Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Strong Momentum As We Head Into Holiday Season: Just as we head into the holiday season, Tencent Holdings’ (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] provided some strong key metrics in its latest media release;  *More Transformation To Come: What a magnificent amazing six months this has been for Tencent’s Afterpay, and the next six months look to be even more transformational with operations beginning in the European Union, launches of banking products, and potentially the launch of the business in Asia (likely under the tutelage of Tencent); and*More Magic Fairy Dust: Tencent continues to hit it out of the park with its Afterpay stake. In addition to a superb return on investment of 400% over the past six months since the stake announcement, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways.

*Strong Momentum As We Head Into Holiday Season: Just as we head into the holiday season, Tencent Holdings’ (700.HK) [Tencent] Afterpay Touch (APT.AU) [Afterpay] provided some strong key metrics in its latest media release;  *More Transformation To Come: What a magnificent amazing six months this has been for Tencent’s Afterpay, and the next six months look to be even more transformational with operations beginning in the European Union, launches of banking products, and potentially the launch of the business in Asia (likely under the tutelage of Tencent); and*More Magic Fairy Dust: Tencent continues to hit it out of the park with its Afterpay stake. In addition to a superb return on investment of 400% over the past six months since the stake announcement, this alliance with Australia’s premier financial technology Buy Now Pay Later (BNPL) company is paying dividends to Tencent in numerous other ways.

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

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.

Equity Capital Markets

Alibaba Group Holding  / Equity Capital Markets

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below.

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below. 

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

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

GoTo Gojek Tokopedia Tbk PT / Equity Bottom-Up

The talk that <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> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> are in the advanced stage of merger talks seems to be a reiteration of the earlier chatter and certainly some wishful thinking from the <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> and its shareholders perspective in my view. Certainly, <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)'</a>s Masayoshi Son has made it known that he would like to see a merger happen.
Not a great surprise, given that <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> is burning more cash than <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ) </a>to stand still. It also operates on a higher cost base with its headquarters in Singapore. There are sure to be Investment Banks in the background pushing for a deal but this does not mean it will happen.
The amazing performance of <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>, which is up by +880% over the last year and now South East Asia's largest market cap stock at US$90.8bn makes a future listing enticing to realize future value. 
The key will be Indonesia, which is after all the region's largest internet market and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a>'s largest market. Surely we should also consider <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> shareholders in this? They may not be so willing to relinquish control? 
The overriding battle will continue to be between the Chinese behemoths <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US),</a> which hold stakes in <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/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> respectively. These two companies are engaged in an ongoing land grab in the digital space in South East Asia, and more especially in Indonesia and it seems unlikely that they would be in cahoots with each other.  
It would seem unlikely that <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> would relinquish ultimate management control to <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> given the dominance in its home market. It has also been quietly rebranding in the region, which could spell a more aggressive approach outside Indonesia is in the offing.

The talk that Grab (0967655D SP) and Gojek (1379371D IJ) are in the advanced stage of merger talks seems to be a reiteration of the earlier chatter and certainly some wishful thinking from the Grab (0967655D SP) and its shareholders perspective in my view. Certainly, Softbank Corp (9434 JP)'s Masayoshi Son has made it known that he would like to see a merger happen.
Not a great surprise, given that Grab (0967655D SP) is burning more cash than Gojek (1379371D IJ) to stand still. It also operates on a higher cost base with its headquarters in Singapore. There are sure to be Investment Banks in the background pushing for a deal but this does not mean it will happen.
The amazing performance of Sea Ltd (SE US), which is up by +880% over the last year and now South East Asia's largest market cap stock at US$90.8bn makes a future listing enticing to realize future value. 
The key will be Indonesia, which is after all the region's largest internet market and Gojek (1379371D IJ)'s largest market. Surely we should also consider Gojek (1379371D IJ) shareholders in this? They may not be so willing to relinquish control? 
The overriding battle will continue to be between the Chinese behemoths Tencent Holdings (700 HK) and Alibaba Group (BABA US), which hold stakes in Gojek (1379371D IJ) and Grab (0967655D SP) respectively. These two companies are engaged in an ongoing land grab in the digital space in South East Asia, and more especially in Indonesia and it seems unlikely that they would be in cahoots with each other.  
It would seem unlikely that Gojek (1379371D IJ) would relinquish ultimate management control to Grab (0967655D SP) given the dominance in its home market. It has also been quietly rebranding in the region, which could spell a more aggressive approach outside Indonesia is in the offing. 

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Chinese super app <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> reported Q320 results earlier this week. Total revenue increased by 29% YoY in the period, but core Operating Profit declined by around 23% YoY, mainly due to growing losses in Meituan's New Initiatives segment. Meanwhile, Meituan's largest operating segment, Food Delivery, reported a 33% YoY jump in revenue, driven in part by a 61% increase in advertising and other revenue. However, margins on actual food delivery activity fell sharply compared to both Q319 and Q220. The reasons for the sharp dip in food delivery margins in Q320 are still unclear to us, but this crucial source of profits deserves close attention from investors, in our view. We also worry investors may be growing impatient with outsized losses in the New Initiatives segment.

Chinese super app Meituan (3690 HK) reported Q320 results earlier this week. Total revenue increased by 29% YoY in the period, but core Operating Profit declined by around 23% YoY, mainly due to growing losses in Meituan's New Initiatives segment. Meanwhile, Meituan's largest operating segment, Food Delivery, reported a 33% YoY jump in revenue, driven in part by a 61% increase in advertising and other revenue. However, margins on actual food delivery activity fell sharply compared to both Q319 and Q220. The reasons for the sharp dip in food delivery margins in Q320 are still unclear to us, but this crucial source of profits deserves close attention from investors, in our view. We also worry investors may be growing impatient with outsized losses in the New Initiatives segment.

Meituan: 'Delivery Margin' Dipped in Q3 | How Patient Will Investors Be with 'New Initiatives'?

Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Private Capital Markets

Tatas, India's leading Conglomerate business group, is <a href="https://www.bloomberg.com/news/articles/2020-12-02/tata-said-near-deal-to-buy-alibaba-backed-indian-online-grocer?sref=SVEekGzB" target="_blank" rel="noopener">reportedly</a> in talks to acquire 80% stake in the country's leading Online grocery vertical Bigbasket, where <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> holds upto 30% of ownership stake. India's Retail sector has been a hot bed of M&amp;A activity (and litigations) involving  the big and mighty over the recent months. India's nascent online grocery retail nearly doubled in sales this year thanks to COVID-led disruptions in physical retail. Existing online verticals, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> backed Bigbasket and <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> backed Grofers were reportedly planning a fresh round of  fund raising to build up infrastructure to cater to the swelling demand and counter rising competition. However, all's not been well with overseas fund raising in India. In the detailed note below, we look at (1) Reported deal specifics and valuation (2) Likely Rationale behind the deal (3) India's nascent online grocery landscape and (4) how COVID and consolidation have been impacting India's e-grocery sector.

Tatas, India's leading Conglomerate business group, is reportedly in talks to acquire 80% stake in the country's leading Online grocery vertical Bigbasket, where Alibaba Group (BABA US) holds upto 30% of ownership stake. India's Retail sector has been a hot bed of M&amp;A activity (and litigations) involving  the big and mighty over the recent months. India's nascent online grocery retail nearly doubled in sales this year thanks to COVID-led disruptions in physical retail. Existing online verticals, Alibaba Group (BABA US) backed Bigbasket and Softbank Group (9984 JP) backed Grofers were reportedly planning a fresh round of  fund raising to build up infrastructure to cater to the swelling demand and counter rising competition. However, all's not been well with overseas fund raising in India. In the detailed note below, we look at (1) Reported deal specifics and valuation (2) Likely Rationale behind the deal (3) India's nascent online grocery landscape and (4) how COVID and consolidation have been impacting India's e-grocery sector.

BABA Backed BigBasket to Go to TATAs: Round 2 of India Retail Sector M&A

China

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

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Alibaba Group Holding (9988 HK)

Tencent Holdings – Father Christmas

TENCENT HOLDINGS: It's May 2020 Stake In Afterpay Keeps Paying Dividends. In It's Latest Release, Afterpay Announced Very Positive Momentum As We...

Thomas J. Monaco

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese...

Rickin Thakrar

Gojek and Grab Merger Wishful Thinking?

The talk that Grab and Gojek are in the advanced stage of merger talks seems to be a reiteration of the earlier chatter and some wishful thinking...

Angus Mackintosh

Meituan: 'Delivery Margin' Dipped in Q3 | How Patient Will Investors Be with 'New Initiatives'?

Meituan posted strong top-line growth in Q320, but core profitability dipped. We are concerned about 'delivery margin' and wonder how long...

Tracking Traffic

BABA Backed BigBasket to Go to TATAs: Round 2 of India Retail Sector M&A

Alibaba backed India eGrocer, BigBasket, to be sold to Tatas. Reported valuation multiples imply a discount vs last round of funding. Despite...

Devi Subhakesan

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