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

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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/singapore-s-post-pandemic-economic-strategy-does-not-go-far-enough" target="_blank" rel="noopener">Singapore's post-pandemic Economic Strategy Does Not Go Far Enough</a>, economist <a href="https://www.smartkarma.com/profiles/nigel-chiang" target="_blank" rel="noopener">Nigel Chiang</a> discusses Singapore's post-pandemic economic strategy and economic outlook. <h3>Equity Bottom Up</h3>In <a href="https://www.smartkarma.com/insights/telkom-indonesia-tlkm-ij-digital-catalysts-abound" target="_blank" rel="noopener">Telkom Indonesia (TLKM IJ) - Digital Catalysts Abound?</a>, CrossASEAN insight provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> returns to look at <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> after the company released a decent set of FY2020 results.<a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/ace-hardware-aces-ij-renovation-complete-time-to-move-in" target="_blank" rel="noopener">Ace Hardware (ACES IJ) - Renovation Complete, Time to Move-In</a>, <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> circles back to <a href="https://www.smartkarma.com/entities/ace-hardware-indonesia" target="_blank" rel="noopener">Ace Hardware Indonesia (ACES IJ)</a> post its FY2020 results where the company managed to record a solid performance despite the pandemic. In <a href="https://www.smartkarma.com/insights/philippine-stock-exchange-pse-pm-solid-foundations-for-future-growth" target="_blank" rel="noopener">Philippine Stock Exchange (PSE PM) - Solid Foundations for Future Growth</a>, Crossasean Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> reports back on <a href="https://www.smartkarma.com/entities/philippine-stock-exchange-inc" target="_blank" rel="noopener">Philippine Stock Exchange (PSE PM)</a> that just released a strong set of 1Q2021 results, underpinning a positive view.In <a href="https://www.smartkarma.com/insights/erajaya-swasembada-eraa-ij-the-empire-strikes-back" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ) - The Empire Strikes Back</a>, CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> circles back to <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> after it released a strong set of 1Q2021 results. In <a href="https://www.smartkarma.com/insights/berli-jucker-bjc-tb-stock-up-for-canned-recovery" target="_blank" data-smartkarma-citation="insights:52281" rel="noopener">Berli Jucker (BJC TB) - Stock-Up for Canned Recovery?</a> CrossASEAN Inisght Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> circles back to the company post recent 1Q2021 results and a conversation with management.In <a href="https://www.smartkarma.com/insights/xl-axiata-excl-ij-rising-through-the-cloud" target="_blank" data-smartkarma-citation="insights:51936" rel="noopener">XL Axiata (EXCL IJ) - Rising Through The Cloud</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> circles back to <a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener">XL Axiata (EXCL IJ)</a> after recent results and a number of interesting data points regarding 5G.<a href="https://www.smartkarma.com/entities/xl-axiata-tbk-pt" target="_blank" data-smartkarma-citation="entities:15028:1" rel="noopener"></a>In <a href="https://www.smartkarma.com/insights/malaysia-mco-winners" target="_blank" rel="noopener">Malaysia MCO: Winners</a>, <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" rel="noopener">Henry Soediarko</a> discusses what will happen to the <a href="https://www.smartkarma.com/entities/kuala-lumpur-composite-index" target="_blank" rel="noopener">Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX)</a> as the Malaysian government extends the MCO orders with COVID-19 cases rising.In <a href="https://www.smartkarma.com/insights/kasikornbank-kbank-impact-of-the-nvdr-issuance-halt" target="_blank" rel="noopener">Kasikornbank (KBANK): Impact of the NVDR Issuance Halt</a>, <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" rel="noopener">Brian Freitas</a> returns to look at <a href="https://www.smartkarma.com/entities/kasikornbank-pcl" target="_blank" rel="noopener">Kasikornbank PCL (KBANK TB)</a> after the company announced that investors are unable to buy any more Non-Voting Depository Receipts (NVDR) in the bank due to the current issuance approaching its permitted limit of 25% of issued shares. In <a href="https://www.smartkarma.com/insights/monde-nissin-is-attracting-a-lot-of-long-only-funds" target="_blank" rel="noopener">Monde Nissin Is Attracting a Lot of Long Only Funds</a>, <a href="https://www.smartkarma.com/profiles/oshadhi-kumarasiri" target="_blank" rel="noopener">Oshadhi Kumarasiri</a> reports back on <a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" rel="noopener">Monde Nissin Corp (0191881D PM)</a>'s ongoing IPO that has already secured 11 cornerstone investors, including GIC, Fidelity International, AIA, and Goldman Sachs Asset Management.In <a href="https://www.smartkarma.com/insights/ea-ev-ess-business-commencement-delayed-to-2h21" target="_blank" rel="noopener">EA: EV-ESS Business Commencement Delayed to 2H21</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a>' feeds back from <a href="https://www.smartkarma.com/entities/energy-absolute-pcl" target="_blank" rel="noopener">Energy Absolute (EA TB)</a> analyst meeting which  came out in a negative tone.In <a href="https://www.smartkarma.com/insights/bch-strong-earnings-momentum-in-2q21" target="_blank" rel="noopener">BCH: Strong Earnings Momentum in 2Q21</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a> maintains a HOLD rating for <a href="https://www.smartkarma.com/entities/bangkok-chain-hospital-pcl" target="_blank" rel="noopener">Bangkok Chain Hospital (BCH TB)</a> after the analyst meeting that came out with a positive tone, thanks to solid COVID-19 related revenue from 3rd wave of COVID-19.In <a href="https://www.smartkarma.com/insights/toa-increase-in-raw-material-costs-pressures-2q21-profit" target="_blank" rel="noopener">TOA: Increase in Raw Material Costs Pressures 2Q21 Profit</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a> maintains a HOLD rating for <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" rel="noopener">TOA Paint (Thailand) (TOA TB)</a>, as they expect that the company's net profit will be weak in 2Q21, due to cost increases.In <a href="https://www.smartkarma.com/insights/hana-benefit-from-strong-demand-could-be-limited-by-chip-shortage" target="_blank" rel="noopener">HANA: Benefit from Strong Demand Could Be Limited by Chip Shortage</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a> returns to look at <a href="https://www.smartkarma.com/entities/hana-microelectronics-pcl" target="_blank" rel="noopener">Hana Microelectronics (HANA TB)</a> after it released its 1Q2021 results. In <a href="https://www.smartkarma.com/insights/shr-hiccup-in-2q21-before-recover-strongly-in-2h21" target="_blank" rel="noopener">SHR: Hiccup in 2Q21 Before Recover Strongly in 2H21</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a> maintains HOLD rating for <a href="https://www.smartkarma.com/entities/s-hotels-resorts-pcl" target="_blank" rel="noopener">S Hotels &amp; Resorts PCL (SHR TB)</a> and expects its earning to recover in 2H2021. In <a href="https://www.smartkarma.com/insights/cbg-china-market-is-a-key-growth-driver-in-the-next-three-years" target="_blank" rel="noopener">CBG: China Market Is a Key Growth Driver in the Next Three Years</a>, <a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener">Country Group</a> keep a BUY rating on <a href="https://www.smartkarma.com/entities/carabao-group-pcl" target="_blank" rel="noopener">Carabao Group (CBG TB)</a> post its recent analyst meeting.<h3>Sector and Thematic </h3>In <a href="https://www.smartkarma.com/insights/the-stocks-to-own-in-thailand-vol-33" target="_blank" rel="noopener">The Stocks to Own in Thailand – Vol. 33</a>, <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" rel="noopener">Dr Andrew Stotz, CFA</a> from <a href="https://www.smartkarma.com/companies/a-stotz-investment-research" target="_blank" rel="noopener">A. Stotz Investment Research</a> highlights 14 stocks in Thailand that look interesting to own based upon their FVMR Methodology.<h3>Credit</h3>In <a href="https://www.smartkarma.com/insights/smartkarma-webinar-high-yield-opportunities-in-indonesia-and-india" target="_blank" rel="noopener">Smartkarma Webinar | High-Yield Opportunities in Indonesia and India</a>, Insight Providers <a href="https://www.smartkarma.com/profiles/leonard-law-cfa" target="_blank" rel="noopener">Leonard Law, CFA</a> and <a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener">Trung Nguyen</a> of <a href="https://www.smartkarma.com/companies/lucror-analytics" target="_blank" rel="noopener">Lucror Analytics</a> will go over HY picks for the Indonesian and Indian markets, focusing on names that Lucror covers and outlining their high-conviction "Buy" ideas. Please find the registration details through the above link.


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 Singapore's post-pandemic Economic Strategy Does Not Go Far Enough, economist Nigel Chiang discusses Singapore's post-pandemic economic strategy and economic outlook. Equity Bottom UpIn Telkom Indonesia (TLKM IJ) - Digital Catalysts Abound?, CrossASEAN insight provider Angus Mackintosh returns to look at Telekomunikasi Indonesia (TLKM IJ) after the company released a decent set of FY2020 results.In Ace Hardware (ACES IJ) - Renovation Complete, Time to Move-In, Angus Mackintosh circles back to Ace Hardware Indonesia (ACES IJ) post its FY2020 results where the company managed to record a solid performance despite the pandemic. In Philippine Stock Exchange (PSE PM) - Solid Foundations for Future Growth, Crossasean Insight Provider Angus Mackintosh reports back on Philippine Stock Exchange (PSE PM) that just released a strong set of 1Q2021 results, underpinning a positive view.In Erajaya Swasembada (ERAA IJ) - The Empire Strikes Back, CrossASEAN Insight Provider Angus Mackintosh circles back to Erajaya Swasembada (ERAA IJ) after it released a strong set of 1Q2021 results. In Berli Jucker (BJC TB) - Stock-Up for Canned Recovery? CrossASEAN Inisght Provider Angus Mackintosh circles back to the company post recent 1Q2021 results and a conversation with management.In XL Axiata (EXCL IJ) - Rising Through The Cloud CrossASEAN Insight Provider Angus Mackintosh circles back to XL Axiata (EXCL IJ) after recent results and a number of interesting data points regarding 5G.In Malaysia MCO: Winners, Henry Soediarko discusses what will happen to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) as the Malaysian government extends the MCO orders with COVID-19 cases rising.In Kasikornbank (KBANK): Impact of the NVDR Issuance Halt, Brian Freitas returns to look at Kasikornbank PCL (KBANK TB) after the company announced that investors are unable to buy any more Non-Voting Depository Receipts (NVDR) in the bank due to the current issuance approaching its permitted limit of 25% of issued shares. In Monde Nissin Is Attracting a Lot of Long Only Funds, Oshadhi Kumarasiri reports back on Monde Nissin Corp (0191881D PM)'s ongoing IPO that has already secured 11 cornerstone investors, including GIC, Fidelity International, AIA, and Goldman Sachs Asset Management.In EA: EV-ESS Business Commencement Delayed to 2H21, Country Group' feeds back from Energy Absolute (EA TB) analyst meeting which  came out in a negative tone.In BCH: Strong Earnings Momentum in 2Q21, Country Group maintains a HOLD rating for Bangkok Chain Hospital (BCH TB) after the analyst meeting that came out with a positive tone, thanks to solid COVID-19 related revenue from 3rd wave of COVID-19.In TOA: Increase in Raw Material Costs Pressures 2Q21 Profit, Country Group maintains a HOLD rating for TOA Paint (Thailand) (TOA TB), as they expect that the company's net profit will be weak in 2Q21, due to cost increases.In HANA: Benefit from Strong Demand Could Be Limited by Chip Shortage, Country Group returns to look at Hana Microelectronics (HANA TB) after it released its 1Q2021 results. In SHR: Hiccup in 2Q21 Before Recover Strongly in 2H21, Country Group maintains HOLD rating for S Hotels &amp; Resorts PCL (SHR TB) and expects its earning to recover in 2H2021. In CBG: China Market Is a Key Growth Driver in the Next Three Years, Country Group keep a BUY rating on Carabao Group (CBG TB) post its recent analyst meeting.Sector and Thematic In The Stocks to Own in Thailand – Vol. 33, Dr Andrew Stotz, CFA from A. Stotz Investment Research highlights 14 stocks in Thailand that look interesting to own based upon their FVMR Methodology.CreditIn Smartkarma Webinar | High-Yield Opportunities in Indonesia and India, Insight Providers Leonard Law, CFA and Trung Nguyen of Lucror Analytics will go over HY picks for the Indonesian and Indian markets, focusing on names that Lucror covers and outlining their high-conviction "Buy" ideas. Please find the registration details through the above link.

The Week That Was in ASEAN@Smartkarma - Post Pandemic Singapore, Digital Telkom, and the PSE

Equity Bottom-Up

Indonesia's largest pharmaceutical company <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" rel="noopener">Kalbe Farma (KLBF IJ)</a> is currently in talks with the Indonesian government to distribute the COVID-19 vaccine. A call with the company shed more light on this, as well as the prospects for 2021 for its core business.
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" rel="noopener">Kalbe Farma (KLBF IJ)</a> is also developing a COVID-19 vaccine with Genexine of Korea, which has already cleared the first clinical trial phase and is preparing for the second clinical trial.
The distribution of the government-sponsored COVID-19 vaccine will be done through the subsidiary <a href="https://www.smartkarma.com/entities/enseval-putera-megatrading-tbk-pt" target="_blank" rel="noopener">Enseval Putera Megatrading (EPMT IJ)</a>, which is <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a>'s 95%-owned distribution arm.
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" rel="noopener">Kalbe Farma (KLBF IJ)</a> is preparing a number of expansion plans at home and abroad, with a planned capex of IDR1tn for 2021, paid out of internally generated funds.
Capex will also be used to complete the construction of an OTC drug factory in Myanmar, where there is strong demand for OTC drugs.
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> scores quite highly from an ESG perspective and has just become the only company in Indonesia to achieve a "AA" rating from MSCI having previously been rated A.
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" rel="noopener">Kalbe Farma (KLBF IJ)</a> is forecast to see EPS increase by +7.5% in FY21E and +24.2% in FY22E and trades on 25.7x FY21E PER and 23.6x FY22E PER and trades on 15.4x FY21E EV/EBITDA and 14.4x FY22E EV/EBITDA, which are both below historical averages, making the company look attractive with a recovery ahead and in light of this latest vaccine news.

Indonesia's largest pharmaceutical company Kalbe Farma (KLBF IJ) is currently in talks with the Indonesian government to distribute the COVID-19 vaccine. A call with the company shed more light on this, as well as the prospects for 2021 for its core business.
Kalbe Farma (KLBF IJ) is also developing a COVID-19 vaccine with Genexine of Korea, which has already cleared the first clinical trial phase and is preparing for the second clinical trial.
The distribution of the government-sponsored COVID-19 vaccine will be done through the subsidiary Enseval Putera Megatrading (EPMT IJ), which is Kalbe Farma (KLBF IJ)'s 95%-owned distribution arm.
Kalbe Farma (KLBF IJ) is preparing a number of expansion plans at home and abroad, with a planned capex of IDR1tn for 2021, paid out of internally generated funds.
Capex will also be used to complete the construction of an OTC drug factory in Myanmar, where there is strong demand for OTC drugs.
Kalbe Farma (KLBF IJ) scores quite highly from an ESG perspective and has just become the only company in Indonesia to achieve a "AA" rating from MSCI having previously been rated A.
Kalbe Farma (KLBF IJ) is forecast to see EPS increase by +7.5% in FY21E and +24.2% in FY22E and trades on 25.7x FY21E PER and 23.6x FY22E PER and trades on 15.4x FY21E EV/EBITDA and 14.4x FY22E EV/EBITDA, which are both below historical averages, making the company look attractive with a recovery ahead and in light of this latest vaccine news. 

Kalbe Farma (KLBF IJ) - Vaccinated for Future Growth

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Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The <a href="https://www.smartkarma.com/insights/singapore-sti-macro-bear-pressure-mounting-with-tactical-relief-from-2-400" target="_blank" data-smartkarma-citation="insights:42932" rel="noopener">Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400</a> Insight is improperly attributed to Thomas Monaco. That Insight was published by <a href="https://www.smartkarma.com/profiles/thomas-schroeder" target="_blank" data-smartkarma-citation="accounts:381" rel="noopener">Thomas Schroeder</a>.
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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.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma.</a>
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<h3>Equity Bottom-Up Insights</h3>
In <a href="https://www.smartkarma.com/insights/kalbe-farma-klbf-ij-a-nutritional-spin-off" target="_blank" data-smartkarma-citation="insights:42533" rel="noopener">Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?,</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 South East Asia's largest pharmaceutical company in light of news that the company is considering spinning off its Nutritionals division to raise around US$500m. 
In <a href="https://www.smartkarma.com/insights/link-net-tbk-pt-link-ij-summer-migration-at-last" target="_blank" data-smartkarma-citation="insights:42829" rel="noopener">Link Net Tbk Pt (LINK IJ) - Summer Migration at Last,</a> <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits Indonesia's highest quality high-speed broadband provider following a call with managment, which focused on its recent results, as well as the decision to build its own pole infrastructure to carry its fibre.  
In <a href="https://www.smartkarma.com/insights/singtel-make-the-call" target="_blank" data-smartkarma-citation="insights:42900" rel="noopener">SingTel: Make The Call,</a> <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> zeros in on Singapore's leading telecom provider and finds deep value appearing in the stock.
In <a href="https://www.smartkarma.com/insights/scg-packaging-ipo-initiation-shrink-wrapping" target="_blank" data-smartkarma-citation="insights:42967" rel="noopener">SCG Packaging IPO Initiation: Shrink Wrapping,</a> <a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> takes a first look at the upcoming spin-off from <a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" data-smartkarma-citation="entities:2589:1" rel="noopener">Siam Cement (SCC TB)</a> and IPO of SCG Packaging, which will get a lot of investor focus given ist size and share in of the packaging market in SE Asia. 
In <a href="https://www.smartkarma.com/insights/sembcorp-last-chance-before" target="_blank" data-smartkarma-citation="insights:42886" rel="noopener">Sembcorp - Last Chance Before...</a> <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> looks at the enormously dilutive rights issue and de-merger of Semcorp Marine. 
 In <a href="https://www.smartkarma.com/insights/singapore-sti-macro-bear-pressure-mounting-with-tactical-relief-from-2-400" target="_blank" data-smartkarma-citation="insights:42932" rel="noopener">Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400,</a> technical analysis specialist <a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> works his technical magic on the <a href="https://www.smartkarma.com/entities/ftse-straits-times-index-sti" target="_blank" data-smartkarma-citation="entities:22902:1" rel="noopener">FTSE Straits Times Index (STI) (STI INDEX).</a>
In <a href="https://www.smartkarma.com/insights/ratch-3q20-earnings-to-improve-from-overseas-performance" target="_blank" data-smartkarma-citation="insights:42789" rel="noopener">RATCH: 3Q20 Earnings to Improve from Overseas Performance</a>, our friend at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/ratch-group-pcl" target="_blank" data-smartkarma-citation="entities:15338:1" rel="noopener">Ratchaburi Electric (RATCH TB)</a> post its more recent analyst meeting, which left a positive impression.  
In <a href="https://www.smartkarma.com/insights/b-work-good-dividend-yield-makes-an-attractive-investment" target="_blank" data-smartkarma-citation="insights:42782" rel="noopener">B-WORK: Good Dividend Yield Makes an Attractive Investment,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> revisits <a href="https://www.smartkarma.com/entities/bualuang-office-leasehold-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:26187:1" rel="noopener">Bualuang Office Leasehold Real Estate Investment Trust (B-WORK TB)</a> and takes a positive view. 
In <a href="https://www.smartkarma.com/insights/rbf-the-excessive-outperformance-may-come-to-a-halt" target="_blank" data-smartkarma-citation="insights:42788" rel="noopener">RBF: The Excessive Outperformance May Come to a Halt,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/r-b-food-supply-pcl" target="_blank" data-smartkarma-citation="entities:28949:1" rel="noopener">R&amp;B Food Supply PCL (RBF TB)</a> to HOLD from SELL based on raising his target price of THB9.25 from THB8.70, implying a downside of 9% from the current price. 
In <a href="https://www.smartkarma.com/insights/sti-acquisition-benefits-are-not-fully-priced-in-strong-buy" target="_blank" data-smartkarma-citation="insights:42785" rel="noopener">STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> revisits <a href="https://www.smartkarma.com/entities/stonehenge-inter-pcl" target="_blank" data-smartkarma-citation="entities:27353:1" rel="noopener">Stonehenge Inter (STI TB)</a> with a BUY recommendation based on his target of THB10.10, implying an upside of 31% from the current share price. 
In <a href="https://www.smartkarma.com/insights/dod-strong-performance-deserves-a-re-rating" target="_blank" data-smartkarma-citation="insights:42676" rel="noopener">DOD: Strong Performance Deserves a Re-Rating,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/dod-biotech-pcl" target="_blank" data-smartkarma-citation="entities:26179:1" rel="noopener">DOD Biotech PCL (DOD TB)</a> to BUY from HOLD based on raising his target price to Bt10.70 from Bt7.55, implying an upside of 26% from the current price. 
In <a href="https://www.smartkarma.com/insights/vranda-the-calm-before-challenging-times" target="_blank" data-smartkarma-citation="insights:42781" rel="noopener">VRANDA: The Calm Before Challenging Times,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> has a SELL recommendation on <a href="https://www.smartkarma.com/entities/veranda-resort-pcl" target="_blank" data-smartkarma-citation="entities:29176:1" rel="noopener">Veranda Resort PCL (VRANDA TB)</a> based on a target price of THB4.30, implying a downside of 26% from the current share price. 
In <a href="https://www.smartkarma.com/insights/ace-results-are-not-stunning-stay-on-hold" target="_blank" data-smartkarma-citation="insights:42784" rel="noopener">ACE: Results Are Not Stunning, Stay on HOLD,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/absolute-clean-energy-pcl" target="_blank" data-smartkarma-citation="entities:29155:1" rel="noopener">Absolute Clean Energy PCL (ACE TB)</a> to HOLD from SELL based on raising his target price to THB3.49 from THB2.64, implying an upside of 8% from the current price. 
In <a href="https://www.smartkarma.com/insights/spa-weak-demand-continues-to-pressure-2h20-earnings" target="_blank" data-smartkarma-citation="insights:42813" rel="noopener">SPA: Weak Demand Continues to Pressure 2H20 Earnings,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> downgrades <a href="https://www.smartkarma.com/entities/siam-wellness-group-pcl" target="_blank" data-smartkarma-citation="entities:3765:1" rel="noopener">Siam Wellness Group (SPA TB)</a> from BUY to HOLD rating and cut his target price by 31% to THB6.6 to factor in weakening earnings momentum in 2H20. 
In <a href="https://www.smartkarma.com/insights/gunkul-new-60mw-power-plant-to-drive-2h20-earnings" target="_blank" data-smartkarma-citation="insights:42820" rel="noopener">GUNKUL: New 60MW Power Plant to Drive 2H20 Earnings,</a> <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> maintain a BUY rating on <a href="https://www.smartkarma.com/entities/gunkul-engineering-pcl" target="_blank" data-smartkarma-citation="entities:15272:1" rel="noopener">Gunkul Engineering (GUNKUL TB)</a> with a target price of THB3.24 derived using DCF method (WACC 7.8% and TG 1%) implying 11.4x FY20E PER or 0.5x relative PER to Thai utility sector. 
<h3>Sector and Thematic Insights</h3>
In <a href="https://www.smartkarma.com/insights/telecom-review-sept-2020-ais-and-asiasoft-get-aggressive-on-gaming" target="_blank" data-smartkarma-citation="insights:41022" rel="noopener">Telecom Review (Sept 2020): AIS and AsiaSoft Get Aggressive on Gaming,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> takes a look at gaming, specifically related to <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> and <a href="https://www.smartkarma.com/entities/asiasoft-corp-pcl" target="_blank" data-smartkarma-citation="entities:5429:1" rel="noopener">Asiasoft Corp (AS TB)</a> in Thailand.


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400 Insight is improperly attributed to Thomas Monaco. That Insight was published by Thomas Schroeder.



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.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma.

Equity Bottom-Up Insights
In Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?, CrossASEAN Insight Provider Angus Mackintosh revisits South East Asia's largest pharmaceutical company in light of news that the company is considering spinning off its Nutritionals division to raise around US$500m. 
In Link Net Tbk Pt (LINK IJ) - Summer Migration at Last, Angus Mackintosh revisits Indonesia's highest quality high-speed broadband provider following a call with managment, which focused on its recent results, as well as the decision to build its own pole infrastructure to carry its fibre.  
In SingTel: Make The Call, David Blennerhassett zeros in on Singapore's leading telecom provider and finds deep value appearing in the stock.
In SCG Packaging IPO Initiation: Shrink Wrapping, Arun George takes a first look at the upcoming spin-off from Siam Cement (SCC TB) and IPO of SCG Packaging, which will get a lot of investor focus given ist size and share in of the packaging market in SE Asia. 
In Sembcorp - Last Chance Before... Travis Lundy looks at the enormously dilutive rights issue and de-merger of Semcorp Marine. 
 In Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400, technical analysis specialist Thomas J. Monaco works his technical magic on the FTSE Straits Times Index (STI) (STI INDEX).
In RATCH: 3Q20 Earnings to Improve from Overseas Performance, our friend at Country Group report back on Ratchaburi Electric (RATCH TB) post its more recent analyst meeting, which left a positive impression.  
In B-WORK: Good Dividend Yield Makes an Attractive Investment, Dr. Andrew Stotz, CFA revisits Bualuang Office Leasehold Real Estate Investment Trust (B-WORK TB) and takes a positive view. 
In RBF: The Excessive Outperformance May Come to a Halt, Dr. Andrew Stotz, CFA upgrades his recommendation on R&amp;B Food Supply PCL (RBF TB) to HOLD from SELL based on raising his target price of THB9.25 from THB8.70, implying a downside of 9% from the current price. 
In STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY, Dr. Andrew Stotz, CFA revisits Stonehenge Inter (STI TB) with a BUY recommendation based on his target of THB10.10, implying an upside of 31% from the current share price. 
In DOD: Strong Performance Deserves a Re-Rating, Dr. Andrew Stotz, CFA upgrades his recommendation on DOD Biotech PCL (DOD TB) to BUY from HOLD based on raising his target price to Bt10.70 from Bt7.55, implying an upside of 26% from the current price. 
In VRANDA: The Calm Before Challenging Times, Dr. Andrew Stotz, CFA has a SELL recommendation on Veranda Resort PCL (VRANDA TB) based on a target price of THB4.30, implying a downside of 26% from the current share price. 
In ACE: Results Are Not Stunning, Stay on HOLD, Dr. Andrew Stotz, CFA upgrades his recommendation on Absolute Clean Energy PCL (ACE TB) to HOLD from SELL based on raising his target price to THB3.49 from THB2.64, implying an upside of 8% from the current price. 
In SPA: Weak Demand Continues to Pressure 2H20 Earnings, Dr. Andrew Stotz, CFA downgrades Siam Wellness Group (SPA TB) from BUY to HOLD rating and cut his target price by 31% to THB6.6 to factor in weakening earnings momentum in 2H20. 
In GUNKUL: New 60MW Power Plant to Drive 2H20 Earnings, Country Group maintain a BUY rating on Gunkul Engineering (GUNKUL TB) with a target price of THB3.24 derived using DCF method (WACC 7.8% and TG 1%) implying 11.4x FY20E PER or 0.5x relative PER to Thai utility sector. 
Sector and Thematic Insights
In Telecom Review (Sept 2020): AIS and AsiaSoft Get Aggressive on Gaming, our Thai guru Athaporn Arayasantiparb, CFA takes a look at gaming, specifically related to Advanced Info Service (ADVANC TB) and Asiasoft Corp (AS TB) in Thailand. 

The Week that Was in ASEAN@Smartkama - Kalbe Spin-Off, SingTel's Deep Value, and Thailand's Gamers

It was reported last week the South East Asia's largest pharmaceuticals company <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> is looking to spin-off its Nutritionals business at a total value of US$500m. This would be Indonesia's largest IPO of 2020. We take a closer look at this segment and whether a separate listing would add value.
As at June, 2020 Nutritionals made up 28% of the company's revenues and around 40% of EBITDA, as its share is boosted by the much lower margin distribution business which is 32% of sales.
The division covers a wide range of products including powdered milk products covering all age ranges from expectant mother to babies, kids, and adults under a number different brands, as well as producing supplements for diabetics to stabilise blood sugar, a cholesterol a sliming milk, and a weight-loss product called Slim &amp; Fit. 
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> also sells the popular Fit Bar and Fit Chips snacks under this division, which are very accessible and popular snacks found across modern trade and has the license to sell Blackmores Vitamins in Indonesia, where it has a leading market share.
Though there are scant details available on this potential spin-off, we attempt to ascertain whether this will be value accretive for shareholders of <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ).</a>
The company distributes its nutritional products through its extensive network under <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)'</a>s distribution subsidiary<a href="https://www.smartkarma.com/entities/enseval-putera-megatrading-tbk-pt" target="_blank" data-smartkarma-citation="entities:12291:1" rel="noopener"> Enseval Putera Megatrading (EPMT IJ),</a> which cover the whole of Indonesia.
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We await further details on this but continue to see <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> as a key defensive holding in Indonesia, which will benefit from more health-conscious Indonesians as well as a rebound in its pharmaceuticals business as PSBB measures are relaxed. It is also involved in testing for COVID-19 and in the development of a vaccine with Korean company Genexine, which could provide further catalysts. <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a>  is trading at a slight discount to its 5-year average forward PER of 27.5x currently on 26.4x but with a number of potential catalysts ahead.
</div>

It was reported last week the South East Asia's largest pharmaceuticals company Kalbe Farma (KLBF IJ) is looking to spin-off its Nutritionals business at a total value of US$500m. This would be Indonesia's largest IPO of 2020. We take a closer look at this segment and whether a separate listing would add value.
As at June, 2020 Nutritionals made up 28% of the company's revenues and around 40% of EBITDA, as its share is boosted by the much lower margin distribution business which is 32% of sales.
The division covers a wide range of products including powdered milk products covering all age ranges from expectant mother to babies, kids, and adults under a number different brands, as well as producing supplements for diabetics to stabilise blood sugar, a cholesterol a sliming milk, and a weight-loss product called Slim &amp; Fit. 
Kalbe Farma (KLBF IJ) also sells the popular Fit Bar and Fit Chips snacks under this division, which are very accessible and popular snacks found across modern trade and has the license to sell Blackmores Vitamins in Indonesia, where it has a leading market share.
Though there are scant details available on this potential spin-off, we attempt to ascertain whether this will be value accretive for shareholders of Kalbe Farma (KLBF IJ).
The company distributes its nutritional products through its extensive network under Kalbe Farma (KLBF IJ)'s distribution subsidiary Enseval Putera Megatrading (EPMT IJ), which cover the whole of Indonesia.

We await further details on this but continue to see Kalbe Farma (KLBF IJ) as a key defensive holding in Indonesia, which will benefit from more health-conscious Indonesians as well as a rebound in its pharmaceuticals business as PSBB measures are relaxed. It is also involved in testing for COVID-19 and in the development of a vaccine with Korean company Genexine, which could provide further catalysts. Kalbe Farma (KLBF IJ)  is trading at a slight discount to its 5-year average forward PER of 27.5x currently on 26.4x but with a number of potential catalysts ahead.


Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?

<div class="content-highlight">
A recent conversation with <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> management confirmed the company's resilience in a COVID-19 world, with its core pharmaceutical division seeing stable growth and its OTC consumer health products doing especially well.  Its direct involvement with testing and ongoing work on a COVID-19 vaccine could provide further upside.
</div>
1Q2020 numbers were stable with +8% growth in sales and +12% in net profit, April was within estimates, whilst May was a bit weaker and June saw some recovery as PSBB measures were relaxed.
<a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> saw strong demand for multivitamins, as well as its herbal-based medicinal products, as consumers have sought to boost immunity during the pandemic. 
The company has also been actively involved in processing COVID-19 swab tests and is now processing around 20,000 per day as well as being involved in developing a COVID-19 vaccine for Indonesia in partnership with Korean company Genexin.
The company's valuations look reasonable in light of its defensive nature trading well-below its 5-year average PER. Despite its strong performance during the pandemic, we continue to take a positive view of <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ) </a>given its unique exposure to pharmaceutical and consumer staples.


A recent conversation with Kalbe Farma (KLBF IJ) management confirmed the company's resilience in a COVID-19 world, with its core pharmaceutical division seeing stable growth and its OTC consumer health products doing especially well.  Its direct involvement with testing and ongoing work on a COVID-19 vaccine could provide further upside.

1Q2020 numbers were stable with +8% growth in sales and +12% in net profit, April was within estimates, whilst May was a bit weaker and June saw some recovery as PSBB measures were relaxed.
Kalbe Farma (KLBF IJ) saw strong demand for multivitamins, as well as its herbal-based medicinal products, as consumers have sought to boost immunity during the pandemic. 
The company has also been actively involved in processing COVID-19 swab tests and is now processing around 20,000 per day as well as being involved in developing a COVID-19 vaccine for Indonesia in partnership with Korean company Genexin.
The company's valuations look reasonable in light of its defensive nature trading well-below its 5-year average PER. Despite its strong performance during the pandemic, we continue to take a positive view of Kalbe Farma (KLBF IJ) given its unique exposure to pharmaceutical and consumer staples. 

Kalbe Farma (KLBF IJ) - Still a Healthy Choice

Indonesia

PT Enseval Putera Megatrading Tbk distributes pharmaceutical products, consumer goods, and hospital supplies and equipment.  The Company also markets and sells chemical products as raw material for the pharmaceutical, cosmetics, and food industries.

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Enseval Putera Megatrading (EPMT IJ)

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Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?

Would a Nutritionals spin-off add value for Kalbe Farma (KLBF IJ)?

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Kalbe Farma (KLBF IJ) - Still a Healthy Choice

A recent conversation with Kalbe Farma (KLBF IJ) management confirmed the company's resilience in a COVID-19 world, with its core pharmaceutical...

Angus Mackintosh

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