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>China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.</p>
<p>Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. </p>
<p>BYD also announced that a total of <strong>1500</strong> Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. <strong>The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year</strong>.</p>
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<p>BYD is added into <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> and <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> at the same time while other names are involved with one or some are two - moving from one to another. </p>
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<p>BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. </p>
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<p><strong>Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. </strong></p>
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China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.
Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. 
BYD also announced that a total of 1500 Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year.

BYD is added into Hang Seng China Enterprises Index (HSCEI INDEX) and Hong Kong Hang Seng Index (HSI INDEX) at the same time while other names are involved with one or some are two - moving from one to another. 

BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. 

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. 


BYD (1211) Vs Tesla (TSLA): Fight over China

<p>Nexter's share price has moved in tandem with <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> to develop autonomous vehicles although it was denied by the companies yesterday. </p>
<p>The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, <strong>it is time to sell to lock in some profit</strong>. </p>

Nexter's share price has moved in tandem with Geely Auto (175 HK) in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with Baidu (BIDU US) to develop autonomous vehicles although it was denied by the companies yesterday. 
The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, it is time to sell to lock in some profit. 

<p><a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> share price has blown out in the past week, raising the question of whether it is time to sell or hold. </p>
<p>The company has a pipeline of exciting and futuristic product innovation that will keep its existing customers (conventional automakers) happy while also winning more mandates in the EV industry.   </p>
<p>There will be a slight margin decline in the 2H 2020 from the North American customers but the increasing proportion of Chinese customers should help to plug the gap. The company is still trading on the 49% and 48% discount on PER and EV/EBITDA of its customers respectively.</p>

Nexteer Automotive (1316 HK) share price has blown out in the past week, raising the question of whether it is time to sell or hold. 
The company has a pipeline of exciting and futuristic product innovation that will keep its existing customers (conventional automakers) happy while also winning more mandates in the EV industry.   
There will be a slight margin decline in the 2H 2020 from the North American customers but the increasing proportion of Chinese customers should help to plug the gap. The company is still trading on the 49% and 48% discount on PER and EV/EBITDA of its customers respectively.

Asia gaming and consumer discretionary analyst

Michael Ting

<p>Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a path to recovery for passenger and commercial vehicle sales. The stock has underperformed its peer average by 20% YTD and has become a forgotten stock among investors but at 3x forward P/E along with improving fundamentals, we believe the stock offers a favorable risk/reward at current levels supported by a 7% dividend yield.</p>

Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a path to recovery for passenger and commercial vehicle sales. The stock has underperformed its peer average by 20% YTD and has become a forgotten stock among investors but at 3x forward P/E along with improving fundamentals, we believe the stock offers a favorable risk/reward at current levels supported by a 7% dividend yield.

Dongfeng Motor: The Forgotten Stock with a Favorable Risk/Reward

<p>Having increased its global market share from fifth to second in 2018 thanks to the technological advantages, the company's share price has disappointed its shareholders and underperformed its customers' in China due to its heavy reliance on US customers such as Ford and GM.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/291/original/image_44632301051596175067736.png?1596175067" class="editor-image img-responsive" data-smartkarma-image-id="149291"></figure><div class="content-remarks"><p>source: Capital IQ</p></div><div>With the new initiative to focus more on China and Emerging Markets, the company creates an opportunity to diversify its revenue geographically and participate in the rebound in the Chinese auto sector. </div><div></div><div>The company is severely undervalued compared to the peers by 68% in PER and 38% in EV/EBITDA despite higher profitability (560% higher ROE) and leaner capital structure (50% better in D/E), showing <span>potential for re-rating</span>. </div><div></div><div>
<p>If the company's AES is to be implemented this year and adopted by various customers in China to start with, then the revenue that the company receives will bolster its current net income (USD 232.4 million) by around 38% to 570% in the next few years depending on the pace of the adoption and market share. Buy <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> .</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/289/original/image_65787491341596174865541.png?1596174865" class="editor-image img-responsive" data-smartkarma-image-id="149289"></figure><div class="content-remarks"><p>source: Capital IQ</p></div>
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Having increased its global market share from fifth to second in 2018 thanks to the technological advantages, the company's share price has disappointed its shareholders and underperformed its customers' in China due to its heavy reliance on US customers such as Ford and GM.source: Capital IQWith the new initiative to focus more on China and Emerging Markets, the company creates an opportunity to diversify its revenue geographically and participate in the rebound in the Chinese auto sector. The company is severely undervalued compared to the peers by 68% in PER and 38% in EV/EBITDA despite higher profitability (560% higher ROE) and leaner capital structure (50% better in D/E), showing potential for re-rating. 
If the company's AES is to be implemented this year and adopted by various customers in China to start with, then the revenue that the company receives will bolster its current net income (USD 232.4 million) by around 38% to 570% in the next few years depending on the pace of the adoption and market share. Buy Nexteer Automotive (1316 HK) .
source: Capital IQ


China

Dongfeng Motor Group Company Limited, through joint ventures, designs, manufactures, and markets diesel engines, light trucks, automobiles, castings, and related spare parts.

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Dongfeng Motor (489 HK)

BYD (1211) Vs Tesla (TSLA): Fight over China

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time...

Henry Soediarko

Nexteer (1316): Time to Book Some Profit

Nexter's share price has moved in tandem with Geely Auto in the past 6m, which has benefited from the rumor on the partnership with Baidu to...

Henry Soediarko

Nexteer (1316): What to Do Now?

The company's technological advantage has enabled it to have a pipeline of exciting and futuristic innovation that is ready to blow the auto...

Henry Soediarko

Dongfeng Motor: The Forgotten Stock with a Favorable Risk/Reward

Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a...

Michael Ting

Nexteer (1316): AES to the Rescue

Having increased its global market share from fifth to second in 2018 thanks to the technological advantages, the company's share price has...

Henry Soediarko

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