arun George also comments on Temasek's decision to pull out of this long-standing deal. In Sembcorp Industries - A Simple Story Which Looks Complicated,Travis Lundy comments on this complicated capital raise. In Sembcorp Marine Rights Decided And "Virtual IPO" Set (Still Avoid), events specialist attempts to decipher this extremely complicated restructuring. In B-WORK: Offers Price Upside and a Good Dividend Yield,Dr Andrew Stotz, CFA initiates coverage on B-WORK with a BUY recommendation based on a target price of Bt12.80.In ADVANC:  2Q20 Performance Hindered by a Drop in ARPU, our friends at Country Group report back on Advanced Info Service (ADVANC TB) after recent results. In CBG: Trading on High Valuation Zone,Country Group maintain their BUY rating and rollover their target price to THB141 based on 35x FY21E PER (Previous TP is THB110), the average of the Thailand energy drink group. In ASIAN: 2Q20 Earnings Reached Its PeakCountry Group revisit Asian Seafoods Coldstorage (ASIAN TB) and maintain their ‘SELL’ rating with a new target price at Bt10.3 (from Bt7.2).In PLANB: Expect Net Loss in 2Q20 to Be Bottom of This Year,Country Group report back on Plan B Media (PLANB TB) after a telephone call with management. Credit InsightsIn AA REIT S$ Bond - First REIT Perpetual in the New Normal, Lakshmi Iyer, CFA reports back after a new bond issue from AIMS APAC REIT (AAREIT SP).AIMS APAC REIT (AAREIT SP) issued a perpetual security on August 6th (5.65% SGD125mn deal).  She thinks the deal is interesting for several reasons (timing of the issue, spread on coupon reset, etc.). She does not expect the bond to tighten significantly as it is correctly priced with respect to the senior debt.

The Week that Was in ASEAN@Smartkarma - Thai Politics, BCA's +ve Liabilities, and Singapore O&M

<div><p><a href="https://www.smartkarma.com/entities/procurri-corporation-limited" target="_blank" data-smartkarma-citation="entities:24110:1" rel="noopener">Procurri Corporation (PROC SP)</a> was a strong performer in 2019 rising over 80%. YTD shares have been weak (-36%) because of the <a href="https://links.sgx.com/FileOpen/PCL%20-%20GA%20Termination%20of%20Discussions%20SGX20200115.ashx?App=Announcement&amp;FileID=593308" target="_blank" rel="noopener">aborted transaction</a> with Park Place Technologies. Recall, Park Place had proposed to buy the maintenance business of Procurri for 115M USD, or 0.55 SGD/share. The deal valued the maintenance business at approximately 13-14x EV/EBITDA. Given the price offered by Park Place, we assume they were very keen to acquire Procurri's maintenance assets and integrate them with similar businesses they already own.</p></div><div>
<p><strong>Why did the Park Place deal fail?</strong> According to management extracting the maintenance business from the rest of Procurri's businesses was too complex both operationally and tax-wise. In response, management has now split the business into three separate business units:</p>
<ol>
<li>IT Hardware</li>
<li>ITAD</li>
<li>Lifecycle services</li>
</ol>
<p>During 1H20 Procurri managed to grow revenues 1.6% and profits were essentially flat mainly saved by forgivable loans from the US and Singapore government. These loans will run out during 2H20 so business needs to pick up to show any bottom line profits. During the conf call, the strategic guidance of key investor Novo Tellus was mentioned several times. Recall, Novo Tellus paid 0.33 SGD/share for their 29.6% stake in February 2019. Recall, the other well-known investments of Novo Tellus on SGX have been <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> and <a href="https://www.smartkarma.com/entities/isdn-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19907:1" rel="noopener">ISDN Holdings (ISDN SP)</a>. AEM is up 108% YTD and ISDN is up 74%. YTD Procurri is clearly a laggard YTD in the Novo Tellus book.</p>
</div><div><h2>Procurri currently trades at 4x EV/EBITDA and 0.4 EV/Sales</h2></div><div><p>Given that NPAT at Procurri will likely remain anemic in 2020 and Singapore investors will not reward revenue and EBITDA growth the strategic committee better thinks of structural ways to unlock value at Procurri. <em>We discussed 4 options in our January update <a href="https://www.smartkarma.com/insights/procurri-proc-sp-failed-park-place-sale-focus-back-on-how-undervalued-procurri-remains" target="_blank" data-smartkarma-citation="insights:35878" rel="noopener">Procurri (PROC SP): Failed Park Place Sale = Focus Back on How Undervalued Procurri Remains</a>. </em></p></div><div>
<p>Our Fair Value estimate of 0.64 SGD remains unchanged (100% upside) which is based on 8x EV/EBITDA and 0.8x EV/Sales. We forecast little to no growth in revenues and EBITDA for FY20 vs FY19.</p>
<p>Procurri remains cheap but as it stopped reporting quarterly trends we won't hear from the company again until February 2021. Unless some major ITAD deals are announced it is hard to see what is the catalyst that gets Procurri to outperform.</p>
</div>

Procurri Corporation (PROC SP) was a strong performer in 2019 rising over 80%. YTD shares have been weak (-36%) because of the aborted transaction with Park Place Technologies. Recall, Park Place had proposed to buy the maintenance business of Procurri for 115M USD, or 0.55 SGD/share. The deal valued the maintenance business at approximately 13-14x EV/EBITDA. Given the price offered by Park Place, we assume they were very keen to acquire Procurri's maintenance assets and integrate them with similar businesses they already own.
Why did the Park Place deal fail? According to management extracting the maintenance business from the rest of Procurri's businesses was too complex both operationally and tax-wise. In response, management has now split the business into three separate business units:

IT Hardware
ITAD
Lifecycle services

During 1H20 Procurri managed to grow revenues 1.6% and profits were essentially flat mainly saved by forgivable loans from the US and Singapore government. These loans will run out during 2H20 so business needs to pick up to show any bottom line profits. During the conf call, the strategic guidance of key investor Novo Tellus was mentioned several times. Recall, Novo Tellus paid 0.33 SGD/share for their 29.6% stake in February 2019. Recall, the other well-known investments of Novo Tellus on SGX have been AEM Holdings (AEM SP) and ISDN Holdings (ISDN SP). AEM is up 108% YTD and ISDN is up 74%. YTD Procurri is clearly a laggard YTD in the Novo Tellus book.
Procurri currently trades at 4x EV/EBITDA and 0.4 EV/SalesGiven that NPAT at Procurri will likely remain anemic in 2020 and Singapore investors will not reward revenue and EBITDA growth the strategic committee better thinks of structural ways to unlock value at Procurri. We discussed 4 options in our January update Procurri (PROC SP): Failed Park Place Sale = Focus Back on How Undervalued Procurri Remains. 
Our Fair Value estimate of 0.64 SGD remains unchanged (100% upside) which is based on 8x EV/EBITDA and 0.8x EV/Sales. We forecast little to no growth in revenues and EBITDA for FY20 vs FY19.
Procurri remains cheap but as it stopped reporting quarterly trends we won't hear from the company again until February 2021. Unless some major ITAD deals are announced it is hard to see what is the catalyst that gets Procurri to outperform.


Procurri: US PPP Saves 1H20; Remains Cheap at 0.4x EV/Sales but No Catalyst

Singapore

AEM Holdings Limited designs and manufactures semiconductor manufacturing equipment and related tooling parts and precision machining of components for semiconductor industry.  The Company also manufactures and distributes electronics, engineering, chemical and related products. AEM provides engineering services.

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AEM (AEM SP)

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Nicolas Van Broekhoven

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