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

Equity Bottom-Up

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<li>
<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> FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a>. </li>
<li>The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors'</a> performance.  </li>
<li>
<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> remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.</li>
</ul>



Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ). 
The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors' performance.  

Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.


Astra International (ASII IJ) - Rock Solid

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

<p>It has been almost two years since we last wrote about <a href="https://www.smartkarma.com/entities/geo-energy-resources-ltd" target="_blank" data-smartkarma-citation="entities:8717:1" rel="noopener">Geo Energy Resources (GERL SP)</a>. Our last insight can be found here <a href="https://www.smartkarma.com/insights/geo-energy-gerl-sp-distressed-bonds-and-share-price-versus-optimistic-management-who-is-right" target="_blank" data-smartkarma-citation="insights:34887" rel="noopener">Geo Energy (GERL SP): Distressed Bonds and Share Price Versus Optimistic Management; Who Is Right?</a> </p><p>How things have changed!</p><p>Back in late 2019, the coal price was hovering between 20-30 USD, Macquarie had bought 5% of the company for 0.29 SGD/share in November 2018 and Geo was generating losses as the coal price was below its cost of production. Entering 4Q21 the coal price is at stratospheric highs (117 USD for October 2021 delivery) and Geo is earning record profits.</p><p>In a public disclosure, the company announced it made 26.5M USD in EBITDA in July 2021 alone. This was with coal prices around +/-50 USD/ton. Today coal prices are well over 100 USD.<strong> We estimate at current prices Geo is making at least 45M-50M USD in EBITDA every month!</strong> Compare this to the market cap of 320M USD currently. In 2H EBITDA at current market prices could total +/- 225M USD alone. 1H2021 EBITDA was 78M USD. Recall, Geo has no debt and 60M USD in cash.</p><p>Mr. Market is slowly waking up to this reality pushing the stock up over 70% YTD (most of the gain came in the last few trading sessions). Many Indonesian-listed peers such as <a href="https://www.smartkarma.com/entities/adaro-energy-tbk-pt" target="_blank" data-smartkarma-citation="entities:6061:1" rel="noopener">Adaro Energy (ADRO IJ)</a>, <a href="https://www.smartkarma.com/entities/tambang-batubara-bukit-asam" target="_blank" data-smartkarma-citation="entities:1189:1" rel="noopener">Tambang Batubara Bukit Asam (PTBA IJ)</a>, and coal contractor <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> have also underperformed vs the underlying commodity.  However, this is not true of US-listed peers such as <a href="https://www.smartkarma.com/entities/consol-energy-inc-61c2f282-fc00-497d-9066-606d78f6fe82" target="_blank" data-smartkarma-citation="entities:26245:1" rel="noopener">Consol Energy (CEIX US)</a> and <a href="https://www.smartkarma.com/entities/peabody-energy-corp" target="_blank" data-smartkarma-citation="entities:6430:1" rel="noopener">Peabody Energy (BTU US)</a> which are up 345% and 606% respectively YTD.</p><p><strong>We expect a 4Q21 catch-up trade-in Indonesian-related coal names that could be violent. While prices will surely cool off in 2022 they might not drop all the way below the cost of production once again. Geo has a 30% dividend policy so investors are sure to see massive dividends (est. 18% div yield) come March 2022. Board member Jim Rogers should hopefully make sure the cash is not squandered on doing an expensive M&amp;A deal but is returned to shareholders.</strong></p>

It has been almost two years since we last wrote about Geo Energy Resources (GERL SP). Our last insight can be found here Geo Energy (GERL SP): Distressed Bonds and Share Price Versus Optimistic Management; Who Is Right? How things have changed!Back in late 2019, the coal price was hovering between 20-30 USD, Macquarie had bought 5% of the company for 0.29 SGD/share in November 2018 and Geo was generating losses as the coal price was below its cost of production. Entering 4Q21 the coal price is at stratospheric highs (117 USD for October 2021 delivery) and Geo is earning record profits.In a public disclosure, the company announced it made 26.5M USD in EBITDA in July 2021 alone. This was with coal prices around +/-50 USD/ton. Today coal prices are well over 100 USD. We estimate at current prices Geo is making at least 45M-50M USD in EBITDA every month! Compare this to the market cap of 320M USD currently. In 2H EBITDA at current market prices could total +/- 225M USD alone. 1H2021 EBITDA was 78M USD. Recall, Geo has no debt and 60M USD in cash.Mr. Market is slowly waking up to this reality pushing the stock up over 70% YTD (most of the gain came in the last few trading sessions). Many Indonesian-listed peers such as Adaro Energy (ADRO IJ), Tambang Batubara Bukit Asam (PTBA IJ), and coal contractor United Tractors (UNTR IJ) have also underperformed vs the underlying commodity.  However, this is not true of US-listed peers such as Consol Energy (CEIX US) and Peabody Energy (BTU US) which are up 345% and 606% respectively YTD.We expect a 4Q21 catch-up trade-in Indonesian-related coal names that could be violent. While prices will surely cool off in 2022 they might not drop all the way below the cost of production once again. Geo has a 30% dividend policy so investors are sure to see massive dividends (est. 18% div yield) come March 2022. Board member Jim Rogers should hopefully make sure the cash is not squandered on doing an expensive M&amp;A deal but is returned to shareholders.

Geo Energy: Indonesian Coal Market Beneficiary Trading at Distressed Multiple

Cross Asset Strategy

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<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>
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<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>
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<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>
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<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>
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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

<ul>
<li>The past week saw Insights on <a href="https://www.smartkarma.com/entities/delfi-ltd" target="_blank" data-smartkarma-citation="entities:19714:1" rel="noopener">Delfi Ltd (DELFI SP)</a>, <a href="https://www.smartkarma.com/entities/second-chance-properties-ltd" target="_blank" data-smartkarma-citation="entities:20342:1" rel="noopener">Second Chance Properties (SCE SP)</a>, <a href="https://www.smartkarma.com/entities/jollibee-foods-corp" target="_blank" data-smartkarma-citation="entities:987:1" rel="noopener">Jollibee Foods (JFC PM</a>, and Vietcombank.    </li>
<li>There were also macro insights on Indonesia from both <a href="https://www.smartkarma.com/profiles/prasenjit-k-basu" target="_blank" data-smartkarma-citation="accounts:612" rel="noopener">Prasenjit K. Basu</a> and <a href="https://www.smartkarma.com/profiles/manu-bhaskaran" target="_blank" data-smartkarma-citation="accounts:35" rel="noopener">Manu Bhaskaran</a> on Indonesia together with commentary on Malaysia macro and <a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" data-smartkarma-citation="entities:3121:1" rel="noopener">Lippo Karawaci</a>'s Fitch Downgrade.</li>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.</li>
</ul>


The past week saw Insights on Delfi Ltd (DELFI SP), Second Chance Properties (SCE SP), Jollibee Foods (JFC PM, and Vietcombank.    
There were also macro insights on Indonesia from both Prasenjit K. Basu and Manu Bhaskaran on Indonesia together with commentary on Malaysia macro and Lippo Karawaci's Fitch Downgrade.
The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.


The Week That Was in ASEAN@Smartkarma - Delfi the Chocolatier, Second Chance Property, and Jollibee.

<ul>
<li>The past week saw insights on <a href="https://www.smartkarma.com/entities/grab-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab Holdings (GRAB US)</a>, <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia (BBRI IJ)</a>, <a href="https://www.smartkarma.com/entities/sariguna-primatirta-tbk-pt" target="_blank" data-smartkarma-citation="entities:33584:1" rel="noopener">Sariguna Primatirta (CLEO IJ)</a>, <a href="https://www.smartkarma.com/entities/metrodata-electronic-pt" target="_blank" data-smartkarma-citation="entities:7184:1" rel="noopener">PT Metrodata Electronics (MTDL IJ)</a>, and <a href="https://www.smartkarma.com/entities/pt-selamat-sempurna-tbk" target="_blank" data-smartkarma-citation="entities:10909:1" rel="noopener">Selamat Sempurna (SMSM IJ)</a>.</li>
<li>There were also macro insights on inflation in the Philippines and Malaysia and further insights On <a href="https://www.smartkarma.com/entities/best-world-international-ltd" target="_blank" data-smartkarma-citation="entities:4600:1" rel="noopener">Best World International (BEST SP)</a>, <a href="https://www.smartkarma.com/entities/pt-ecocare-indo-pasifik-tbk" target="_blank" data-smartkarma-citation="entities:43693:1" rel="noopener">Ecocare Indo Pasifik (HYGN IJ)</a> and <a href="https://www.smartkarma.com/entities/malaysia-airports-holdings-bhd" target="_blank" data-smartkarma-citation="entities:117:1" rel="noopener">Malaysia Airports Holdings</a>.</li>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.</li>
</ul>


The past week saw insights on Grab Holdings (GRAB US), Bank Rakyat Indonesia (BBRI IJ), Sariguna Primatirta (CLEO IJ), PT Metrodata Electronics (MTDL IJ), and Selamat Sempurna (SMSM IJ).
There were also macro insights on inflation in the Philippines and Malaysia and further insights On Best World International (BEST SP), Ecocare Indo Pasifik (HYGN IJ) and Malaysia Airports Holdings.
The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.


The Week That Was in ASEAN@Smartkarma - Grab's Lead, Bank Rakyat Indonesia, and CLEO's Pure Water

Indonesia

PT Solusi Tunas Pratama Tbk develops and constructs telecommunication towers for the wireless communications industry.

PT Wintermar Offshore Marine Tbk offers offshore support services, primarily for the oil and gas industry.  The Company owns and operates a fleet of vessels including AHTS and PSVs equipped with Dynamic Positioning System, and also manages and charters third party vessels. Over the past years, Wintermar has expanded out of Indonesia and now operates in 12 countries, supported by a strong and professional team and high quality vessels.

PT Jasa Marga Persero Tbk operates the Indonesian highway system.  The Company collects tolls, maintains the road surfaces, and offers towing and ambulance services.

PT AKR Corporindo Tbk distributes chemical products such as caustic soda, Polyvinyl Chloride (PVC) resin, sorbitol, soda ash, and sodium sulfate.  Through its subsidiaries, the Company also manufactures chemicals, operates storage tanks and warehouses, and provides logistic services.

PT Transcoal Pacific Tbk. provides logistics services. The Company offers sea transportation, warehousing, and fleets management services for energy related products. Transcoal Pacific serves customers in Indonesia.

PT Wijaya Karya (Persero) Tbk. (WIKA:IJ) one of the largest listed state-owned engineering, procurement and construction (“EPC”) companies in Indonesia with diversified construction projects was established In 1960 under the name Perusahaan Negara Bangunan Widjaja Karja.

WIKA have four business segments: Industry, Infrastructure & Building, Energy & Industrial Plant, and Realty & Property, Through these segments, we have successfully undertaken key national infrastructure projects including Balikpapan-Samarinda Toll Road, Semanggi Interchange, Jatigede Dam, Soekarno-Hatta Airport Terminal 3, Ngurah Rai Airport and the Suramadu Bridge, Serang-Panimbang Toll Road and Jakarta-Bandung High Speed Railway.

As of December 2021, WIKA is owned by the Government as to 65,05% and by public shareholders as to 34,95%, with market capitalization IDR9,91 Trillion and total order book IDR88,12 trillion

PT Petrosea Tbk provides engineering construction and contract mining services for the oil and gas, mining, and infrastructure industries. The Company also provides heavy equipment rentals throughout Indonesia for its clients.

PT Pelayaran Tempuran Emas Tbk provides sea transportation services. The company has network of branches and agents throughout Indonesia and Singapore. Pelayaran Tempuran Emas also offers logistic supports for cargo movements.

PT Citra Marga Nusaphala Persada Tbk constructs, operates, and manages toll highways systems.  The Company derives its revenue primarily from toll gate proceeds, project management fees, and related services.

PT Jaya Sukses Makmur Sentosa Tbk. provides general construction services. The Company offers contracting, trade, land management, procurement, and other related services. Jaya Sukses Makmur Sentosa serves customers in Indonesia.

Golden Energy and Resources Ltd. engages in the exploration, mining, marketing and trading of thermal coal. The Company 's coal mining concession areas cover South and Cental Kalimantan, as well as Jambi, Indonesia.

New Times Energy Corporation Limited, through its subsidiaries, engages in business development in natural resources industry

Yinson Holdings Berhad is an investment holding company. The Company, through its subsidiaries, provides offshore support services such as trading and logistics to the upstream oil and gas sector. Yinson Holdings' business also includes commodity trading.

Akastor ASA is an investment company. The Company invests in a portfolio of companies in the oilfield services sector, providing engineering services, technologies, product solutions and field-life solutions for the oil and gas industry. Akastor also invests in real estate and other smaller-sized holdings.

Yamato Holdings Co., Ltd. mainly provides door-to-door parcel delivery services. The Company has developed a nationwide delivery system specializing in time-specified delivery. Yamato Holdings offers moving services and other comprehensive transportation services including logistics services for both domestic and overseas customers as well as financial and autoworks services.

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

Seatrium Ltd offers engineering solutions for the offshore, marine, and energy industries. The Company provides rigs and floaters, repairs and upgrades, offshore platforms, and specialized shipbuilding. Seatrium serves customers worldwide.

Zhuzhou CRRC Times Electric Co., Ltd. provides and integrates train-borne electrical systems for the PRC Railway industry.  The Company also develops, manufactures, and sells train power converters, auxiliary power supply equipment and control systems for trains for urban rail systems

Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK)

Cathay Pacific Airways Limited operates scheduled airline services. The Company also provides related services, including airline catering, aircraft handling, and engineering.

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

PT United Tractors Tbk distributes and leases construction machinery including Komatsu, Nissan Diesel, Scania, Bomag, Valmet, and Tadano brands.  The Company also provides contract mining services, and trades and assembles heavy equipment.

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United Tractors (UNTR IJ)

Astra International (ASII IJ) - Rock Solid

Astra International remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to...

Angus Mackintosh

Geo Energy: Indonesian Coal Market Beneficiary Trading at Distressed Multiple

GEO has run 70% YTD but has lagged US-listed coal peers such as Consol and Peabody which are up respectively 345% and 606% YTD. We expect a violent...

Nicolas Van Broekhoven

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

The Week That Was in ASEAN@Smartkarma - Delfi the Chocolatier, Second Chance Property, and Jollibee.

The past week saw Insights on Delfi Ltd (DELFI SP), Second Chance Properties (SCE SP), Jollibee Foods (JFC PM), Vietcombank, and Indonesia Macro.

Angus Mackintosh

The Week That Was in ASEAN@Smartkarma - Grab's Lead, Bank Rakyat Indonesia, and CLEO's Pure Water

The past week saw insights on Grab Holdings (GRAB US), Bank Rakyat Indonesia (BBRI IJ), Sariguna Primatirta (CLEO IJ), PT Metrodata Electronics...

Angus Mackintosh

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