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

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

The news that <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but also for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a>
One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a>.
<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> in Indonesia.

The news that Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) are in talks for a potential merger and future listing came with some excitement, given that it has the potential to create a homegrown Indonesian digital powerhouse in one fell swoop. 
This will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but also for Grab (0967655D SP), which will suddenly find itself three steps behind its Indonesian rival having been a potential suitor, although that marriage would have been less than easy.
Gojek (1379371D IJ) has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).
One key area of overlap between Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 35% stake in OVO, it is possible that it will decide to sell this stake with payments and financial services falling to GoPay. 
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
Unlike a Gojek/Grab combination, there are few competition issues as Tokopedia PT (1087142D IJ) and Gojek (1379371D IJ) operate in different verticals. There are also unlikely to be issues with any substantial lay-offs.
There will be significant synergies between the two companies in areas such as payments, with an ever-increasing use-case for GoPay and on making deliveries even more seamless for Tokopedia PT (1087142D IJ).
The combined size of the two companies would be around US$18bn under the latest valuations but it could quite easily command a higher valuation with a US listing, although it is not yet sure what shape or form that listing will take.
A SPAC listing would be the least favorable option, given question marks over the real winners from such as structure. A straight IPO would be the most straightforward and preferred option, even if it takes a bit longer to execute. The merged entity will likely provide a more formidable adversary for Sea Ltd (SE US) in Indonesia.

Gojek and Tokopedia - Digital Game of Thrones

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January?

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January? 

Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Equity Bottom-Up

<ul>
<li>The Shenzhen-based game developer trades at an attractive valuation;</li>
<li>Meanwhile, the business has been growing at a nearly triple-digit rate while maintaining an above 30% return on equity and invested capital;</li>
<li>Should investors buy into this (seemingly quality) growth story?  We want to take a deep dive.</li>
</ul>


The Shenzhen-based game developer trades at an attractive valuation;
Meanwhile, the business has been growing at a nearly triple-digit rate while maintaining an above 30% return on equity and invested capital;
Should investors buy into this (seemingly quality) growth story?  We want to take a deep dive.


Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

This is the second of a series of reports on the Chinese streaming platform <a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">iQIYI Inc (IQ US)</a>  where we will be discussing the company’s valuation. In our previous insight on the company, we discussed the company’s business model, segments and valuation.In our previous insight, we highlighted that the membership services is the only segment that has seen YoY growth in revenues whereas the company’s second largest segment, online advertising services is seeing continued decrease in revenues.iQiyi’s average revenue per paid subscriber has remained stable while the number of paid subscribers has dropped over the last two quarters. Given the intense competition in the Chinese online streaming market, we believe it will be difficult for the company to increase ARPU without compromising on the number of subscribers.Moreover, the company has been able to turn profitable at the gross margin line during the last two quarters, and the company’s operating expenses are strongly correlated with revenues and we believe the company trying to reduce these costs will impact its top line.Read our previous insight on the company:<a href="https://www.smartkarma.com/insights/iqiyi-placement-searching-for-additional-revenues-amidst-deepening-losses" target="_blank" data-smartkarma-citation="insights:46452" rel="noopener">IQIYI Placement: Searching for Additional Revenues Amidst Deepening Losses</a>

This is the second of a series of reports on the Chinese streaming platform iQIYI Inc (IQ US)  where we will be discussing the company’s valuation. In our previous insight on the company, we discussed the company’s business model, segments and valuation.In our previous insight, we highlighted that the membership services is the only segment that has seen YoY growth in revenues whereas the company’s second largest segment, online advertising services is seeing continued decrease in revenues.iQiyi’s average revenue per paid subscriber has remained stable while the number of paid subscribers has dropped over the last two quarters. Given the intense competition in the Chinese online streaming market, we believe it will be difficult for the company to increase ARPU without compromising on the number of subscribers.Moreover, the company has been able to turn profitable at the gross margin line during the last two quarters, and the company’s operating expenses are strongly correlated with revenues and we believe the company trying to reduce these costs will impact its top line.Read our previous insight on the company:IQIYI Placement: Searching for Additional Revenues Amidst Deepening Losses 

IQIYI Valuation: Netflix of China Seems Overvalued; No Growth Without Sacrificing Profits

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

At long last, Hang Seng Indexes (HSIL) has released the consultation paper on the "Proposal to enhance the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market". Market participants have until 24 January to submit their views to the HSIL.There are 5 main proposals in the consultation paper:<ol>
<li>Select constituents by industry group based on a target coverage for each industry group</li>
<li>Increase the number of constituents to between 65 to 80</li>
<li>Removal of the Minimum Listing History requirement for eligible candidates</li>
<li>Maintain a certain number of constituents classified as Hong Kong companies to sustain the level of representation of Hong Kong portion in the index</li>
<li>Lower the weighting cap of individual constituents from 10% to 8%, and increase the weighting cap of WVRs and Secondary Listings from 5% to 8%.</li>
</ol>The simulated one-way turnover of increasing the number of constituents to between 65-80 is estimated at 15-20% and HSIL proposes to implement the transition to the enhanced methodology within one year.In this Insight, we look at the impact on the index from the proposed changes.

At long last, Hang Seng Indexes (HSIL) has released the consultation paper on the "Proposal to enhance the Hong Kong Hang Seng Index (HSI INDEX) as regards continuing to serve as the most representative and important benchmark of the Hong Kong stock market". Market participants have until 24 January to submit their views to the HSIL.There are 5 main proposals in the consultation paper:
Select constituents by industry group based on a target coverage for each industry group
Increase the number of constituents to between 65 to 80
Removal of the Minimum Listing History requirement for eligible candidates
Maintain a certain number of constituents classified as Hong Kong companies to sustain the level of representation of Hong Kong portion in the index
Lower the weighting cap of individual constituents from 10% to 8%, and increase the weighting cap of WVRs and Secondary Listings from 5% to 8%.
The simulated one-way turnover of increasing the number of constituents to between 65-80 is estimated at 15-20% and HSIL proposes to implement the transition to the enhanced methodology within one year.In this Insight, we look at the impact on the index from the proposed changes.

HSI Market Consultation - Wide Ranging Changes Proposed

China

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

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NetEase Inc (NTES US)

Gojek and Tokopedia - Digital Game of Thrones

The potential merger of Gojek and Tokopedia with a listing of the combined entity planned at a future date will provide investors with an exciting...

Angus Mackintosh

Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK...

Douglas Kim

Fire Rock: A Value Play or Value Trap?

Another superior-return, fast-growing gaming business trading at an attractive level. Should investors buy into this (seemingly quality) growth...

Steven Chen

IQIYI Valuation: Netflix of China Seems Overvalued; No Growth Without Sacrificing Profits

This is the second of a series of reports on the Chinese streaming platform iQiyi where we will be discussing the company’s valuation.

Shifara Samsudeen, ACMA, CGMA

HSI Market Consultation - Wide Ranging Changes Proposed

HSIL has announced the market consultation for the Hang Seng Index. The conclusions should be announced in February. If the market agrees to most...

Brian Freitas

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