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

Thematic (Sector/Industry)

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This past week's offering of Insights across <a href="mailto:ASEAN@Smartkarma" target="_blank">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 pieces. Please find a brief summary below, with a fuller write up in the detailed section. 
I would also like to welcome <a href="https://www.smartkarma.com/profiles/3145" target="_blank" data-smartkarma-citation="accounts:3145">Jessica Irene</a> as a new Insight Provider covering Indonesia as part of the CrossASEAN Team, which publishes exclusively on Smartkarma. She brings with her rich experience covering Indonesia, more recently on the Buy-side with Manulife in Jakarta and previously as an analyst with CLSA in Indonesia. 
</div><h2>Macro Insights</h2>In <a href="https://www.smartkarma.com/insights/indonesia-reforms-suffer-ahead-of-2019-polls" target="_blank" data-smartkarma-citation="insights:24056">Indonesia: Reforms Suffer Ahead of 2019 Polls</a>, <a href="https://www.smartkarma.com/profiles/1628" target="_blank" data-smartkarma-citation="accounts:1628">Dr. Jim Walker</a> highlights rising political risk in Indonesia following the announcement of President Jokowi's running mate for next year's Presidential Election. In <a href="https://www.smartkarma.com/insights/indonesian-economy-stop-gap-measures-to-provide-only-fleeting-reprieve-for-rupiah-s-descent" target="_blank" data-smartkarma-citation="insights:24064">Indonesian Economy: Stop-Gap Measures to Provide Only Fleeting Reprieve for Rupiah’s Descent</a>, <a href="https://www.smartkarma.com/profiles/1567" target="_blank" data-smartkarma-citation="accounts:1567">Nicholas Chia</a> assesses the impact of recent measures employed by the Indonesian government to stem the Rupiah's fall.In <a href="https://www.smartkarma.com/insights/thailand-domestic-demand-fuels-recovery" target="_blank" data-smartkarma-citation="insights:23996">Thailand: Domestic Demand Fuels Recovery</a>, Insight provider <a href="https://www.smartkarma.com/profiles/35" target="_blank" data-smartkarma-citation="accounts:35">Manu Bhaskaran</a> notes buoyant domestic demand is driving the Thai economy, providing the impetus for BOT to raise rates by end-2018. He also suggests that political risk will be the main bugbear as elections loom and that could scuttle private investment.In <a href="https://www.smartkarma.com/insights/thai-politics-junta-sets-the-stage-for-political-longevity" target="_blank" data-smartkarma-citation="insights:24006">Thai Politics: Junta Sets the Stage for Political Longevity</a>, <a href="https://www.smartkarma.com/profiles/1567" target="_blank" data-smartkarma-citation="accounts:1567">Nicholas Chia</a> comments on the hazy political outlook in Thailand. The military Junta has been taking steps to extend its rule well after the 2019 election which is supposed to restore civilian rule. Suffice to say, the Thai polity will remain fractured and polarised for the foreseeable future.In <a href="https://www.smartkarma.com/insights/philippine-economy-runaway-inflation-threatens-the-authorities-credibility" target="_blank" data-smartkarma-citation="insights:23966">Philippine Economy: Runaway Inflation Threatens the Authorities’ Credibility</a>, <a href="https://www.smartkarma.com/profiles/35" target="_blank" data-smartkarma-citation="accounts:35">Manu Bhaskaran</a> notes that galloping inflation is chipping away at the authorities’ credibility, as the central bank is mulling an emergency meeting to rein in stirring prices. In <a href="https://www.smartkarma.com/insights/quo-vadis-php" target="_blank" data-smartkarma-citation="insights:23979">Quo Vadis, PHP?</a>, Philippines economist, <a href="https://www.smartkarma.com/profiles/1930" target="_blank" data-smartkarma-citation="accounts:1930">Jun Trinidad</a> lays out his views on the direction of the Peso. In <a href="https://www.smartkarma.com/insights/malaysia-bnm-remains-accommodative-as-economy-hums-along" target="_blank" data-smartkarma-citation="insights:24062">Malaysia: BNM Remains Accommodative as Economy Hums Along</a>, <a href="https://www.smartkarma.com/profiles/35" target="_blank" data-smartkarma-citation="accounts:35">Manu Bhaskaran</a> comments on the Bank Negara's decision to leave rates unchanged at its latest meeting. Exports and industrial production stayed solid in July 2018, revealing a stable economy with its growth trajectory intact. The central bank thus opted to keep the policy rate unchanged. However, the Ringgit is likely to remain under downward pressure and that could force the BNM's hand soon.In <a href="https://www.smartkarma.com/insights/malaysia-the-honeymoon-is-over-now-for-the-governing" target="_blank" data-smartkarma-citation="insights:24063">Malaysia: The Honeymoon Is Over, Now for the Governing</a>, <a href="https://www.smartkarma.com/profiles/48" target="_blank" data-smartkarma-citation="accounts:48">Jason Tan</a> discusses where we are after the change of Government in Malaysia.  In his <a href="https://www.smartkarma.com/insights/indonesia-politics-weekly-prabowo-on-economy-jw-s-risky-treasurers-budget-passes-pd-s-straddle" target="_blank" data-smartkarma-citation="insights:24159">Indonesia Politics Weekly: Prabowo on Economy; JW's Risky Treasurers; Budget Passes; PD's Straddle</a>, <a href="https://www.smartkarma.com/profiles/2060" target="_blank" data-smartkarma-citation="accounts:2060">Kevin O’Rourke</a> looks at the most important political and economic events over the last week and provides his value-added comments. <h2> Equity Bottom-up Insights</h2>In <a href="https://www.smartkarma.com/insights/mitra-adiperkasa-mapi-ij-digesting-the-new-structure" target="_blank" data-smartkarma-citation="insights:24131">Mitra Adiperkasa (MAPI IJ): Digesting the New Structure</a>, <a href="https://www.smartkarma.com/profiles/3145" target="_blank" data-smartkarma-citation="accounts:3145">Jessica Irene</a>, in her inaugural equity-bottom up Insight on Smartkarma looks at Indonesia's leading retailer serving the middle-class and suggests that it is close to fair value, with its restructuring efforts over the last two years come to fruition.<a href="https://www.smartkarma.com/entities/18684" target="_blank" data-smartkarma-citation="entities:18684:1"></a>In his insight, <a href="https://www.smartkarma.com/insights/procurri-proc-sp-what-would-be-a-fair-price-for-minority-shareholders" target="_blank" data-smartkarma-citation="insights:23960">Procurri (PROC SP): What Would Be a Fair Price for Minority Shareholders?</a> <a href="https://www.smartkarma.com/profiles/1763" target="_blank" data-smartkarma-citation="accounts:1763">Lloyd Moffatt</a> revisits the company following an announcement that it has received an unsolicited non-binding indication of interest in the company's shares. In <a href="https://www.smartkarma.com/insights/m-mk-tb-strong-margins-and-continued-expansion" target="_blank" data-smartkarma-citation="insights:23995">M (MK TB): Strong Margins and Continued Expansion</a>, <a href="https://www.smartkarma.com/profiles/756" target="_blank" data-smartkarma-citation="accounts:756">Dr. Andrew Stotz, CFA</a> works his magic on this Thai restaurant group and comes away with a positive view. In his insight <a href="https://www.smartkarma.com/insights/oue-c-reit-oue-downtown-office-a-yield-dilutive-acquisition" target="_blank" data-smartkarma-citation="insights:24024">OUE C-REIT – OUE Downtown Office a Yield Dilutive Acquisition</a>, <a href="https://www.smartkarma.com/profiles/2053" target="_blank" data-smartkarma-citation="accounts:2053">Royston Foo</a> looks at the recently announced acquisition from its sponsor. In <a href="https://www.smartkarma.com/insights/oue-c-reit-ouect-sp-dilutive-acquisition-and-equity-fund-raising-deal" target="_blank" data-smartkarma-citation="insights:24051">OUE C-REIT (OUECT SP): Dilutive Acquisition and Equity Fund Raising Deal</a>, <a href="https://www.smartkarma.com/profiles/1786" target="_blank" data-smartkarma-citation="accounts:1786">Anni Kum</a> zeros in on OUE C-REIT, which has announced a massive right-issue for the proposed acquisition of OUE Downtown's office components.In <a href="https://www.smartkarma.com/insights/mega-supplement-maker-spreads-healthy-message-in-booming-region" target="_blank" data-smartkarma-citation="insights:24003">MEGA: Supplement Maker Spreads Healthy Message in Booming Region</a>, our friends at <a href="https://www.smartkarma.com/companies/965" target="_blank" data-smartkarma-citation="companies:965">Country Group</a> initiate coverage on MEGA with a BUY rating.In <a href="https://www.smartkarma.com/insights/bem-mass-transit-expansion-above-and-below-ground" target="_blank" data-smartkarma-citation="insights:24054">BEM: Mass-Transit Expansion Above and Below Ground</a>, <a href="https://www.smartkarma.com/profiles/756" target="_blank" data-smartkarma-citation="accounts:756">Dr. Andrew Stotz, CFA</a> takes a close look at this expressway operator and comes away with a positive view. In  <a href="https://www.smartkarma.com/insights/surya-citra-media-scma-ij-digital-transformation-ahead-on-the-ground-in-j-town" target="_blank" data-smartkarma-citation="insights:23992">Surya Citra Media (SCMA IJ) - Digital Transformation Ahead?</a>, former Jakartan <a href="https://www.smartkarma.com/profiles/937" target="_blank" data-smartkarma-citation="accounts:937">Angus Mackintosh</a> writes on  <a href="https://www.smartkarma.com/entities/14739" target="_blank" data-smartkarma-citation="entities:14739:1">Surya Citra Media Pt Tbk (SCMA IJ)</a> following a conversation with management.<a href="https://www.smartkarma.com/entities/14739" target="_blank" data-smartkarma-citation="entities:14739:1"></a>In <a href="https://www.smartkarma.com/insights/robins-cashing-in-on-lifestyle-and-online-strategies" target="_blank" data-smartkarma-citation="insights:24042">ROBINS: Cashing in on Lifestyle and Online Strategies</a>, our friends at <a href="https://www.smartkarma.com/profiles/2192" target="_blank" data-smartkarma-citation="accounts:2192">Research at Rong Viet Securities</a> initiate coverage on ROBINS with a BUY rating.In <a href="https://www.smartkarma.com/insights/silverlake-axis-trading-lower-than-after-short-seller-attack-in-15-business-upcycle-coming-in-19" target="_blank" data-smartkarma-citation="insights:24047">Silverlake Axis: Trading Lower than After Short Seller Attack in '15; Business Upcycle Coming in '19</a>, <a href="https://www.smartkarma.com/profiles/1208" target="_blank" data-smartkarma-citation="accounts:1208">Nicolas Van Broekhoven</a> revisits <a href="https://www.smartkarma.com/entities/14150" target="_blank" data-smartkarma-citation="entities:14150:1">Silverlake Axis (SILV SP)</a> following a recent correction in the share price.  In <a href="https://www.smartkarma.com/insights/seafco-seafco-tb-building-solid-foundations" target="_blank" data-smartkarma-citation="insights:24089">SEAFCO (SEAFCO TB): Building Solid Foundations</a>, <a href="https://www.smartkarma.com/profiles/756" target="_blank" data-smartkarma-citation="accounts:756">Dr. Andrew Stotz, CFA</a> comments on this construction player. In <a href="https://www.smartkarma.com/insights/sat-sat-tb-new-orders-and-continued-strong-demand" target="_blank" data-smartkarma-citation="insights:24126">SAT (SAT TB): New Orders and Continued Strong Demand</a>, <a href="https://www.smartkarma.com/profiles/756" target="_blank" data-smartkarma-citation="accounts:756">Dr. Andrew Stotz, CFA</a> works his magic on this Original Equipment Manufacturer (OEM) which produces different types of parts used in passenger cars, pickups, trucks and agricultural machinery such as tractors.<h2>Sector and Thematic Insights</h2>In her first Insight on Smartkarma, <a href="https://www.smartkarma.com/insights/indo-snippets-new-import-tariff-jokowi2019-go-viet-launch" target="_blank" data-smartkarma-citation="insights:24096">INDO Snippets: New Import Tariff, #Jokowi2019, Go-Viet Launch</a>, Jakarta based Indonesia specialist <a href="https://www.smartkarma.com/profiles/3145" target="_blank" data-smartkarma-citation="accounts:3145">Jessica Irene</a> provides some value-added commentary on the latest on the ground information that may have a meaningful impact on the Indonesian equity market. In his Insight <a href="https://www.smartkarma.com/insights/final-lap-thai-strategy-recap-sept-2018" target="_blank" data-smartkarma-citation="insights:24143">Final-Lap Thai Strategy Recap (Sept 2018)</a>, <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> revisits his market strategy for Thailand as we approach the end of 3Q18. In <a href="https://www.smartkarma.com/insights/picking-stocks-with-the-right-management-culture" target="_blank" data-smartkarma-citation="insights:23889">Picking Stocks With the Right Management/Culture</a>, our Thai guru <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> seeks to identify five pointers to look for when analysing management quality and culture.In <a href="https://www.smartkarma.com/insights/small-cap-diary-tks-and-the-anti-tesla-play" target="_blank" data-smartkarma-citation="insights:23197">Small Cap Diary: TKS and the Anti-Tesla Play</a>, <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> this week, he visited two companies 1)  TKS, one of the small-cap stocks where he has the highest conviction, and 2) <a href="https://www.smartkarma.com/entities/11778" target="_blank" data-smartkarma-citation="entities:11778:1">Somboon Advance Technology P (SAT TB)</a>, one of the best-performing auto stocks in Thailand. In <a href="https://www.smartkarma.com/insights/energy-watch-siam-gas-and-gripes-on-the-glow-deal" target="_blank" data-smartkarma-citation="insights:23650">Energy Watch: Siam Gas and Gripes on the Glow Deal!</a>, our Thai guru <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> discusses <a href="https://www.smartkarma.com/entities/662" target="_blank" data-smartkarma-citation="entities:662:1">Siamgas &amp; Petrochemicals (SGP TB)</a>, a purveyor of LPG for cooking gas and transport that boasts a Forbes 50 billionaire within its founder rank, following a visit to the company. In <a href="https://www.smartkarma.com/insights/reality-check-xvi-was-the-mk-property-deal-a-good-idea-for-supalai" target="_blank" data-smartkarma-citation="insights:24061">Reality Check XVI: Was the MK Property Deal A Good Idea for Supalai?</a>, <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> comments on this recent acquisition. In <a href="https://www.smartkarma.com/insights/singapore-property-weekly-recap-8th-sep-to-14th-sep-billion-dollar-enbloc-office-transactions" target="_blank" data-smartkarma-citation="insights:24136">Singapore Property Weekly Recap (8th Sep to 14th Sep) – Billion Dollar Enbloc; Office Transactions</a>, <a href="https://www.smartkarma.com/profiles/2053" target="_blank" data-smartkarma-citation="accounts:2053">Royston Foo</a> discusses the most significant breaking news over the last week and provides his value-added commentary. In <a href="https://www.smartkarma.com/insights/singapore-property-latest-ec-tender-validates-upward-trend-in-pricing-and-developers-optimism" target="_blank" data-smartkarma-citation="insights:24149">Singapore Property – Latest EC Tender Validates Upward Trend in Pricing and Developers’ Optimism</a>, <a href="https://www.smartkarma.com/profiles/2053" target="_blank" data-smartkarma-citation="accounts:2053">Royston Foo</a> looks the result of the last Government's latest tender.  In <a href="https://www.smartkarma.com/insights/telecom-review-there-s-life-after-iphone-x" target="_blank" data-smartkarma-citation="insights:24083">Telecom Review: There's Life After IPhone X</a>, <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> assesses the potential impact of Apple's latest product launch. In <a href="https://www.smartkarma.com/insights/interesting-stocks-to-consider-in-asean" target="_blank" data-smartkarma-citation="insights:23949">Interesting Stocks to Consider in ASEAN</a>, <a href="https://www.smartkarma.com/profiles/756" target="_blank" data-smartkarma-citation="accounts:756">Dr. Andrew Stotz, CFA</a> highlights the top 15 stocks he finds most interesting across ASEAN.


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 pieces. Please find a brief summary below, with a fuller write up in the detailed section. 
I would also like to welcome Jessica Irene as a new Insight Provider covering Indonesia as part of the CrossASEAN Team, which publishes exclusively on Smartkarma. She brings with her rich experience covering Indonesia, more recently on the Buy-side with Manulife in Jakarta and previously as an analyst with CLSA in Indonesia. 
Macro InsightsIn Indonesia: Reforms Suffer Ahead of 2019 Polls, Dr. Jim Walker highlights rising political risk in Indonesia following the announcement of President Jokowi's running mate for next year's Presidential Election. In Indonesian Economy: Stop-Gap Measures to Provide Only Fleeting Reprieve for Rupiah’s Descent, Nicholas Chia assesses the impact of recent measures employed by the Indonesian government to stem the Rupiah's fall.In Thailand: Domestic Demand Fuels Recovery, Insight provider Manu Bhaskaran notes buoyant domestic demand is driving the Thai economy, providing the impetus for BOT to raise rates by end-2018. He also suggests that political risk will be the main bugbear as elections loom and that could scuttle private investment.In Thai Politics: Junta Sets the Stage for Political Longevity, Nicholas Chia comments on the hazy political outlook in Thailand. The military Junta has been taking steps to extend its rule well after the 2019 election which is supposed to restore civilian rule. Suffice to say, the Thai polity will remain fractured and polarised for the foreseeable future.In Philippine Economy: Runaway Inflation Threatens the Authorities’ Credibility, Manu Bhaskaran notes that galloping inflation is chipping away at the authorities’ credibility, as the central bank is mulling an emergency meeting to rein in stirring prices. In Quo Vadis, PHP?, Philippines economist, Jun Trinidad lays out his views on the direction of the Peso. In Malaysia: BNM Remains Accommodative as Economy Hums Along, Manu Bhaskaran comments on the Bank Negara's decision to leave rates unchanged at its latest meeting. Exports and industrial production stayed solid in July 2018, revealing a stable economy with its growth trajectory intact. The central bank thus opted to keep the policy rate unchanged. However, the Ringgit is likely to remain under downward pressure and that could force the BNM's hand soon.In Malaysia: The Honeymoon Is Over, Now for the Governing, Jason Tan discusses where we are after the change of Government in Malaysia.  In his Indonesia Politics Weekly: Prabowo on Economy; JW's Risky Treasurers; Budget Passes; PD's Straddle, Kevin O’Rourke looks at the most important political and economic events over the last week and provides his value-added comments.  Equity Bottom-up InsightsIn Mitra Adiperkasa (MAPI IJ): Digesting the New Structure, Jessica Irene, in her inaugural equity-bottom up Insight on Smartkarma looks at Indonesia's leading retailer serving the middle-class and suggests that it is close to fair value, with its restructuring efforts over the last two years come to fruition.In his insight, Procurri (PROC SP): What Would Be a Fair Price for Minority Shareholders? Lloyd Moffatt revisits the company following an announcement that it has received an unsolicited non-binding indication of interest in the company's shares. In M (MK TB): Strong Margins and Continued Expansion, Dr. Andrew Stotz, CFA works his magic on this Thai restaurant group and comes away with a positive view. In his insight OUE C-REIT – OUE Downtown Office a Yield Dilutive Acquisition, Royston Foo looks at the recently announced acquisition from its sponsor. In OUE C-REIT (OUECT SP): Dilutive Acquisition and Equity Fund Raising Deal, Anni Kum zeros in on OUE C-REIT, which has announced a massive right-issue for the proposed acquisition of OUE Downtown's office components.In MEGA: Supplement Maker Spreads Healthy Message in Booming Region, our friends at Country Group initiate coverage on MEGA with a BUY rating.In BEM: Mass-Transit Expansion Above and Below Ground, Dr. Andrew Stotz, CFA takes a close look at this expressway operator and comes away with a positive view. In  Surya Citra Media (SCMA IJ) - Digital Transformation Ahead?, former Jakartan Angus Mackintosh writes on  Surya Citra Media Pt Tbk (SCMA IJ) following a conversation with management.In ROBINS: Cashing in on Lifestyle and Online Strategies, our friends at Research at Rong Viet Securities initiate coverage on ROBINS with a BUY rating.In Silverlake Axis: Trading Lower than After Short Seller Attack in '15; Business Upcycle Coming in '19, Nicolas Van Broekhoven revisits Silverlake Axis (SILV SP) following a recent correction in the share price.  In SEAFCO (SEAFCO TB): Building Solid Foundations, Dr. Andrew Stotz, CFA comments on this construction player. In SAT (SAT TB): New Orders and Continued Strong Demand, Dr. Andrew Stotz, CFA works his magic on this Original Equipment Manufacturer (OEM) which produces different types of parts used in passenger cars, pickups, trucks and agricultural machinery such as tractors.Sector and Thematic InsightsIn her first Insight on Smartkarma, INDO Snippets: New Import Tariff, #Jokowi2019, Go-Viet Launch, Jakarta based Indonesia specialist Jessica Irene provides some value-added commentary on the latest on the ground information that may have a meaningful impact on the Indonesian equity market. In his Insight Final-Lap Thai Strategy Recap (Sept 2018), Athaporn Arayasantiparb, CFA revisits his market strategy for Thailand as we approach the end of 3Q18. In Picking Stocks With the Right Management/Culture, our Thai guru Athaporn Arayasantiparb, CFA seeks to identify five pointers to look for when analysing management quality and culture.In Small Cap Diary: TKS and the Anti-Tesla Play, Athaporn Arayasantiparb, CFA this week, he visited two companies 1)  TKS, one of the small-cap stocks where he has the highest conviction, and 2) Somboon Advance Technology P (SAT TB), one of the best-performing auto stocks in Thailand. In Energy Watch: Siam Gas and Gripes on the Glow Deal!, our Thai guru Athaporn Arayasantiparb, CFA discusses Siamgas &amp; Petrochemicals (SGP TB), a purveyor of LPG for cooking gas and transport that boasts a Forbes 50 billionaire within its founder rank, following a visit to the company. In Reality Check XVI: Was the MK Property Deal A Good Idea for Supalai?, Athaporn Arayasantiparb, CFA comments on this recent acquisition. In Singapore Property Weekly Recap (8th Sep to 14th Sep) – Billion Dollar Enbloc; Office Transactions, Royston Foo discusses the most significant breaking news over the last week and provides his value-added commentary. In Singapore Property – Latest EC Tender Validates Upward Trend in Pricing and Developers’ Optimism, Royston Foo looks the result of the last Government's latest tender.  In Telecom Review: There's Life After IPhone X, Athaporn Arayasantiparb, CFA assesses the potential impact of Apple's latest product launch. In Interesting Stocks to Consider in ASEAN, Dr. Andrew Stotz, CFA highlights the top 15 stocks he finds most interesting across ASEAN.

The Week that Was in ASEAN@Smartkarma - Indonesian Retail, Digital Transformation and Infrastructure

Jessica Irene

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/18684" target="_blank" data-smartkarma-citation="entities:18684:1">Mitra Adiperkasa (MAPI IJ)</a> is the biggest retailer in Indonesia in terms of turnover and store count, holding exclusive licenses to over 150 global brands, and operates over 2,000 stores across 66 cities. Their road to the top is not without hurdles as the company has had two rounds of consolidation.
The company went on aggressive expansion stages in 2006-2008 and 2011-2013, adding 44% and 54% of store space within the three years’ time frame. The rapid expansion, lack of inventory control, and unfortunate timing of Rupiah depreciation resulted in elevated gearing levels and more than an 80% core profit drop in the following year.
The last overexpansion pushed MAPI to rationalize their brands and lost ownership in some of their major subsidiaries. This may change investors’ perspective as MAPI is valued less as an operator but more as a holding company. With the crown jewel <a href="https://www.smartkarma.com/entities/27291" target="_blank" data-smartkarma-citation="entities:27291:1">Map Aktif Adiperkasa PT (MAPA IJ)</a> listed last June, we feel that we are at that tipping point. The euphoria of MAPI unlocking value of its subsidiaries should be offset by potentially steeper holding company discount and a larger than expected earnings dilution.
Our financial model shows flat net profit growth in FY19E as the increase in minority interests outweighs operational growth. Bloomberg consensus is still expecting some 20% earnings growth for FY19E. This coupled with 9% Rupiah depreciation YTD suggests downside risk to earnings forecasts and hence to the fair value per share.

Mitra Adiperkasa (MAPI IJ) is the biggest retailer in Indonesia in terms of turnover and store count, holding exclusive licenses to over 150 global brands, and operates over 2,000 stores across 66 cities. Their road to the top is not without hurdles as the company has had two rounds of consolidation.
The company went on aggressive expansion stages in 2006-2008 and 2011-2013, adding 44% and 54% of store space within the three years’ time frame. The rapid expansion, lack of inventory control, and unfortunate timing of Rupiah depreciation resulted in elevated gearing levels and more than an 80% core profit drop in the following year.
The last overexpansion pushed MAPI to rationalize their brands and lost ownership in some of their major subsidiaries. This may change investors’ perspective as MAPI is valued less as an operator but more as a holding company. With the crown jewel Map Aktif Adiperkasa PT (MAPA IJ) listed last June, we feel that we are at that tipping point. The euphoria of MAPI unlocking value of its subsidiaries should be offset by potentially steeper holding company discount and a larger than expected earnings dilution.
Our financial model shows flat net profit growth in FY19E as the increase in minority interests outweighs operational growth. Bloomberg consensus is still expecting some 20% earnings growth for FY19E. This coupled with 9% Rupiah depreciation YTD suggests downside risk to earnings forecasts and hence to the fair value per share.

Mitra Adiperkasa (MAPI IJ): Digesting the New Structure

Indonesia

PT MAP Aktif Adiperkasa Tbk retails sporting goods. The Company operates an online portal that offers a wide range boots, shoes, sandals, shorts, caps, hoodies, and accessories. Map Aktif Adiperkasa serves customers in Indonesia.

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MAP Aktif Adiperkasa PT (MAPA IJ)

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