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

Equity Bottom-Up

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A call with <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> management revealed ongoing pressure from the latest wave of COVID-19 in Thailand, which continues to impact the retail business under Big C but there is some light at the end of the tunnel with the company continuing to focus on renovating and converting stores, as well as expanding its overall network including its omnichannel network.
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The company's recent results saw sales decrease by -5.4% YoY to THB 34,161m in 2Q2021 mainly due to the decline in its retail business under the modern supply chain, which continued to be impacted by COVID-19 related issues. Despite the ongoing third wave in Thailand 3Q2020 is looking better on a YoY basis. 
Currently, 29 out of 77 provinces are dark red zones currently but this includes all the most populous areas of Thailand. Big C continues to see strong growth from food but faces pressure as Softline cannot be sold (non-essential) and non-food overall is a drag.
In terms of formats, Mini Big C and the company's supermarket format under The Food Place has been performing relatively well. Mini Big C are more like proximity mini-markets rather than convenience stores. 
Big C also continues to pursue its omnichannel approach to sales, which involves using third party operators but also using call and chat avenues through Line and Whatsapp. 
The company is also ramping up the renovations of its existing stores and has had a good experience so far with this exercise in terms of improving returns
The key catalyst for the retail business will come from a recovery in the tourism business, given that some of the company's stores had heavy exposure to sales to tourists pre-pandemic.
The company's packaging supply chain business saw a resilient performance in 2Q2021, with especially strong growth from its glass bottling business.
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> saw strong performance in its consumer supply chain business, mainly due to the addition of Unicharm as a new client for Thailand for traditional markets.
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> healthcare and technical division registered a steady performance in 2Q2021 with COVID-19 related products doing well plus new hospital budget-related orders driving growth.
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The company continues to make progress on its ESG credentials and became part of FTSE4Good Emerging Markets and FTSE4Good ASEAN 5 indices at the end of June.
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> is an interesting proxy to the consumer recovery, not just in Thailand but also to South East Asia, given its exposure in Vietnam, and Malaysia. It remains cheap relative to peers, trading on 25.0x FY22E PER and 21.4x FY23E PER, with forecast EPS growth of +41.2% and +16.6%% for FY22E and FY23E respectively.


A call with Berli Jucker (BJC TB) management revealed ongoing pressure from the latest wave of COVID-19 in Thailand, which continues to impact the retail business under Big C but there is some light at the end of the tunnel with the company continuing to focus on renovating and converting stores, as well as expanding its overall network including its omnichannel network.

The company's recent results saw sales decrease by -5.4% YoY to THB 34,161m in 2Q2021 mainly due to the decline in its retail business under the modern supply chain, which continued to be impacted by COVID-19 related issues. Despite the ongoing third wave in Thailand 3Q2020 is looking better on a YoY basis. 
Currently, 29 out of 77 provinces are dark red zones currently but this includes all the most populous areas of Thailand. Big C continues to see strong growth from food but faces pressure as Softline cannot be sold (non-essential) and non-food overall is a drag.
In terms of formats, Mini Big C and the company's supermarket format under The Food Place has been performing relatively well. Mini Big C are more like proximity mini-markets rather than convenience stores. 
Big C also continues to pursue its omnichannel approach to sales, which involves using third party operators but also using call and chat avenues through Line and Whatsapp. 
The company is also ramping up the renovations of its existing stores and has had a good experience so far with this exercise in terms of improving returns
The key catalyst for the retail business will come from a recovery in the tourism business, given that some of the company's stores had heavy exposure to sales to tourists pre-pandemic.
The company's packaging supply chain business saw a resilient performance in 2Q2021, with especially strong growth from its glass bottling business.
Berli Jucker (BJC TB) saw strong performance in its consumer supply chain business, mainly due to the addition of Unicharm as a new client for Thailand for traditional markets.
Berli Jucker (BJC TB) healthcare and technical division registered a steady performance in 2Q2021 with COVID-19 related products doing well plus new hospital budget-related orders driving growth.



The company continues to make progress on its ESG credentials and became part of FTSE4Good Emerging Markets and FTSE4Good ASEAN 5 indices at the end of June.
Berli Jucker (BJC TB) is an interesting proxy to the consumer recovery, not just in Thailand but also to South East Asia, given its exposure in Vietnam, and Malaysia. It remains cheap relative to peers, trading on 25.0x FY22E PER and 21.4x FY23E PER, with forecast EPS growth of +41.2% and +16.6%% for FY22E and FY23E respectively.

Berli Jucker (BJC TB) - Bright Lights at the End of the Tunnel

Cross Asset Strategy

Thailand plans to fully reopen to foreign visitors in 120 days, given it aims to give at least one dose of vaccine to the majority of residents by early October.
The country aims for some tourist destinations to be open to fully vaccinated visitors without any quarantine requirement before this time. Phuket is seen as the “pilot” for the new scheme.
Thailand's economy is highly dependent on tourism with around 12% of GDP officially from tourism but the true exposure is closer to 20% given all the related industries outside travel and hotels from retail to banks. 
These most recent plans were unveiled in an address by Prime Minister Prayuth Chan-Ocha in a National address yesterday, which included a number of important concessions, which can be seen in the detailed section.
We recommend increasing weightings in Thai hotels, hospitals, selective retailers, and banks to play this tourism recovery theme. Please see below for details.

Thailand plans to fully reopen to foreign visitors in 120 days, given it aims to give at least one dose of vaccine to the majority of residents by early October.
The country aims for some tourist destinations to be open to fully vaccinated visitors without any quarantine requirement before this time. Phuket is seen as the “pilot” for the new scheme.
Thailand's economy is highly dependent on tourism with around 12% of GDP officially from tourism but the true exposure is closer to 20% given all the related industries outside travel and hotels from retail to banks. 
These most recent plans were unveiled in an address by Prime Minister Prayuth Chan-Ocha in a National address yesterday, which included a number of important concessions, which can be seen in the detailed section.
We recommend increasing weightings in Thai hotels, hospitals, selective retailers, and banks to play this tourism recovery theme. Please see below for details. 

Thailand - 120 Days Later - Fully Vaccinated Tourism to Resume

A  call with <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> management post the company's recent results revealed a more cautious tone given the recent pick-up in COVID-19 cases in the so-called "third wave". 
Restaurants remain open and dining in is allowed although not permitted to serve alcohol and bars and nightclubs are shut under the current measures. Alcohol can be sold through retail outlets for consumption at home. Big C and Mini Big continue to sell alcohol through all of their outlets. 
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> continued to experience difficult YoY comparisons for its packaging supply chain business, which is focused on glass bottling and aluminium cans, given that there was some stocking upon glass bottles last year in 1Q. 
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> consumer supply chain division had a mixed picture given that non-food had a high base last year since tissue sales were very strong in 1Q2020, as was personal care, whilst demand for snacks remained soft.
For the company's healthcare and technical supply chain (H&amp;TSC), it saw a positive performance for the technical side, mainly driven by food additives but the lube business was relatively weaker
The company's core modern supply chain division, which consists mainly of its Big C retail business, continues to see big declines in both sales and SSSG given that January and February last year were relatively normal ahead of the onset of the pandemic. The higher portion of B2B sales to offset competition from traditional trade has negatively impacted margins slightly.
Big C continues to expand its store network with plans to add two new Big C hypermarkets this year and 100 mini-Big C proximity stores. There are also a number of Big C Marketplace stores being converted to other formats including Big C Depot and Food Place.
Omnichannel sales are growing, which include sales through Line and Whatsapp as well as various online channels now account for just under 3% of sales.
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> will continue to face headwinds in 2Q2021, as the third wave impacts mobility and beer sales but YoY comparisons will start to get easier. We continue to see <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> as an interesting proxy to the consumer recovery, not just in Thailand but also to South East Asia, given its exposure in Vietnam, and Malaysia. It remains cheap relative to peers, with a stronger growth outlook for the next two years.

A  call with Berli Jucker (BJC TB) management post the company's recent results revealed a more cautious tone given the recent pick-up in COVID-19 cases in the so-called "third wave". 
Restaurants remain open and dining in is allowed although not permitted to serve alcohol and bars and nightclubs are shut under the current measures. Alcohol can be sold through retail outlets for consumption at home. Big C and Mini Big continue to sell alcohol through all of their outlets. 
Berli Jucker (BJC TB) continued to experience difficult YoY comparisons for its packaging supply chain business, which is focused on glass bottling and aluminium cans, given that there was some stocking upon glass bottles last year in 1Q. 
Berli Jucker (BJC TB) consumer supply chain division had a mixed picture given that non-food had a high base last year since tissue sales were very strong in 1Q2020, as was personal care, whilst demand for snacks remained soft.
For the company's healthcare and technical supply chain (H&amp;TSC), it saw a positive performance for the technical side, mainly driven by food additives but the lube business was relatively weaker
The company's core modern supply chain division, which consists mainly of its Big C retail business, continues to see big declines in both sales and SSSG given that January and February last year were relatively normal ahead of the onset of the pandemic. The higher portion of B2B sales to offset competition from traditional trade has negatively impacted margins slightly.
Big C continues to expand its store network with plans to add two new Big C hypermarkets this year and 100 mini-Big C proximity stores. There are also a number of Big C Marketplace stores being converted to other formats including Big C Depot and Food Place.
Omnichannel sales are growing, which include sales through Line and Whatsapp as well as various online channels now account for just under 3% of sales.
Berli Jucker (BJC TB) will continue to face headwinds in 2Q2021, as the third wave impacts mobility and beer sales but YoY comparisons will start to get easier. We continue to see Berli Jucker (BJC TB) as an interesting proxy to the consumer recovery, not just in Thailand but also to South East Asia, given its exposure in Vietnam, and Malaysia. It remains cheap relative to peers, with a stronger growth outlook for the next two years.

Berli Jucker (BJC TB) - Stock-Up for Canned Recovery?

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

Stable result in Q2 2021 despite the increasing COVID-19 cases in Thailand from nightclubs and concerts prompting the Thai government to extend the ban for nightlife entertainment. The interesting part is that contrary to <a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)'s </a>observation that the Thais are quite happy to drink and socialize at home versus Vietnamese, who tend to consume outside the home, Sabeco (Saigon Bev Company)'s sales volume actually went up during this period and lifted <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> results, further reiterating that the Thai may be happy to drink at home but the difficult period has dampened their home drinking appetite. Thai Beverage is still trading at a lower valuation to its peak, the current valuation at 17x PER is still higher than 14x forward PER.  The recent Q2 2021 result brought some optimism especially when the management displayed cost savings ability but the spirits and beer outlook remain soft as long as the pandemic is still there.

Stable result in Q2 2021 despite the increasing COVID-19 cases in Thailand from nightclubs and concerts prompting the Thai government to extend the ban for nightlife entertainment. The interesting part is that contrary to Berli Jucker (BJC TB)'s observation that the Thais are quite happy to drink and socialize at home versus Vietnamese, who tend to consume outside the home, Sabeco (Saigon Bev Company)'s sales volume actually went up during this period and lifted Thai Beverage (THBEV SP) results, further reiterating that the Thai may be happy to drink at home but the difficult period has dampened their home drinking appetite. Thai Beverage is still trading at a lower valuation to its peak, the current valuation at 17x PER is still higher than 14x forward PER.  The recent Q2 2021 result brought some optimism especially when the management displayed cost savings ability but the spirits and beer outlook remain soft as long as the pandemic is still there. 

Thai Beverage (THBEV): Weak Quarter Ahead

The two weeks nightlife ban has been put in place by the Thai government and possible further extension if this third wave is not resolved soon enough as the increase in the daily community cases have reached the second wave level. If things do not go under control soon enough, we should expect a stricter measure from the Thai government which means a further extension of the nightlife ban.
<div>Compared to other listed breweries in the region, <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 trading at 65% PER discount, 78% PBR discount, and 51% EV/EBITDA discount. Compared to November last year, the valuation gap with the peers remains on the same level with the exception of EV/EBITDA where Thai Bev's high D/E (120%) is the possible cause. </div>
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<div>Compared to <a href="https://www.smartkarma.com/entities/cp-all-pcl" target="_blank" data-smartkarma-citation="entities:13889:1" rel="noopener">CP ALL PCL (CPALL TB)</a> and <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> , Thai Beverage is trading at 50% PER discount, 54% PBR discount, and 24% EV/EBITDA discount - the gap somewhat narrowed but Thai Bev remains undervalued. </div>
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Since 6 months ago, <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> has been trading at a discount compared to the peers due to the bigger exposure in domestic tourism. With the reinstatement of the nightlife ban, Thai Bev is likely to trade at discount to the peers until the third wave pandemic is solved and vaccination has started to take place.

The two weeks nightlife ban has been put in place by the Thai government and possible further extension if this third wave is not resolved soon enough as the increase in the daily community cases have reached the second wave level. If things do not go under control soon enough, we should expect a stricter measure from the Thai government which means a further extension of the nightlife ban.
Compared to other listed breweries in the region, Thai Beverage (THBEV SP) is trading at 65% PER discount, 78% PBR discount, and 51% EV/EBITDA discount. Compared to November last year, the valuation gap with the peers remains on the same level with the exception of EV/EBITDA where Thai Bev's high D/E (120%) is the possible cause. 

Compared to CP ALL PCL (CPALL TB) and Airports of Thailand (AOT TB) , Thai Beverage is trading at 50% PER discount, 54% PBR discount, and 24% EV/EBITDA discount - the gap somewhat narrowed but Thai Bev remains undervalued. 

Since 6 months ago, Thai Beverage (THBEV SP) has been trading at a discount compared to the peers due to the bigger exposure in domestic tourism. With the reinstatement of the nightlife ban, Thai Bev is likely to trade at discount to the peers until the third wave pandemic is solved and vaccination has started to take place.

Thai Beverage (THBEV): Not the Time to Buy Yet

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)

Berli Jucker (BJC TB) - Bright Lights at the End of the Tunnel

Berli Jucker's retail business under Big C continues to see pressure from COVID-19 issues but improvements are underway and it is expanding again,...

Angus Mackintosh

Thailand - 120 Days Later - Fully Vaccinated Tourism to Resume

Thailand plans reopen to reopen its borders to the fully vaccinated in 120 days without quarantine restrictions, which will be a boon for the...

Angus Mackintosh

Berli Jucker (BJC TB) - Stock-Up for Canned Recovery?

Berli Jucker is an interesting proxy to the consumer recovery in Thailand and South-East Asia, through its packaging, retail, and consumer supply...

Angus Mackintosh

Thai Beverage (THBEV): Weak Quarter Ahead

Q2 2021 result brought some optimism especially when the management displayed cost savings ability but the spirits and beer outlook remain soft as...

Henry Soediarko

Thai Beverage (THBEV): Not the Time to Buy Yet

Thai Bev is likely to trade at discount to the peers until the third wave pandemic is solved and vaccination has started to take place.

Henry Soediarko

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