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.

Event-Driven

In a recently published interview, <a href="https://www.livemint.com/companies/news/ikea-finds-mattresses-score-over-bookcases-in-india-1554752934010.html" target="_blank">IKEA's chief executive confirmed </a>that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( <a href="https://www.smartkarma.com/insights/consumption-diary-as-ikea-storms-india-gsk-wants-a-way-out-actionable-insights-from-smartkarma" target="_blank" data-smartkarma-citation="insights:23284">Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma</a> ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>Amazon decides to close out its third-party retailing in China. We believe Amazon fails in China because it is over-confident in its awareness and refuses to promote itself by advertisements.</li>
<li>Amazon decide to continue its import-export retailing. However, we believe the import retailing will also fail, because Amazon does not provide translations for product descriptions in foreign languages.</li>
</ul>


Amazon decides to close out its third-party retailing in China. We believe Amazon fails in China because it is over-confident in its awareness and refuses to promote itself by advertisements.
Amazon decide to continue its import-export retailing. However, we believe the import retailing will also fail, because Amazon does not provide translations for product descriptions in foreign languages.


Amazon (AMZN): Has Failed and Will Continue to Fail in China – From a Regular Shopper’s Perspective

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Thematic (Sector/Industry)

The focus of this Insight is the Food Retail business in India, that is witnessing intense competition. The food retail or the grocery retail business is attractive because of the high repeat frequency compared to other forms of retail where market share is supposedly shifting from Kirana stores to brick and motor and online retailers and recently, also attracting food delivery apps, that are trying to optimise their delivery fleet via offering grocery deliveries. 
We visit EasyPay, a 5-year-old company started by Nilay Patel.  EasyPay offers solutions to help unorganised small mom and pop stores called "Kirana Stores" in India. Our visit is aimed at understanding the emerging O2O (Online to Offline) theme that is shaping up Indian Retail and Payments Industry,  and has now also reached the Kirana stores. The current industry dynamics indicate a share of market for all players i.e. Offline Retailers, Online Stores and even Kirana Stores that adapt to newer forms of retail using technology and Data often referred to as "Smart Retail". It would, be too early to write off the ability of Kirana stores to fight back modern retail.

The focus of this Insight is the Food Retail business in India, that is witnessing intense competition. The food retail or the grocery retail business is attractive because of the high repeat frequency compared to other forms of retail where market share is supposedly shifting from Kirana stores to brick and motor and online retailers and recently, also attracting food delivery apps, that are trying to optimise their delivery fleet via offering grocery deliveries. 
We visit EasyPay, a 5-year-old company started by Nilay Patel.  EasyPay offers solutions to help unorganised small mom and pop stores called "Kirana Stores" in India. Our visit is aimed at understanding the emerging O2O (Online to Offline) theme that is shaping up Indian Retail and Payments Industry,  and has now also reached the Kirana stores. The current industry dynamics indicate a share of market for all players i.e. Offline Retailers, Online Stores and even Kirana Stores that adapt to newer forms of retail using technology and Data often referred to as "Smart Retail". It would, be too early to write off the ability of Kirana stores to fight back modern retail. 

Visit Note | The Case For "Kirana" Stores & Their Fight with Modern Retail

Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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<ul>
<li>Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth</li>
<li>Widespread adoption of Hydrogen considered unlikely</li>
<li>41% of Platinum &amp; 84% of Palladium reliant on autocatalyst demand</li>
<li>Hybrids in Europe up 107% in three years at 1:7 to diesel counterparts, without subsidies</li>
<li>Hybrid premium ~ 8% like-for-like over a combustion vehicle </li>
<li>Carpooling/ride-share platforms have hallmarks of being a macro-trend</li>
<li>W. Asian carpool CAGR of 77.6% over past 11 years</li>
<li>Est. by close 2019 &gt;62m people globally will utilise trans. platforms, forgoing car ownership
</li>
<li>Adverse impact on vehicle growth, models, drive-trains, R&amp;D, insurance &amp; finance </li>
<li>Logistics industry diesel transitioning will affect LT PGM demand, in particular platinum</li>
<li>Primary platinum-surplus to grow in time, downward pressure on price</li>
</ul>
Auto-catalysts make up the majority of platinums (41%) and in particular, palladium (84%) end use demand.  To determine the future demand profile for PGMs, therefore, we examined the types and likelihood of future drivetrains, as well as technologies affecting unit demand.
Hydrogen's key attraction is its potential green credentials, and if it was to ever became a reality, resultant PGM catalyst demand would outstrip all existing suppliers.  To achieve that noble aim, however, gargantuan energy resources would be needed to conduct electrolysis of water, thermodynamically, a very energy intensive process.  Our analysis concludes that hydrogen will remain a boutique industry, confined to economies with abundant hydrocarbon production, with conversion relying on steam reformation.  Overall impact of hydrogen on PGM demand, will be marginal at best.
Presently, EVs have substantial range and recharge hurdles to overcome before they could ever be a primary mode of transport for many; with global demand primarily driven by Chinese directives, not by the Western consumer.  In the short to medium-term, we do not expect EVs to impact PGM demand significantly.  However, we preface that statement by our belief that in the longer-term, the largest adopter of EVs will be within the commercial logistics sector, currently dominated by diesel power plants, which rely on a substantial amount of platinum within its auto-catalysts.  Widespread adoption of EVs and robotic drones and the replacement of traditional diesel drivetrains will only exacerbate current over-supply in platinum, in time, we forecast its price to fall substantially.
Hybrid sales are up 107% in Europe over the past three years without any state subsidies.  It is reasonable to assume that potential demand of PGMs have, and will continue to be, stymied by hybrid advances.  But we expect overall (even modest) growth in car volume sales should maintain current market dynamics, in the short to medium term.
Carpooling and a host of other transactional transport options are now a realistic, flexible and affordable life-style choice, that contradict the necessity of car ownership.  Especially among the inner-city urbanites, with Asia averaging a CAGR of 77.6% over the past decade.  Car manufacturers are already experiencing significant sales headwinds.  On average it has been found that members/fleet ratio (i.e. No. of cars divided by No. of members) range between 61 – 76, a fraction of unit demand when compared with an average Western family of three or four members, often owning two vehicles.  Using decade average regional CAGRs, projecting three years in advance, the potential number of decreased car sales globally could reach 62m by the close of 2019.  To put that into context, Volkswagen and Toyota produce between 10 to 11m  units each pa.  This raises the question of whether recent sluggish global car sales is somehow related to the almost exponential growth in carpooling/ride-share platforms?


Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth
Widespread adoption of Hydrogen considered unlikely
41% of Platinum &amp; 84% of Palladium reliant on autocatalyst demand
Hybrids in Europe up 107% in three years at 1:7 to diesel counterparts, without subsidies
Hybrid premium ~ 8% like-for-like over a combustion vehicle 
Carpooling/ride-share platforms have hallmarks of being a macro-trend
W. Asian carpool CAGR of 77.6% over past 11 years
Est. by close 2019 &gt;62m people globally will utilise trans. platforms, forgoing car ownership

Adverse impact on vehicle growth, models, drive-trains, R&amp;D, insurance &amp; finance 
Logistics industry diesel transitioning will affect LT PGM demand, in particular platinum
Primary platinum-surplus to grow in time, downward pressure on price

Auto-catalysts make up the majority of platinums (41%) and in particular, palladium (84%) end use demand.  To determine the future demand profile for PGMs, therefore, we examined the types and likelihood of future drivetrains, as well as technologies affecting unit demand.
Hydrogen's key attraction is its potential green credentials, and if it was to ever became a reality, resultant PGM catalyst demand would outstrip all existing suppliers.  To achieve that noble aim, however, gargantuan energy resources would be needed to conduct electrolysis of water, thermodynamically, a very energy intensive process.  Our analysis concludes that hydrogen will remain a boutique industry, confined to economies with abundant hydrocarbon production, with conversion relying on steam reformation.  Overall impact of hydrogen on PGM demand, will be marginal at best.
Presently, EVs have substantial range and recharge hurdles to overcome before they could ever be a primary mode of transport for many; with global demand primarily driven by Chinese directives, not by the Western consumer.  In the short to medium-term, we do not expect EVs to impact PGM demand significantly.  However, we preface that statement by our belief that in the longer-term, the largest adopter of EVs will be within the commercial logistics sector, currently dominated by diesel power plants, which rely on a substantial amount of platinum within its auto-catalysts.  Widespread adoption of EVs and robotic drones and the replacement of traditional diesel drivetrains will only exacerbate current over-supply in platinum, in time, we forecast its price to fall substantially.
Hybrid sales are up 107% in Europe over the past three years without any state subsidies.  It is reasonable to assume that potential demand of PGMs have, and will continue to be, stymied by hybrid advances.  But we expect overall (even modest) growth in car volume sales should maintain current market dynamics, in the short to medium term.
Carpooling and a host of other transactional transport options are now a realistic, flexible and affordable life-style choice, that contradict the necessity of car ownership.  Especially among the inner-city urbanites, with Asia averaging a CAGR of 77.6% over the past decade.  Car manufacturers are already experiencing significant sales headwinds.  On average it has been found that members/fleet ratio (i.e. No. of cars divided by No. of members) range between 61 – 76, a fraction of unit demand when compared with an average Western family of three or four members, often owning two vehicles.  Using decade average regional CAGRs, projecting three years in advance, the potential number of decreased car sales globally could reach 62m by the close of 2019.  To put that into context, Volkswagen and Toyota produce between 10 to 11m  units each pa.  This raises the question of whether recent sluggish global car sales is somehow related to the almost exponential growth in carpooling/ride-share platforms?

PGMs: Facing Technological Obsolescence? (P. 2)

Can <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding (BABA US)</a> 's Alipay and <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings (700 HK)</a> WeChat pay replicate their success in India? With the world's second highest mobile phone users and more than 45 pre-paid Payment Instruments providers, India is witnessing a fiercely competitive payments landscape. In this Insight, we explore options available for public market and VC/PE investors to play the Indian payments theme. We also provide an overview of Indian investments of <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding (BABA US)</a> , <a href="https://www.smartkarma.com/entities/24240" target="_blank" data-smartkarma-citation="entities:24240:1">Ant Financial (1051260D CH)</a> , <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a> , <a href="https://www.smartkarma.com/entities/11134" target="_blank" data-smartkarma-citation="entities:11134:1">Wal Mart Stores (WMT US)</a> , <a href="https://www.smartkarma.com/entities/21085" target="_blank" data-smartkarma-citation="entities:21085:1">Naspers Ltd (NPN SJ)</a> , <a href="https://www.smartkarma.com/entities/11369" target="_blank" data-smartkarma-citation="entities:11369:1">Alphabet Inc Cl C (GOOG US)</a> &amp; Sequoia Capital India.  Paytm, PhonePe, Amazon Pay and Mobikwik are the ones that really matter.
As payment providers move up from pure transactions to more value-added services like Wealth Management &amp; Offline payments, we also suggest possible channel checks for the focus companies with a view of understanding economics and competitive intensity.

Can Alibaba Group Holding (BABA US) 's Alipay and Tencent Holdings (700 HK) WeChat pay replicate their success in India? With the world's second highest mobile phone users and more than 45 pre-paid Payment Instruments providers, India is witnessing a fiercely competitive payments landscape. In this Insight, we explore options available for public market and VC/PE investors to play the Indian payments theme. We also provide an overview of Indian investments of Alibaba Group Holding (BABA US) , Ant Financial (1051260D CH) , Softbank Group (9984 JP) , Wal Mart Stores (WMT US) , Naspers Ltd (NPN SJ) , Alphabet Inc Cl C (GOOG US) &amp; Sequoia Capital India.  Paytm, PhonePe, Amazon Pay and Mobikwik are the ones that really matter.
As payment providers move up from pure transactions to more value-added services like Wealth Management &amp; Offline payments, we also suggest possible channel checks for the focus companies with a view of understanding economics and competitive intensity. 

India Payments | What Really Matters and Suggested Channel Checks

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon.com Inc (AMZN US)

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad...

Devi Subhakesan

Amazon (AMZN): Has Failed and Will Continue to Fail in China – From a Regular Shopper’s Perspective

Amazon decides to close out its third-party retailing in China. We believe Amazon fails in China because it is over-confident in its awareness and...

Ming Lu

Visit Note | The Case For "Kirana" Stores & Their Fight with Modern Retail

The focus of this Insight is the Food Retail business in India, that is witnessing intense competition. The food retail or the grocery retail...

Pranav Bhavsar

PGMs: Facing Technological Obsolescence? (P. 2)

Transportation industries Kodak Moment embracing Hybrids, modest near-term EV growth Widespread adoption of Hydrogen considered unlikely 41% of...

Boost Research

India Payments | What Really Matters and Suggested Channel Checks

Can Alibaba Group Holding (BABA US) 's Alipay and Tencent Holdings (700 HK) WeChat pay replicate their success in India? With the world's second...

Pranav Bhavsar

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52-week Range

Market Cap (USDm)

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