Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Event-Driven

Last week <a href="https://www.smartkarma.com/entities/zhejiang-idc-fluid-control-co-ltd" target="_blank" data-smartkarma-citation="entities:18695:1" rel="noopener">STO Express (002468 CH)</a> warned investors that it lost money in Q3 2020, versus profits in the year-earlier period. It was the third profit warning issued by the company so far in 2020. 
STO Express appears to be retreating from its aggressive pursuit of volume share gains, but the company's new strategy remains unclear, in our view. 
We believe STO Express remains a potential acquisition target when Chinese express sector M&amp;A gains momentum, along with US-listed <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>.

Last week STO Express (002468 CH) warned investors that it lost money in Q3 2020, versus profits in the year-earlier period. It was the third profit warning issued by the company so far in 2020. 
STO Express appears to be retreating from its aggressive pursuit of volume share gains, but the company's new strategy remains unclear, in our view. 
We believe STO Express remains a potential acquisition target when Chinese express sector M&amp;A gains momentum, along with US-listed BEST Inc (BEST US). 

As Profits Turn to Losses, STO Express Retreats from Growth Strategy. Is M&A Next?

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 class="content-highlight">
The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
</div><h3>Macro Insights</h3>In <a href="https://www.smartkarma.com/insights/vietnam-in-robust-health-despite-transient-threat-of-us-s301-action" target="_blank" data-smartkarma-citation="insights:43795" rel="noopener">Vietnam in Robust Health Despite Transient Threat of US S301 Action,</a> CrossASEAN Chief Economist <a href="https://www.smartkarma.com/profiles/prasenjit-k-basu" target="_blank" data-smartkarma-citation="accounts:612" rel="noopener">Prasenjit K. Basu</a> zeros IN on the Vietnamese economy, which has been a key beneficiary of trade diversion from China. In <a href="https://www.smartkarma.com/insights/asian-exports-covid-best-is-behind" target="_blank" data-smartkarma-citation="insights:44020" rel="noopener">Asian Exports &amp; COVID - Best Is Behind,</a><a href="https://www.smartkarma.com/profiles/sharmila-whelan" target="_blank" data-smartkarma-citation="accounts:1728" rel="noopener">Sharmila Whelan</a> looks at the prospects for Asian Exports and sees a less attractive outlook ahead. <h3>Equity Bottom-Up Insights</h3>In Indonesia,<a href="https://www.smartkarma.com/insights/media-nusantara-citra-mncn-ij-no-credit-given-for-metamorphosis" target="_blank" rel="noopener"> Media Nusantara Citra (MNCN IJ) - No Credit Given for Metamorphosis</a>, CrossASEAN insight provider<a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener"> Angus Mackintosh</a> examines an aggressive sell-off in<a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" rel="noopener"> Media Nusantara Citra (MNCN IJ)</a> share price, despite announcing a reasonable set of 2Q2020 results, with especially strong growth coming from its digital advertising through RCTI+ and its YouTube Multichannel Network (MCN), which now has a staggering 101m subscribers.  In <a href="https://www.smartkarma.com/insights/indomobil-sukses-internasional-imas-ij-emerging-transport-monolith" target="_blank" data-smartkarma-citation="insights:43927" rel="noopener">Indomobil Sukses Internasional (IMAS IJ) Emerging Transport Monolith?,</a> CrossASEAN insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits <a href="https://www.smartkarma.com/entities/indomobil-sukses-internasional-tbk-pt" target="_blank" data-smartkarma-citation="entities:11738:1" rel="noopener">Indomobil Sukses Internasional (IMAS IJ),</a> which is making meaningful progress towards being a leader in automotive and transport.In <a href="https://www.smartkarma.com/insights/bank-mestika-dharma-september-quarter-reversals-surge" target="_blank" data-smartkarma-citation="insights:44089" rel="noopener">Bank Mestika Dharma – September Quarter Reversals Surge,</a> banking specialist <a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" data-smartkarma-citation="accounts:12" rel="noopener">Daniel Tabbush</a> zeros in on this small Indonesian lender, which is one of the first to report earnings and reported an improvement and reversal of credit costs. In <a href="https://www.smartkarma.com/insights/ammb-top-decile-ph-score-and-vfm-asset" target="_blank" data-smartkarma-citation="insights:44065" rel="noopener">AMMB: Top Decile PH Score™ and VFM Asset,</a><a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a> zeros in on this Malaysia lender were he find a promising outlook and attractive valuations under his model.<a href="https://www.smartkarma.com/entities/ammb-holdings-bhd" target="_blank" data-smartkarma-citation="entities:137:1" rel="noopener"></a>In Singapore,<a href="https://www.smartkarma.com/insights/trade-ideas-for-singapore-reits-implications-from-cct-cmt-merger" target="_blank" rel="noopener"> Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger</a>,<a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" rel="noopener"> Sumeet Singh</a> takes a look at the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. In <a href="https://www.smartkarma.com/insights/mr-diy-ipo-store-expansion-still-going-strong-undemanding-valuation" target="_blank" data-smartkarma-citation="insights:43929" rel="noopener">MR DIY IPO - Store Expansion Still Going Strong, Undemanding Valuation,</a> IPO specialist <a href="https://www.smartkarma.com/profiles/zhen-zhou-toh" target="_blank" data-smartkarma-citation="accounts:673" rel="noopener">Zhen Zhou, Toh</a> revisits this IPO looking at its growth prospects and valuation. In Malaysia,<a href="https://www.smartkarma.com/insights/mr-d-i-y-group-ipo-valuation-insights" target="_blank" rel="noopener"> Mr. D.I.Y. Group IPO: Valuation Insights</a>,<a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" rel="noopener"> Arun George</a> provides a view on why he believes that an attractive valuation and solid cornerstone support makes <a href="https://www.smartkarma.com/entities/mr-d-i-y-group" target="_blank" data-smartkarma-citation="entities:28430:1" rel="noopener">MR D.I.Y. Group (MRDIY MK)</a> IPO tempting at the proposed price. In Malaysia,<a href="https://www.smartkarma.com/insights/mr-diy-ipo-quality-homes" target="_blank" rel="noopener"> MR DIY IPO: Quality Homes</a>,<a href="https://www.smartkarma.com/profiles/shifara-samsudeen-acma-cgma" target="_blank" rel="noopener"> Shifara Samsudeen</a> takes an initial look at Malaysia's home improvement retailer Mr. D.I.Y.  which has filed for an IPO which will raise approximately RM1.5bn (US$362m), the largest listing in three years in Malaysia. The company has set the price at RM1.60 per share and is expected to list the IPO on the 14th of October.In <a href="https://www.smartkarma.com/insights/mr-diy-ipo-inexpensive-valuation-compared-to-peers-despite-better-growth-profile" target="_blank" data-smartkarma-citation="insights:44019" rel="noopener">MR DIY IPO: Inexpensive Valuation Compared to Peers Despite Better Growth Profile,</a><a href="https://www.smartkarma.com/profiles/shifara-samsudeen-acma-cgma" target="_blank" data-smartkarma-citation="accounts:3297" rel="noopener">Shifara Samsudeen,</a> provides us with her views on this upcoming Malaysian IPO. In Thailand,<a href="https://www.smartkarma.com/insights/kerry-express-best-inc-two-approaches-to-ecommerce-logistics-growth-in-se-asia" target="_blank" rel="noopener"> Kerry Express &amp; Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia</a> examines the different approaches pursued in eCommerce fulfillment in SE Asia by the upcoming IPO<a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" rel="noopener"> Kerry Express Thailand (KEX TB)</a> and by<a href="https://www.smartkarma.com/entities/best-inc" target="_blank" rel="noopener"> BEST Inc (BEST US). </a>In <a href="https://www.smartkarma.com/insights/bgrim-positive-sentiments-from-joining-hands-with-pea-encom" target="_blank" data-smartkarma-citation="insights:43897" rel="noopener">BGRIM: Positive Sentiments from Joining Hands with PEA ENCOM,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> expect the cooperation with PEA ENCOM will help <a href="https://www.smartkarma.com/entities/b-grimm-pcl" target="_blank" data-smartkarma-citation="entities:23996:1" rel="noopener">B Grimm Power (BGRIM TB)</a> to expand the SPP (Small Power Producer) client base and have synergy benefits of up to THB1.0bn from cost-saving and service efficiency. <h3>Sector and Thematic</h3>In<a href="https://www.smartkarma.com/insights/indonesia-banks-positives-clouded-but-persist" target="_blank" rel="noopener"> Indonesia Banks – Positives Clouded, But Persist</a>, banking specialist<a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" rel="noopener"> Daniel Tabbush</a> discusses why the country's credit penetration remains low and margins remain higher than almost any other country. Due to the ill-conceived interruption of economies and a more conservative bank system due to the financial crisis in 1997, credit growth is now lower in Indonesia than in most other Asian-Pacific countries. In Thailand,<a href="https://www.smartkarma.com/insights/silicon-stories-m-if-you-can-t-beat-them-join-them" target="_blank" rel="noopener"> Silicon Stories M: If You Can't Beat Them, Join Them</a>, Thai specialist<a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" rel="noopener"> Athaporn Arayasantiparb, CFA</a> takes a look at <a href="https://www.smartkarma.com/entities/bank-of-ayudhya-pcl" target="_blank" data-smartkarma-citation="entities:136:1" rel="noopener">Bank Of Ayudhya (BAY TB)</a>,  which has realized that it is easier to partner with Internet startups than build businesses from scratch. In <a href="https://www.smartkarma.com/insights/sti-index-rebalance-in-the-race-to-replace-cct-finally-some-daylight-emerges" target="_blank" data-smartkarma-citation="insights:43862" rel="noopener">STI Index Rebalance: In the Race to Replace CCT, Finally Some Daylight Emerges,</a><a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> looks at the upcoming Singapore STI Index rebalancing. <h3>Credit Insights</h3>In<a href="https://www.smartkarma.com/insights/thai-bank-capital-constraints-debt-capital-issuance-needs-and-potential-impacts" target="_blank" rel="noopener"> Thai Bank Capital Constraints, Debt Capital Issuance Needs, and Potential Impact,</a> Credit Specialist<a href="https://www.smartkarma.com/profiles/hank-calenti-cfa" target="_blank" rel="noopener"> Hank Calenti, CFA</a> discusses the potential for further capital issuance by Thai banks following<a href="https://www.smartkarma.com/entities/bangkok-bank-public-co-ltd" target="_blank" rel="noopener"> Bangkok Bank Public (BBL TB)</a>'s recent bond issue. In <a href="https://www.smartkarma.com/insights/thai-bank-capital-and-chronic-covid-19-sensitivity" target="_blank" data-smartkarma-citation="insights:44011" rel="noopener">Thai Bank Capital and Chronic COVID-19 Sensitivity,</a><a href="https://www.smartkarma.com/profiles/hank-calenti-cfa" target="_blank" data-smartkarma-citation="accounts:5194" rel="noopener">Hank Calenti, CFA</a> dives into the potential scenarios for Thai Banks should COVID-19 loan relief decay become chronic. In Indonesia,<a href="https://www.smartkarma.com/insights/the-plight-of-the-garuda" target="_blank" rel="noopener"> The Plight of the Garuda</a>, Credit Specialist<a href="https://www.smartkarma.com/profiles/derek-silva" target="_blank" rel="noopener"> Derek Silva</a>,  examines Garuda's financial condition, which is now becoming critical.


The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
Macro InsightsIn Vietnam in Robust Health Despite Transient Threat of US S301 Action, CrossASEAN Chief Economist Prasenjit K. Basu zeros IN on the Vietnamese economy, which has been a key beneficiary of trade diversion from China. In Asian Exports &amp; COVID - Best Is Behind,Sharmila Whelan looks at the prospects for Asian Exports and sees a less attractive outlook ahead. Equity Bottom-Up InsightsIn Indonesia, Media Nusantara Citra (MNCN IJ) - No Credit Given for Metamorphosis, CrossASEAN insight provider Angus Mackintosh examines an aggressive sell-off in Media Nusantara Citra (MNCN IJ) share price, despite announcing a reasonable set of 2Q2020 results, with especially strong growth coming from its digital advertising through RCTI+ and its YouTube Multichannel Network (MCN), which now has a staggering 101m subscribers.  In Indomobil Sukses Internasional (IMAS IJ) Emerging Transport Monolith?, CrossASEAN insight Provider Angus Mackintosh revisits Indomobil Sukses Internasional (IMAS IJ), which is making meaningful progress towards being a leader in automotive and transport.In Bank Mestika Dharma – September Quarter Reversals Surge, banking specialist Daniel Tabbush zeros in on this small Indonesian lender, which is one of the first to report earnings and reported an improvement and reversal of credit costs. In AMMB: Top Decile PH Score™ and VFM Asset,Paul Hollingworth zeros in on this Malaysia lender were he find a promising outlook and attractive valuations under his model.In Singapore, Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger, Sumeet Singh takes a look at the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. In MR DIY IPO - Store Expansion Still Going Strong, Undemanding Valuation, IPO specialist Zhen Zhou, Toh revisits this IPO looking at its growth prospects and valuation. In Malaysia, Mr. D.I.Y. Group IPO: Valuation Insights, Arun George provides a view on why he believes that an attractive valuation and solid cornerstone support makes MR D.I.Y. Group (MRDIY MK) IPO tempting at the proposed price. In Malaysia, MR DIY IPO: Quality Homes, Shifara Samsudeen takes an initial look at Malaysia's home improvement retailer Mr. D.I.Y.  which has filed for an IPO which will raise approximately RM1.5bn (US$362m), the largest listing in three years in Malaysia. The company has set the price at RM1.60 per share and is expected to list the IPO on the 14th of October.In MR DIY IPO: Inexpensive Valuation Compared to Peers Despite Better Growth Profile,Shifara Samsudeen, provides us with her views on this upcoming Malaysian IPO. In Thailand, Kerry Express &amp; Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia examines the different approaches pursued in eCommerce fulfillment in SE Asia by the upcoming IPO Kerry Express Thailand (KEX TB) and by BEST Inc (BEST US). In BGRIM: Positive Sentiments from Joining Hands with PEA ENCOM, our friends at Country Group expect the cooperation with PEA ENCOM will help B Grimm Power (BGRIM TB) to expand the SPP (Small Power Producer) client base and have synergy benefits of up to THB1.0bn from cost-saving and service efficiency. Sector and ThematicIn Indonesia Banks – Positives Clouded, But Persist, banking specialist Daniel Tabbush discusses why the country's credit penetration remains low and margins remain higher than almost any other country. Due to the ill-conceived interruption of economies and a more conservative bank system due to the financial crisis in 1997, credit growth is now lower in Indonesia than in most other Asian-Pacific countries. In Thailand, Silicon Stories M: If You Can't Beat Them, Join Them, Thai specialist Athaporn Arayasantiparb, CFA takes a look at Bank Of Ayudhya (BAY TB),  which has realized that it is easier to partner with Internet startups than build businesses from scratch. In STI Index Rebalance: In the Race to Replace CCT, Finally Some Daylight Emerges,Brian Freitas looks at the upcoming Singapore STI Index rebalancing. Credit InsightsIn Thai Bank Capital Constraints, Debt Capital Issuance Needs, and Potential Impact, Credit Specialist Hank Calenti, CFA discusses the potential for further capital issuance by Thai banks following Bangkok Bank Public (BBL TB)'s recent bond issue. In Thai Bank Capital and Chronic COVID-19 Sensitivity,Hank Calenti, CFA dives into the potential scenarios for Thai Banks should COVID-19 loan relief decay become chronic. In Indonesia, The Plight of the Garuda, Credit Specialist Derek Silva,  examines Garuda's financial condition, which is now becoming critical. 

The NEW Week that Was in ASEAN@Smartkarma - Omnibus Laws, Credit Costs, and Mr DIY

Equity Capital Markets

Kerry Express Thailand / Equity Capital Markets

The purpose of this note is to analyze the different eCommerce fulfillment markets pursued by <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> and <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US).</a> KEX focuses on Thailand's domestic express market, while Best has a competing domestic service and is also developing a X-border express service to quickly move Chinese goods into multiple SE Asian markets.To better understand these two markets, we looked at market data from KEX's IPO documents as well as financial data disclosed by eCommerce giant <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>. These figures, combined with numbers from KEX itself and the Chinese express companies, give investors a sense of the size and growth potential of the Thai domestic and X-border eComm fulfillment markets.While both markets offer attractive growth, they also present distinct challenges. In the Thai domestic express market, these challenges include a lack of scale (compared to China's expess market) and relatively low population density, especially outside of Metro Bangkok. Challenges presented by the X-border market include exorbitant pricing, competition from large multinationals, and increased complexity (ie, paperwork, customs, tariffs, etc). We conclude that KEX is an intriguing pure play on Thailand's eCommerce development whose upcoming IPO is worth following. Regarding Best, we recently upgraded its shares to Buy on expected sector consolidation. To date its Thai and X-border revenues remain a very small part of the company's business which probably won't "move the needle" in the near-term.

The purpose of this note is to analyze the different eCommerce fulfillment markets pursued by Kerry Express Thailand (KEX TB) and BEST Inc (BEST US). KEX focuses on Thailand's domestic express market, while Best has a competing domestic service and is also developing a X-border express service to quickly move Chinese goods into multiple SE Asian markets.To better understand these two markets, we looked at market data from KEX's IPO documents as well as financial data disclosed by eCommerce giant Alibaba Group (BABA US). These figures, combined with numbers from KEX itself and the Chinese express companies, give investors a sense of the size and growth potential of the Thai domestic and X-border eComm fulfillment markets.While both markets offer attractive growth, they also present distinct challenges. In the Thai domestic express market, these challenges include a lack of scale (compared to China's expess market) and relatively low population density, especially outside of Metro Bangkok. Challenges presented by the X-border market include exorbitant pricing, competition from large multinationals, and increased complexity (ie, paperwork, customs, tariffs, etc). We conclude that KEX is an intriguing pure play on Thailand's eCommerce development whose upcoming IPO is worth following. Regarding Best, we recently upgraded its shares to Buy on expected sector consolidation. To date its Thai and X-border revenues remain a very small part of the company's business which probably won't "move the needle" in the near-term. 

Kerry Express & Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia

Equity Bottom-Up

We are upgrading <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> from HOLD to BUY on the expectation of Chinese express sector consolidation in the coming 12-18 months. Note that we do not expect sector fundamentals to improve in the near-term, nor do we expect Best to erase its losses in the next few quarters. 
While we concede we may be early in rating Best BUY, we believe conditions are developing in ways that make sector M&amp;A more likely in the medium-term. Given its size, its depressed valuation and its relationship to <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>, Best could become an acquisition target. 
We view Best as a cheap option on sector consolidation. At a 20% discount to peers on [EV/Revenue] and [EV/Parcel], we believe Best's express operation alone is worth US$5.05 per ADS -- investors effectively get the rest of its businesses for free. BUY below US$3 for ~70% upside.

We are upgrading BEST Inc (BEST US) from HOLD to BUY on the expectation of Chinese express sector consolidation in the coming 12-18 months. Note that we do not expect sector fundamentals to improve in the near-term, nor do we expect Best to erase its losses in the next few quarters. 
While we concede we may be early in rating Best BUY, we believe conditions are developing in ways that make sector M&amp;A more likely in the medium-term. Given its size, its depressed valuation and its relationship to Alibaba Group (BABA US), Best could become an acquisition target. 
We view Best as a cheap option on sector consolidation. At a 20% discount to peers on [EV/Revenue] and [EV/Parcel], we believe Best's express operation alone is worth US$5.05 per ADS -- investors effectively get the rest of its businesses for free. BUY below US$3 for ~70% upside. 

Upgrading Best Inc To Speculative BUY on Expectation of Express Sector Consolidation

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:
<ol>
<li>How things used to work in China's express sector</li>
<li>How the sector has begun changing in ways that may force consolidation</li>
<li>The 'Why?' &amp; 'How?' of Chinese express sector consolidation</li>
<li>Alibaba's critical role in potential M&amp;A activity</li>
<li>Some thoughts about the timing of expected changes</li>
<li>Conclusions</li>
</ol>

The objectives of this report are to examine what express sector consolidation may look like over the next few years, and to offer investors guidance about how to play this trend when the dominoes begin to fall, most likely in 2021-22. We organize the report into six parts as follows:

How things used to work in China's express sector
How the sector has begun changing in ways that may force consolidation
The 'Why?' &amp; 'How?' of Chinese express sector consolidation
Alibaba's critical role in potential M&amp;A activity
Some thoughts about the timing of expected changes
Conclusions


Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

China

BEST Inc. offers logistics and supply chain management solutions. The Company provides express and freight delivery, inventory management, warehousing, financing, cross-border supply chain, merchandise sourcing, and value-added services. BEST serves customers worldwide.

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BEST (BEST US)

As Profits Turn to Losses, STO Express Retreats from Growth Strategy. Is M&A Next?

STO Express recently warned investors it would report a loss in Q3 2020. The company seems to be rethinking its aggressive pursuit of volume share,...

Tracking Traffic

The NEW Week that Was in ASEAN@Smartkarma - Omnibus Laws, Credit Costs, and Mr DIY

The NEW Week that Was in ASEAN@Smartkarma includes a curation of the past week's insights across SE Asia together with value-added commentary on...

Angus Mackintosh

Kerry Express & Best Inc: Two Approaches to ECommerce Logistics Growth in SE Asia

Define market opportunity: domestic Thailand (KEX

Tracking Traffic

Upgrading Best Inc To Speculative BUY on Expectation of Express Sector Consolidation

What is rationale? What are catalysts? Why Best and not other potential targets? Price target?

Tracking Traffic

Pressure Building: How Consolidation in China's Express Sector Might Look Over the Next Two Years

Objective of this note: How things used to work How the sector has begun changing

Tracking Traffic

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