Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>With <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota (7203 JP)</a> having sold some of its stake in <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso</a>, <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI</a> and <a href="https://www.smartkarma.com/entities/harmonic-drive-systems-inc" target="_blank" data-smartkarma-citation="entities:10238:1" rel="noopener">Harmonic Drive</a> this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.</li>
<li>Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


With Toyota (7203 JP) having sold some of its stake in Denso, KDDI and Harmonic Drive this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.
Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener"><strong>Jardine Cycle &amp; Carriage (JCNC SP)</strong></a>'s current implied stub value is around its highest-ever level.</li>
<li>The simple ratio of JCNC/<strong><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></strong> is around its highest level outside the 2008 GFC.</li>
<li>A weak Indonesian rupiah is likely a factor. Still, JCNC is trading rich to its NAV. A takeover from parent <strong><a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a></strong> is idealistic.</li>
</ul>



Jardine Cycle &amp; Carriage (JCNC SP)'s current implied stub value is around its highest-ever level.
The simple ratio of JCNC/Astra International (ASII IJ) is around its highest level outside the 2008 GFC.
A weak Indonesian rupiah is likely a factor. Still, JCNC is trading rich to its NAV. A takeover from parent Jardine Matheson Holdings (JM SP) is idealistic.


<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a></strong> is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.</li>
<li>A key catalyst for the recent narrowing was JCNC's inclusion in the SIMSCI Index at the end of last month.</li>
<li>JCNC is expensive here - relative to historical values -  and from an implied stub perspective.</li>
</ul>



Jardine Cycle &amp; Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
A key catalyst for the recent narrowing was JCNC's inclusion in the SIMSCI Index at the end of last month.
JCNC is expensive here - relative to historical values -  and from an implied stub perspective.


<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a></strong> (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.</li>
<li>The reweighting follows the cancellation of the 59% shareholding in JMH held by <strong><a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a></strong>, which was privatised last year.</li>
<li>I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.</li>
</ul>



Jardine Matheson Holdings (JM SP) (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.
The reweighting follows the cancellation of the 59% shareholding in JMH held by Jardine Strategic Holdings (JS SP), which was privatised last year.
I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.


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

<div>
<p>The overall Indonesian market has traded sideways this year, rising by only +2.45% YTD, despite a strong economic recovery in 2Q2021. This is mainly due to the Emergency PPKM measures put in place as the COVID-19 cases spiked in June, with strict measures coming into effect on 3rd July</p>
</div>
<p>In fact, new cases peaked out in Indonesia on 15th July and have been on a steep decline since herd immunity and increased vaccinations helped to calm the situation.</p>
<p>Recent conversations with retailers such as <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ),</a> <a href="https://www.smartkarma.com/entities/ace-hardware-indonesia" target="_blank" data-smartkarma-citation="entities:12808:1" rel="noopener">Ace Hardware Indonesia (ACES IJ)</a>, and <a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> reveal a significantly improved picture in August.</p>
<div>One positive impact from last year's pandemic is that companies in a number of different sectors have adopted operational policies that allow them to operate more efficiently even in a lockdown situation.</div>
<div class="content-highlight">
<div></div>
<div>With the Indonesian market massively under-owned by foreign investors, we see this recent market correction as an opportunity.  Foreigner positioning is at the lowest level in a decade, which suggests potential inflows as recovery comes through.</div>
<div></div>
<div>We recommend buying banks, autos, retailers, cement, digital economy proxies, telcos as data enablers, and property as a reflation trade. We remain positive on healthcare but see some pricing risk for testing services and declining COVID-19 related revenues. </div>
</div>
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<p></p>
</div>


The overall Indonesian market has traded sideways this year, rising by only +2.45% YTD, despite a strong economic recovery in 2Q2021. This is mainly due to the Emergency PPKM measures put in place as the COVID-19 cases spiked in June, with strict measures coming into effect on 3rd July

In fact, new cases peaked out in Indonesia on 15th July and have been on a steep decline since herd immunity and increased vaccinations helped to calm the situation.
Recent conversations with retailers such as Mitra Adiperkasa (MAPI IJ), Ace Hardware Indonesia (ACES IJ), and Matahari Department Store (LPPF IJ) reveal a significantly improved picture in August.
One positive impact from last year's pandemic is that companies in a number of different sectors have adopted operational policies that allow them to operate more efficiently even in a lockdown situation.


With the Indonesian market massively under-owned by foreign investors, we see this recent market correction as an opportunity.  Foreigner positioning is at the lowest level in a decade, which suggests potential inflows as recovery comes through.

We recommend buying banks, autos, retailers, cement, digital economy proxies, telcos as data enablers, and property as a reflation trade. We remain positive on healthcare but see some pricing risk for testing services and declining COVID-19 related revenues. 










CrossASEAN Indonesia Strategy - The Stars Are Aligned

Indonesia

PT Astra International Tbk assembles and distributes automobiles, motorcycles, and their related spare parts.  Through its subsidiaries, the Company also operates in the mining, development of plantations, financial and information technology.

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Astra International (ASII IJ)

Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

Toyota, Toyota Industries and Denso are tag teaming to unwind some of their stake in Aisin, in a deal worth over US$1bn. While the timing of the...

Sumeet Singh

Jardine Cycle & Carriage Is A Short

Jardine Cycle & Carriage's premium to NAV is not justifiable. I'd look to reverse the stub here - Short JCNC, Long Astra.

David Blennerhassett

JCNC Is Still Overstretched Vs. Astra

JCNC is expensive here - relative to historical values - and from an implied stub perspective. And the MSCI inclusion event has now passed. I'd...

David Blennerhassett

Jardine Matheson (JM SP): MSCI Blues

Given JMH's strong underlying operating performance, the 40% discount to NAV - one in which there are discounts of discounts, JMH is attractive...

David Blennerhassett

CrossASEAN Indonesia Strategy - The Stars Are Aligned

Indonesia has been through the worse in terms of the recent covid surge and is now on the cusp of a steep recovery at a time when foreign weighting...

Angus Mackintosh

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