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

CTOS Digital (CTOS) aims to raise up to US$291m via its Malaysian IPO. It is majority owned by Creador, a PE firm. CTOS is an investment holding whose subsidiaries are principally involved in the business of credit reporting, digital software related services, software development, outsourcing and training services and investment holding. CTOS was the largest credit reporting agency (CRA) in Malaysia with an estimated market share in terms of revenue of 71.2% in 2020 according to the IMR Report. Its associate, Experian, was the second largest credit reporting agency (CRA) in Malaysia, with an estimated market share in terms of revenue of 17.5%.We covered most aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/ctos-digital-pre-ipo-credit-where-credit-s-due" target="_blank" rel="noopener">CTOS Digital Pre-IPO - Credit where credit’s due</a>.In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

CTOS Digital (CTOS) aims to raise up to US$291m via its Malaysian IPO. It is majority owned by Creador, a PE firm. CTOS is an investment holding whose subsidiaries are principally involved in the business of credit reporting, digital software related services, software development, outsourcing and training services and investment holding. CTOS was the largest credit reporting agency (CRA) in Malaysia with an estimated market share in terms of revenue of 71.2% in 2020 according to the IMR Report. Its associate, Experian, was the second largest credit reporting agency (CRA) in Malaysia, with an estimated market share in terms of revenue of 17.5%.We covered most aspects of the deal in our earlier note, CTOS Digital Pre-IPO - Credit where credit’s due.In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

CTOS Digital IPO - Market Leader, Strong PE Record and Cornerstone

CTOS Digital (CTOS) aims to raise up to US$300m via its Malaysian IPO. It is majority owned by Creador, a PE firm. CTOS is an investment holding whose subsidiaries are principally involved in the business of credit reporting, digital software related services, software development, outsourcing and training services and investment holding.CTOS was the largest credit reporting agency (CRA) in Malaysia with an estimated market share in terms of revenue of 71.2% in 2020 according to the IMR Report. Its associate, Experian, was the second largest CRA in Malaysia, with an estimated market share in terms of revenue of 17.5%.

CTOS Digital (CTOS) aims to raise up to US$300m via its Malaysian IPO. It is majority owned by Creador, a PE firm. CTOS is an investment holding whose subsidiaries are principally involved in the business of credit reporting, digital software related services, software development, outsourcing and training services and investment holding.CTOS was the largest credit reporting agency (CRA) in Malaysia with an estimated market share in terms of revenue of 71.2% in 2020 according to the IMR Report. Its associate, Experian, was the second largest CRA in Malaysia, with an estimated market share in terms of revenue of 17.5%.

CTOS Digital Pre-IPO - Credit Where Credit’s Due

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

*Improving NIMs and Credit:CIMB Group (CIMB.MK) [CIMB] reported 1Q21 results of MYR 2.5 bn, increasing MYR 2.2 bn (10.6x) linked quarter. Excluding the one time gain of MYR 1.2 bn, CIMB’s core operatimg result came in at MYR 1.3 bn – increasing MYR 1.1 bn or 5.1x over the same period. 1Q21 results were driven by several factors: 1) net interest income improvement of MYR 169 mn (4.9%) which was driven by NIM ex-ansion of 15 bp and modest loan growth of MYR 718 mn or 0.2%; and 2) a MYR 1.5 bn (66.5%) decline in loss provisions tracking credit quality improvement in both Malaysia and Singapore; and 
*Credit Risk Decelerating: With NCOs of MYR 1.9 bn or at 1.60% annualized of total loans (decelerating from the MYR 1.9 bn posted in 4Q20), we find that net new NPLs increased only MYR 756 mn or 23.0% on an annualized basis – quite the decline from the MYR 2.6 bn or a whopping 83.5% on an annualized basis posted in 4Q20. We believe that reserves are too light by MYR 2.6 bn– which is nearly two quarters of core operating results.

*Improving NIMs and Credit:CIMB Group (CIMB.MK) [CIMB] reported 1Q21 results of MYR 2.5 bn, increasing MYR 2.2 bn (10.6x) linked quarter. Excluding the one time gain of MYR 1.2 bn, CIMB’s core operatimg result came in at MYR 1.3 bn – increasing MYR 1.1 bn or 5.1x over the same period. 1Q21 results were driven by several factors: 1) net interest income improvement of MYR 169 mn (4.9%) which was driven by NIM ex-ansion of 15 bp and modest loan growth of MYR 718 mn or 0.2%; and 2) a MYR 1.5 bn (66.5%) decline in loss provisions tracking credit quality improvement in both Malaysia and Singapore; and 
*Credit Risk Decelerating: With NCOs of MYR 1.9 bn or at 1.60% annualized of total loans (decelerating from the MYR 1.9 bn posted in 4Q20), we find that net new NPLs increased only MYR 756 mn or 23.0% on an annualized basis – quite the decline from the MYR 2.6 bn or a whopping 83.5% on an annualized basis posted in 4Q20. We believe that reserves are too light by MYR 2.6 bn– which is nearly two quarters of core operating results. 

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Quantitative Analysis

Since our Original on <a href="https://www.smartkarma.com/insights/asia-buyback-forecasting-which-companies-are-likely-to-raise-cut-buybacks" target="_blank" data-smartkarma-citation="insights:47196" rel="noopener">Asia Buyback Forecasting | Which Companies Are Likely to Raise/Cut Buybacks?</a>, published on Jan 31 2021, this is our first quarterly update. Below we provide updated results from our models based on latest reported fiscal year-end financials. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in March, there was also a request for conducting price movement analysis corresponding to our buyback raise/cut outlook for our back-test results. This analysis is now available. Our results show a decent outperformance/underperformance corresponding to buyback raise/cut prediction, suggesting that users of our models will benefit from guiding their investment decisions based on our buyback raise/cut outlook.

Since our Original on Asia Buyback Forecasting | Which Companies Are Likely to Raise/Cut Buybacks?, published on Jan 31 2021, this is our first quarterly update. Below we provide updated results from our models based on latest reported fiscal year-end financials. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in March, there was also a request for conducting price movement analysis corresponding to our buyback raise/cut outlook for our back-test results. This analysis is now available. Our results show a decent outperformance/underperformance corresponding to buyback raise/cut prediction, suggesting that users of our models will benefit from guiding their investment decisions based on our buyback raise/cut outlook.

Asia Buyback Forecasting | Quarterly Update 1.0

*Improved Operating Result: Bank Central Asia (BBCA.IJ) [BCA] reported 1Q21 results of IDR 7.0 tn do not do BCA justice, as core operating results grew IDR 1.5 tn (40.9%) over the same period. BCA’s positive operating results were highlighted by two factors: a) interest income growth of IDR 385 mn (2.8%) due largely to a bit of leverage in the corporate securities portfolio, and b) a tax rate reduction; and*Credit Challenges Persist, But Credit Break Decelerates: By our calculation, we find that 1Q20 net new NPLs amounted to IDR 742 bn for annualized rate of increase of 28.7% - which is quite favorable compared to 4Q20 results of IDR 1.3 tn and 46.5%. Given the surprise deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio.

*Improved Operating Result: Bank Central Asia (BBCA.IJ) [BCA] reported 1Q21 results of IDR 7.0 tn do not do BCA justice, as core operating results grew IDR 1.5 tn (40.9%) over the same period. BCA’s positive operating results were highlighted by two factors: a) interest income growth of IDR 385 mn (2.8%) due largely to a bit of leverage in the corporate securities portfolio, and b) a tax rate reduction; and*Credit Challenges Persist, But Credit Break Decelerates: By our calculation, we find that 1Q20 net new NPLs amounted to IDR 742 bn for annualized rate of increase of 28.7% - which is quite favorable compared to 4Q20 results of IDR 1.3 tn and 46.5%. Given the surprise deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be given the uptick in special mention and lack of full clarity with the restructuring portfolio.

Bank Central Asia – Light At The End Of The Tunnel

Malaysia

CIMB Group Holdings Berhad provides commercial banking and related financial services. The Company and its subsidiaries, operate as a regional universal bank offering a full range of financial products and services, covering corporate and investment banking, consumer banking, treasury, insurance and asset management.

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CIMB Group Holdings (CIMB MK)

CTOS Digital IPO - Market Leader, Strong PE Record and Cornerstone

CTOS Digital (CTOS) aims to raise up to US$291m via its Malaysian IPO. It is majority owned by Creador, a PE firm. CTOS is the largest credit...

Sumeet Singh

CTOS Digital Pre-IPO - Credit Where Credit’s Due

CTOS Digital (CTOS) aims to raise up to US$300m via its Malaysian IPO. It is majority owned by Creador, a PE firm. It has an over 70% market share...

Sumeet Singh

CIMB Group – A Positive Turn

CIMB GROUP: CIMB core results improved 5.1x linked quarter, driven by NIM expansion, loan growth, and decline in loss provisions. Loss reserves are...

Thomas J. Monaco

Asia Buyback Forecasting | Quarterly Update 1.0

This is our first quarterly update since our Original on Buyback Forecasting. We provide updated results based on latest year-end financials.

Ankit Agrawal, CFA

Bank Central Asia – Light At The End Of The Tunnel

BANK CENTRAL ASIA: BCA's core operating results grew 40.9% QOQ in 1Q21, and were highlighted by interest income growth and lower taxes. Another...

Thomas J. Monaco

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