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.

Equity Capital Markets

<p>Monde Nissin (MNC), a food manufacturer in the Philippines, aims to raise around US$1bn in its Philippines IPO.</p><p>It primarily has two main businesses: Asia-Pacific Branded Food and Beverage Business, which sells instant noodles, biscuits and other products, and meat alternative business which includes Quorn and Cauldron meat alternatives brands.</p><p>MNC has a high market share in the Philippines in the instant noodles and biscuits segment along with a few other categories as well. Quorn as well has a strong lead over its next largest peers in the Chicken alternative meat segment in the grocery channel. </p><p>In this note, I'll talk about the positive aspects of the deal.</p>

Monde Nissin (MNC), a food manufacturer in the Philippines, aims to raise around US$1bn in its Philippines IPO.It primarily has two main businesses: Asia-Pacific Branded Food and Beverage Business, which sells instant noodles, biscuits and other products, and meat alternative business which includes Quorn and Cauldron meat alternatives brands.MNC has a high market share in the Philippines in the instant noodles and biscuits segment along with a few other categories as well. Quorn as well has a strong lead over its next largest peers in the Chicken alternative meat segment in the grocery channel. In this note, I'll talk about the positive aspects of the deal.

Monde Nissin Pre-IPO - The Positives - High Market Share

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

Bank of the Philippine Islands / Equity Bottom-Up

<p><strong><em>*Weak Results:</em></strong> Bank of the Philippine Islands (BPI.PM) [BPI] reported 4Q20 results of PHP 4.2 bn, declining PHP 1.3 bn (23.1%) linked quarter. Results were difficult across the board for BPI, but primarily driven by a justified PHP 885 mn (14.6%) increase in loss provisions – reversing the decline seen in 3Q20. BPI will be holding an analyst briefing on Friday 29 January 2021; and  </p><p><strong><em>*Credit Quality Challenges Set To Continue: </em></strong>BPI is still contending with higher than normal NCOs which have caused an accelerated level of net new NPLs at 4Q20 of 65.4%. Given the continued break in credit which shows no signs of abating, we find that BPI’s reserves are short by over PHP 19.0 bn – nearly five years of bottom-line performance.  </p>

*Weak Results: Bank of the Philippine Islands (BPI.PM) [BPI] reported 4Q20 results of PHP 4.2 bn, declining PHP 1.3 bn (23.1%) linked quarter. Results were difficult across the board for BPI, but primarily driven by a justified PHP 885 mn (14.6%) increase in loss provisions – reversing the decline seen in 3Q20. BPI will be holding an analyst briefing on Friday 29 January 2021; and  *Credit Quality Challenges Set To Continue: BPI is still contending with higher than normal NCOs which have caused an accelerated level of net new NPLs at 4Q20 of 65.4%. Given the continued break in credit which shows no signs of abating, we find that BPI’s reserves are short by over PHP 19.0 bn – nearly five years of bottom-line performance.  

Bank of Philippine Islands – Lots Of Wood To Chop

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

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)

<div>
<p>In a follow up to similar styled notes from 2017-2018-2019</p>
<p><a href="https://www.smartkarma.com/insights/overview-of-my-winners-and-losers-in-2019-and-5-high-conviction-ideas-going-into-2020" target="_blank" data-smartkarma-citation="insights:35000" rel="noopener">Overview of My Winners and Losers in 2019... And 5 High Conviction Ideas Going into 2020</a> </p>
</div><div><p><a href="https://www.smartkarma.com/insights/overview-of-my-winners-and-losers-in-2018-and-5-high-conviction-ideas-going-into-2019" target="_blank" data-smartkarma-citation="insights:26696" rel="noopener">Overview of My Winners and Losers in 2018...and 5 High Conviction Ideas Going into 2019</a> </p></div><div><p><a href="https://www.smartkarma.com/insights/overview-of-my-winners-and-losers-in-2017-and-5-high-conviction-ideas-going-into-2018" target="_blank" data-smartkarma-citation="insights:16368" rel="noopener">Overview of My Winners and Losers in 2017...and 5 High Conviction Ideas Going into 2018</a></p></div><div><p>I again look at my stock ideas that have worked out in 2020, those that have not, and those where the verdict is still pending. I will also highlight 5 new high conviction ideas for 2021.</p></div><div><p>Last year I provided 5 high conviction ideas and here is their performance:</p></div><div><table class="table table-striped"><tbody>
<tr>
<td style="width: 188.19px;">Company</td>
<td style="width: 135.71px;">Share Price 19 Dec 2019</td>
<td style="width: 173.14px;">Share Price 24 December 2020</td>
<td style="width: 64.07px;">Dividends</td>
<td style="width: 80.89px;">% Total Return</td>
</tr>
<tr>
<td style="width: 188.19px;">
<a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> </td>
<td style="width: 135.71px;">1.89 SGD</td>
<td style="width: 173.14px;">3.43 SGD</td>
<td style="width: 64.07px;">0.0081 SGD</td>
<td style="width: 80.89px;">+81.91%</td>
</tr>
<tr>
<td style="width: 188.19px;"><a href="https://www.smartkarma.com/entities/24110" target="_blank" data-smartkarma-citation="entities:24110:1" rel="noopener">Procurri Corporation (PROC SP)</a></td>
<td style="width: 135.71px;">0.48 SGD</td>
<td style="width: 173.14px;">0.28 SGD</td>
<td style="width: 64.07px;">0.000 SGD</td>
<td style="width: 80.89px;">-41.66%</td>
</tr>
<tr>
<td style="width: 188.19px;">
<a href="https://www.smartkarma.com/entities/sunpower-group-ltd" target="_blank" data-smartkarma-citation="entities:18395:1" rel="noopener">Sunpower Group (SPWG SP)</a> </td>
<td style="width: 135.71px;">0.57 SGD</td>
<td style="width: 173.14px;">0.76 SGD</td>
<td style="width: 64.07px;">0.0025 SGD</td>
<td style="width: 80.89px;">+33.77%</td>
</tr>
<tr>
<td style="width: 188.19px;">
<a href="https://www.smartkarma.com/entities/ips-securex-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15717:1" rel="noopener">IPS Securex (IPSS SP)</a> </td>
<td style="width: 135.71px;">0.004 SGD</td>
<td style="width: 173.14px;">0.08 SGD</td>
<td style="width: 64.07px;">0.000 SGD</td>
<td style="width: 80.89px;">+100%</td>
</tr>
<tr>
<td style="width: 188.19px;">
<a href="https://www.smartkarma.com/entities/cosco-shipping-international-8a9750d4-23c7-4832-9b67-2032ca7ec1f3" target="_blank" data-smartkarma-citation="entities:672:1" rel="noopener">Cosco International Holdings (517 HK)</a> </td>
<td style="width: 135.71px;">2.01 HKD</td>
<td style="width: 173.14px;">2.38 HKD</td>
<td style="width: 64.07px;">0.16 HKD</td>
<td style="width: 80.89px;">+26.50%</td>
</tr>
</tbody></table></div>


In a follow up to similar styled notes from 2017-2018-2019
Overview of My Winners and Losers in 2019... And 5 High Conviction Ideas Going into 2020 
Overview of My Winners and Losers in 2018...and 5 High Conviction Ideas Going into 2019 Overview of My Winners and Losers in 2017...and 5 High Conviction Ideas Going into 2018I again look at my stock ideas that have worked out in 2020, those that have not, and those where the verdict is still pending. I will also highlight 5 new high conviction ideas for 2021.Last year I provided 5 high conviction ideas and here is their performance:

Company
Share Price 19 Dec 2019
Share Price 24 December 2020
Dividends
% Total Return



AEM Holdings (AEM SP) 
1.89 SGD
3.43 SGD
0.0081 SGD
+81.91%


Procurri Corporation (PROC SP)
0.48 SGD
0.28 SGD
0.000 SGD
-41.66%



Sunpower Group (SPWG SP) 
0.57 SGD
0.76 SGD
0.0025 SGD
+33.77%



IPS Securex (IPSS SP) 
0.004 SGD
0.08 SGD
0.000 SGD
+100%



Cosco International Holdings (517 HK) 
2.01 HKD
2.38 HKD
0.16 HKD
+26.50%



Overview of My Winners and Losers in 2020...And 5 High Conviction Ideas Going into 2021

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

<p style="text-align: justify;">In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.</p>
<p style="text-align: justify;">Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.</p>
<p style="text-align: justify;">The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. </p>
<p style="text-align: justify;">The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.</p>
<p style="text-align: justify;">We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.</p>
<p style="text-align: justify;">We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.</p>
<p style="text-align: justify;">Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.</p>

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and incentive data related to the board of directors, management, and employees across major economies in Asia and picked top 10 companies of each country in terms of market capitalization. We chose to exclude major companies listed in exchanges of other economies such as Tencent and Alibaba to limit our sample size.
Then we devised diversity and incentive scores to assign to those companies and compare those scores against a 5-year trend of their return on shareholders’ equity (ROE) ratios and 1-year stock performance from 1-July-19 to 30-June-20 over its corresponding exchange indices.
The report covers diversity vs. incentives in Asia, diversity score vs. 1-year stock performance and ROE trend, incentives vs. 1-year stock performance and ROE trend, diversity + incentives scores vs. 1-year stock performance and ROE trend, companies with top and bottom diversity + incentive scores, countries with top and bottom average diversity + incentive scores, and incentive score vs. staffing cost trend. 
The results show that companies with high diversity scores do perform well. A high diversity score also has a positive impact on the ROE trend, based on our regression analysis at 95% confidence level. We found that employee incentives are not significant as staff diversity but they can still have an influence on company performances at a lower 90% confidence level.
We note that this study is at the preliminary stage and stock performance is a function of many factors, not only the diversity scores that we concluded. Needless to say, our diversity and incentive scores also reflect the level of disclosures by selected companies, not necessarily the actual practice within each company. Our diversity and incentive scores are also not a credit rating or ranking with peers and, hence, do not reflect default probability of selected companies.
We caution that in Asia, many diversity trends in the West may not apply. The fact that many Asian business communities may remain less sensitive to equal opportunities for females, disabled persons, or LGBTQ communities could make returns of Asian companies less correlated to diversity than in the West. Likewise, additional incentives in some countries in Asia may not be necessary as employees’ strong performance (i.e. in Japan) is a norm, according to the prevalent work culture.
Bondcritic is developing a scoring model, which includes environment, social development, and corporate governance; the last of which cover diversity and incentives. This report is the first of the series to uncover shenanigans in the Asian corporate sector.

Asian Governance: Diversity & Incentives Through the Cultural Lens

<p><strong><em>*Falling Very Short:</em></strong> Bank of the Philippine Islands (BPI.PM) [BPI] reported 2Q20 results of PHP 5.3 bn – missing consensus by 15% and falling short of 1Q20 by PHP 1.1 bn (17.1%). On an operating basis, assuming a normalized tax rate of 25% (versus the reported negative 6%), results would have come in far worse at PHP 3.8 bn – declining 40.5% linked quarter. Driving the poor result was the hefty loan loss provision of PHP 10.8 bn which increased PHP 6.5 bn or 155% over the period; and</p><p> <em><strong>*Credit Is Weak, Reserves Light:</strong></em>Stated NPLs remained flattish at PHP 26.7 bn or 1.83% of total loans, but deterioration is showing up in the form of massive NCOs at PHP 10.9 bn. The impact of COVID-19 on the global economy has only begun to take its toll, and we think that BPI needs a re-think of just maintaining current ratios. Our numbers suggest that BPI will need to add another PHP 53 bn to its coffers over the next four quarters. This suggest a near tripling of its loss reserve and represent nearly three years of pre-tax results for BPI – challenging its 15.6% CET1 ratio.</p>

*Falling Very Short: Bank of the Philippine Islands (BPI.PM) [BPI] reported 2Q20 results of PHP 5.3 bn – missing consensus by 15% and falling short of 1Q20 by PHP 1.1 bn (17.1%). On an operating basis, assuming a normalized tax rate of 25% (versus the reported negative 6%), results would have come in far worse at PHP 3.8 bn – declining 40.5% linked quarter. Driving the poor result was the hefty loan loss provision of PHP 10.8 bn which increased PHP 6.5 bn or 155% over the period; and *Credit Is Weak, Reserves Light:Stated NPLs remained flattish at PHP 26.7 bn or 1.83% of total loans, but deterioration is showing up in the form of massive NCOs at PHP 10.9 bn. The impact of COVID-19 on the global economy has only begun to take its toll, and we think that BPI needs a re-think of just maintaining current ratios. Our numbers suggest that BPI will need to add another PHP 53 bn to its coffers over the next four quarters. This suggest a near tripling of its loss reserve and represent nearly three years of pre-tax results for BPI – challenging its 15.6% CET1 ratio.

Bank of the Philippine Islands – No Free Pass

Philippines

Ayala Corporation, through its subsidiaries, develops real estate properties. The Company also provides financial services, insurance, and information technology and telecommunications services. In addition, Ayala manufactures and sells passenger cars as well as having operations in the food and agriculture industries.

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Ayala Corporation (AC PM)

Bank of Philippine Islands – Lots Of Wood To Chop

BANK OF THE PHILIPPINE ISLANDS: BPI reported a 23.1% linked quarter earnings decline in 4Q20. Results were difficult across the board for BPI,...

Thomas J. Monaco

Overview of My Winners and Losers in 2020...And 5 High Conviction Ideas Going into 2021

Looking back at our 2020 favorite picks shows good performance across the board except for Procurri which declined over 40%. We also highlight 5...

Nicolas Van Broekhoven

Asian Governance: Diversity & Incentives Through the Cultural Lens

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and...

Bondcritic

Bank of the Philippine Islands – No Free Pass

*Falling Very Short: Bank of the Philippine Islands (BPI.PM) [BPI] reported 2Q20 results of PHP 5.3 bn – missing consensus by 15% and falling short...

Thomas J. Monaco

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Monde Nissin Pre-IPO - The Positives - High Market Share

Monde Nissin (MNC), a food manufacturer in the Philippines, aims to raise around US$1bn in its IPO. MNC has a high market share in the Philippines...

Sumeet Singh

Bank of Philippine Islands – Lots Of Wood To Chop

BANK OF THE PHILIPPINE ISLANDS: BPI reported a 23.1% linked quarter earnings decline in 4Q20. Results were difficult across the board for BPI,...

Thomas J. Monaco

Overview of My Winners and Losers in 2020...And 5 High Conviction Ideas Going into 2021

Looking back at our 2020 favorite picks shows good performance across the board except for Procurri which declined over 40%. We also highlight 5...

Nicolas Van Broekhoven

Asian Governance: Diversity & Incentives Through the Cultural Lens

In this Smartkarma Original, we seek to study how diversity and incentives influence stock performance and profitability. We tallied diversity and...

Bondcritic

Bank of the Philippine Islands – No Free Pass

*Falling Very Short: Bank of the Philippine Islands (BPI.PM) [BPI] reported 2Q20 results of PHP 5.3 bn – missing consensus by 15% and falling short...

Thomas J. Monaco