Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> has been the stocks to benefit from the COVID-19 induced lockdown as Singaporeans are allowed to WFH instead of WFO thus they do more grocery shopping and also stockpiled in case of the reduced food supply due to the longer than expected pandemic. The company has recorded a substantial and never-seen-before YoY revenue growth <em>(Q1: 30.7%, Q2: 75.8%, and Q3: 28.9%)</em>. </p>
<p>The tides seemed to have turned though:</p>
<ul>
<li>Singapore statistics bureau reported that the revenue increase from supermarkets and convenience stores has slowed down while F&amp;B sales have grown from SGD 397 million to SGD 629 million <em>QoQ</em>, reflecting the change in consumers' behavior to start going out again. </li>
</ul>
<p>Although its valuation has peaked in Q2, Sheng Siong's share price has not decreased by much thus it is the right time book profit as the large revenues growth is unlikely to sustain going forward. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/873/original/image_38476675561605505587235.png?1605505587" class="editor-image img-responsive" data-smartkarma-image-id="171873"></figure>

Sheng Siong (SSG SP) has been the stocks to benefit from the COVID-19 induced lockdown as Singaporeans are allowed to WFH instead of WFO thus they do more grocery shopping and also stockpiled in case of the reduced food supply due to the longer than expected pandemic. The company has recorded a substantial and never-seen-before YoY revenue growth (Q1: 30.7%, Q2: 75.8%, and Q3: 28.9%). 
The tides seemed to have turned though:

Singapore statistics bureau reported that the revenue increase from supermarkets and convenience stores has slowed down while F&amp;B sales have grown from SGD 397 million to SGD 629 million QoQ, reflecting the change in consumers' behavior to start going out again. 

Although its valuation has peaked in Q2, Sheng Siong's share price has not decreased by much thus it is the right time book profit as the large revenues growth is unlikely to sustain going forward. 


Sheng Siong (SSG): Sustainable High Growth?

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Cross Asset Strategy

<p>We are highlighting some key dates to watch in late 2020 and the year 2021 and the stocks that will be impacted by them:</p><p><strong>Consumer catalysts. </strong>The iPhone 12 release on Nov 20 is expected to be a boon for the telecom sector, but the government's Half-&amp;-Half program could drive consumers away from CP All to small businesses.</p><p><strong>Political pit stop. </strong>Thai politics hinges on the constitutional reform meeting on November 28 and the Prime Minister's trial on December 2. It's defensives like RATCH vs stocks that rely on long term stability like Bangkok Bank that matter at this juncture.</p><p><strong>Test for tourism. </strong>We expect to see YoY improvement for domestic tourism in April (Songkran) that could benefit domestic-focused hotels like Erawan. Likewise, Christmas (December) is likely to be the test for foreign tourism, assuming the vaccine comes in October as expected.</p>

We are highlighting some key dates to watch in late 2020 and the year 2021 and the stocks that will be impacted by them:Consumer catalysts. The iPhone 12 release on Nov 20 is expected to be a boon for the telecom sector, but the government's Half-&amp;-Half program could drive consumers away from CP All to small businesses.Political pit stop. Thai politics hinges on the constitutional reform meeting on November 28 and the Prime Minister's trial on December 2. It's defensives like RATCH vs stocks that rely on long term stability like Bangkok Bank that matter at this juncture.Test for tourism. We expect to see YoY improvement for domestic tourism in April (Songkran) that could benefit domestic-focused hotels like Erawan. Likewise, Christmas (December) is likely to be the test for foreign tourism, assuming the vaccine comes in October as expected.

<p><a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> is uniquely positioned as a Thai company listed in <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">SGX (SGX SP)</a> with an exposure to the reopening of tourism in Thailand. The Thai government has proposed to exempt Chinese tourists from the required 14-day quarantine by 2021 and replace that with an app or token to trace their whereabouts during their holiday in Thailand. With the positive vaccine announcement, this initiative will be rolled out sooner rather than later and possibly be expanded for other countries too which means the number of tourists in Thailand will soon resume to the almost pre-COVID-19 level. </p>
<p>At 16x PER, 2.8x PBR, and 13.4 EV/EBITDA, Thai Beverage is trading at a  <strong>63% PER discount, 76% PBR discount, and 36% EV/EBITDA discount </strong>to the regional brewery peers<strong> and a 65% PER discount, 53% PBR discount, and 50% EV/EBITDA discount to the </strong>other Thai tourism-related stocks. </p>

Thai Beverage (THBEV SP) is uniquely positioned as a Thai company listed in SGX (SGX SP) with an exposure to the reopening of tourism in Thailand. The Thai government has proposed to exempt Chinese tourists from the required 14-day quarantine by 2021 and replace that with an app or token to trace their whereabouts during their holiday in Thailand. With the positive vaccine announcement, this initiative will be rolled out sooner rather than later and possibly be expanded for other countries too which means the number of tourists in Thailand will soon resume to the almost pre-COVID-19 level. 
At 16x PER, 2.8x PBR, and 13.4 EV/EBITDA, Thai Beverage is trading at a  63% PER discount, 76% PBR discount, and 36% EV/EBITDA discount to the regional brewery peers and a 65% PER discount, 53% PBR discount, and 50% EV/EBITDA discount to the other Thai tourism-related stocks. 

Thai Beverage (Thbev): Brewing for Reopening

Thematic (Sector/Industry)

<p>Less than a year since the news hit that the Chinese outbreak spread to the world, <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> has announced its vaccine with more than <strong>90%</strong> effective in preventing Covid-19 among those without evidence of prior infection. Similar to <a href="https://www.smartkarma.com/insights/china-outbreak-theme-winners-and-losers" target="_blank" data-smartkarma-citation="insights:35971" rel="noopener">China Outbreak Theme: Winners and Losers</a> , this insight will discuss the potential winners and losers from the announcement of the vaccine. </p><p>Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. </p><p>Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. </p>

Less than a year since the news hit that the Chinese outbreak spread to the world, Pfizer Inc (PFE US) has announced its vaccine with more than 90% effective in preventing Covid-19 among those without evidence of prior infection. Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine. Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. 

<div>
<a href="https://www.smartkarma.com/entities/ql-resources-bhd" target="_blank" data-smartkarma-citation="entities:11221:1" rel="noopener">Ql Resources (QLG MK) </a>share price outperformance in the past 3 years has made it to be one of the darlings of <a href="https://www.smartkarma.com/entities/kuala-lumpur-composite-index" target="_blank" data-smartkarma-citation="entities:22913:1" rel="noopener">Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX)</a> outside of the glove names. The high expectations from investors have pushed the market valuation to reach 64x PER, a 65% premium to its Malaysian peer - <a href="https://www.smartkarma.com/entities/7-eleven-malaysia-holdings-bhd" target="_blank" data-smartkarma-citation="entities:3890:1" rel="noopener">7 eleven malaysia holdings (SEM MK)</a> although the latter has higher debt and sells various SKUs, unlike Family Mart that focuses on fresh food. </div>
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<div>
<div>Assuming all 300 stores are opened and profitable, the company's forward PER is around 25-45x;  higher than the regional peers' average valuation at 24x; which likely to suggest investors who have made a decent return from holding <a href="https://www.smartkarma.com/entities/ql-resources-bhd" target="_blank" data-smartkarma-citation="entities:11221:1" rel="noopener">Ql Resources (QLG MK)</a> to book some profit. </div>
<div></div>
</div>


Ql Resources (QLG MK) share price outperformance in the past 3 years has made it to be one of the darlings of Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) outside of the glove names. The high expectations from investors have pushed the market valuation to reach 64x PER, a 65% premium to its Malaysian peer - 7 eleven malaysia holdings (SEM MK) although the latter has higher debt and sells various SKUs, unlike Family Mart that focuses on fresh food. 


Assuming all 300 stores are opened and profitable, the company's forward PER is around 25-45x;  higher than the regional peers' average valuation at 24x; which likely to suggest investors who have made a decent return from holding Ql Resources (QLG MK) to book some profit. 



Thailand

CP ALL PCL operates convenience store chains in Thailand and China.  The Company also owns and operates the a department store chain located primarily in Shanghai city and Chonqing city of China.

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CP ALL PCL (CPALL TB)

Sheng Siong (SSG): Sustainable High Growth?

Singapore statistics reported that the revenue increase from supermarkets, CSs has slowed down while F&B sales have grown 60% QoQ, reflecting a...

Henry Soediarko

Catalyst Calendar for Thai Equities 2021

Many catalysts will pop up in late 2020 and the year 2021, which will likely test Thailand in terms of consumer sentiments, politics, and tourism...

Athaporn Arayasantiparb, CFA

Thai Beverage (Thbev): Brewing for Reopening

Thai Beverage is uniquely positioned as a Thai company listed in Singapore with an exposure to the reopening of tourism in Thailand.

Henry Soediarko

Pfizer Vaccine: Winners and Losers

Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine.

Henry Soediarko

QL Resources (QL): Take Profit?

Assuming all 300 stores are opened and profitable, the company's forward PER is around 25-45x; higher than the regional peers' average valuation...

Henry Soediarko

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