Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

<a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> stock closed near $2,100 per share on Friday, making it more expensive at more than $381 billion versus the combined equity of its next five competitors <a href="https://www.smartkarma.com/entities/general-motors-co" target="_blank" data-smartkarma-citation="entities:18811:1" rel="noopener">General Motors Co (GM US)</a>, <a href="https://www.smartkarma.com/entities/ford-motor-co" target="_blank" data-smartkarma-citation="entities:19225:1" rel="noopener">Ford Motor Co (F US)</a>, <a href="https://www.smartkarma.com/entities/toyota-motor-corp-spon-adr" target="_blank" data-smartkarma-citation="entities:8245:1" rel="noopener">Toyota Motor Corp Spon Adr (TM US)</a>, <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a>, and <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd-adr" target="_blank" data-smartkarma-citation="entities:8768:1" rel="noopener">Nissan Motor (ADR) (NSANY US)</a>. Notice I didn't say more "valuable." That's because the stock now is selling at 1153x earnings, with enterprise value 84x my 2020 EBITDA estimate (as affirmed in my report <a href="https://www.smartkarma.com/insights/investors-aren-t-worried-but-tesla-seems-to-be" target="_blank" data-smartkarma-citation="insights:39074" rel="noopener">Investors Aren't Worried, But Tesla Seems To Be</a> on 8/17/20).Now, this doesn't mean I am a Tesla "hater" (or a seventh-grader) or "in the pocket of big oil." But then, people say a lot of dubious things to justify Tesla's stock price like:<ul>
<li>Tesla should be priced like a tech company, not an auto company. </li>
<li>Tesla is profitable and generates free cash flow.</li>
<li>Analysts just don't understand Tesla's business.</li>
<li>Tesla's insane demand plus its prospective battery-making business makes it worth the valuation.</li>
<li>Panic over COVID-19 is "dumb" and it will be over by April. Wait, those <a href="https://www.theguardian.com/technology/2020/may/01/coronavirus-has-elon-musk-acting-like-just-another-used-car-salesman" target="_blank" rel="noopener">statements came from Tesla CEO Elon Musk</a> and they were categorically false and dangerous misinformation when he said them.</li>
</ul>Meanwhile, we're still waiting for the "more than one million" Tesla "robotaxis" with "full self-driving hardware, feature complete at a reliably level that we would consider that no one needs to pay attention" as Musk promised by July of this year on Autonomy Day in April 2019 and which now are significantly overdue (see <a href="https://www.smartkarma.com/insights/tesla-autonomy-day-takes-investors-for-another-ride" target="_blank" data-smartkarma-citation="insights:29339" rel="noopener">Tesla "Autonomy Day" Takes Investors For Another Ride</a> on 4/24/19).I mean, if you can't trust claims from Elon Musk what about Tesla's bulls? <div class="content-highlight">Read on as Bond Angle the Curmudgeon takes on Tesla myths even bigger than its stock price.</div>

Tesla Motors (TSLA US) stock closed near $2,100 per share on Friday, making it more expensive at more than $381 billion versus the combined equity of its next five competitors General Motors Co (GM US), Ford Motor Co (F US), Toyota Motor Corp Spon Adr (TM US), Volkswagen (VOW GR), and Nissan Motor (ADR) (NSANY US). Notice I didn't say more "valuable." That's because the stock now is selling at 1153x earnings, with enterprise value 84x my 2020 EBITDA estimate (as affirmed in my report Investors Aren't Worried, But Tesla Seems To Be on 8/17/20).Now, this doesn't mean I am a Tesla "hater" (or a seventh-grader) or "in the pocket of big oil." But then, people say a lot of dubious things to justify Tesla's stock price like:
Tesla should be priced like a tech company, not an auto company. 
Tesla is profitable and generates free cash flow.
Analysts just don't understand Tesla's business.
Tesla's insane demand plus its prospective battery-making business makes it worth the valuation.
Panic over COVID-19 is "dumb" and it will be over by April. Wait, those statements came from Tesla CEO Elon Musk and they were categorically false and dangerous misinformation when he said them.
Meanwhile, we're still waiting for the "more than one million" Tesla "robotaxis" with "full self-driving hardware, feature complete at a reliably level that we would consider that no one needs to pay attention" as Musk promised by July of this year on Autonomy Day in April 2019 and which now are significantly overdue (see Tesla "Autonomy Day" Takes Investors For Another Ride on 4/24/19).I mean, if you can't trust claims from Elon Musk what about Tesla's bulls? Read on as Bond Angle the Curmudgeon takes on Tesla myths even bigger than its stock price.

Things People Believe: Flat Earth, Faked Moon Landings, and Tesla $2100

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://api2.sgx.com/sites/default/files/2020-08/Megroup-CEO.jpg" class="editor-image img-responsive"></figure>
<div class="content-caption">Megroup-CEO</div>

Engineer Wong Cheong Chee is a man who appreciates his machines.&nbsp;
As a testament to this, the Executive Chairman and CEO of SGX-listed automotive component manufacturer and dealer MeGroup Ltd spent more than four decades of his career in manufacturing.
After graduating from the University of Malaya with a degree in Mechanical Engineering in 1970, Wong started off by learning the ropes of business on the factory floor.&nbsp;
"The early years were foundation years for me," the 73-year-old recalled. “Back in those days, I was always fiddling with mechanical parts. I came to understand the role that machines and automation played in the production process, and also learned to maintain or calibrate machines to fit the factory's production needs."
"You could say that by now, I know everything about machines, since I always talk to them," he added,&nbsp;tongue firmly in cheek.
In 1995, Wong co-founded Menang Nusantara Sdn Bhd in a burst of restless&nbsp;energy, shortly after a RM60 million turnover company he co-founded – Paragon Union Bhd – was listed on Bursa Malaysia. "After Paragon went public, I briefly toyed with the idea of retiring," he recalled.
But Wong – then 48 – couldn't sit still. "I was young and restless, and I wanted to keep working, so I started Menang Nusantara with a friend. I was betting on my years of industry experience and strong relationships with my customers to make this venture work."
Menang Nusantara was initially a pure manufacturing business, and later expanded to include a dealership arm to diversify its revenues.
The journey proved to be a bumpy one, but Wong has&nbsp;no regrets. "Over the years, we experienced numerous recessions in Malaysia, more than four or five. But we pulled through each and every one of them, because of teamwork,” he recalled.
“I remember one setback we faced – a factory fire in 2016. We were able to recover and rebuild the plant in just two months, thanks to the team."
Wong's consistent comebacks from his challenges has earned him the nickname of “phoenix” among his peers, in reference to the mythical bird that rises from the ashes each time in a cycle of rebirth and regeneration.
“The highlights of my 40-year journey were the occasions when I was able to pull myself out of the pit, emerging bigger and stronger from those turbulent times,” he added.
Prudent Management
Wong has also gleaned precious lessons from each experience – a key one being prudent cash flow management. "Your operations need to be sustainable, and for that to happen, cost controls are critical. To be able to tide through price wars and downturns, you must ensure you’re not overspending."
“And every day can be a challenge, because you don’t know what’s going to come, and you need to prepare yourself for battle.”
Another highlight, he discovered, was the cohesiveness of the MeGroup team, which played an essential role when it came to problem-solving.
“When you’re faced with a crisis and sleepless nights, it’s teamwork that makes a difference – when the team comes up with a consistent strategy and moves forward in one direction.”
Listed on SGX Catalist in October 2018 as MeGroup Ltd, the Group comprises two business divisions – Manufacturing and Dealership.&nbsp;For the full year ended 31 March 2020, MeGroup reported a revenue of RM245.8 million on a net profit of RM1.2 million.&nbsp;
Its Manufacturing unit specialises in Noise, Vibration and Harshness (NVH) and non-NVH components, mostly for the automotive industry. NVH parts include headliners and engine outers that are incorporated into various sections of the automobile, such as dashboard, hood and boot, while non-NVH components include parcel trays and board assembly decks.
The Dealership business owns a portfolio of six automotive brands, ranging from Peugeot and Mazda to Hyundai and Honda, with eight dealership outlets, and one undergoing construction.
Although the outlook for Malaysia’s automotive industry has been clouded by the impact of COVID-19 and a weak economic backdrop, transportation remains a necessity. Even with new mobility solutions, the country still requires private vehicles, Wong pointed out.
Last year, the government announced plans to develop a third national car under the National Automotive Policy. MeGroup has registered its interest as a vendor to design and make NVH and non-NVH parts for the project – if it does materialise.
Reinvent, Recreate
At the same time, the Group is exploring other industries to broaden its revenues and achieve long-term sustainable growth. It is already supplying NVH components to Johnson Controls Hitachi, a heating, ventilation and air-conditioning (HVAC) manufacturer.
“Our penetration into the HVAC industry will allow us to bring our manufacturing and production capabilities to other HVAC players,” Wong added.
“Another strategy is to increase the number of products MeGroup can manufacture with its current capabilities, and supply to other sectors, such as the mattress industry, and floor carpeting services for offices and hotels,” Wong noted.
Under its dealership arm, the Group plans to obtain new brand partnerships and acquire other existing dealerships to expand organically and inorganically.
One such move was its recent contract win from Mitsubishi Motors to operate a dealership under their brand in Kuala Selangor. However, due to COVID-19, the construction and start of operations&nbsp;have been delayed&nbsp;to the July-September quarter of this year.
“MeGroup continues to be invited to bid for new NVH and non-NVH projects for new car models from different automobile brands,” Wong said. “We’re also exploring new potential business opportunities and new service offerings in the dealership outlets.”
The Group is looking to grow beyond domestic shores. “We continually seek opportunities in ASEAN to drive growth through greenfield or strategic M&amp;A possibilities. With neighbouring markets expanding into the automotive sector, this offers opportunities for us to scale our operations,” he added.
To lay the foundation for sustainable growth, MeGroup will focus on investing in new manufacturing technologies, as well as the set-up and/or acquisition of research labs. This year, it became the only NVH supplier in Malaysia to build its own sound testing facility.
“The lab allows us to innovate and test our products before mass production. We will be able to rethink, reinvent and recreate our NVH and non-NVH components, so as to be at the forefront of technology, and stay ahead of our competitors.”
Cash-Generating
Meanwhile, the biggest near-term challenge – apart from continuous price competition – is COVID-19, Wong admitted.
“Our operations were frozen for nearly three months. Since then, about 70% of our sales and deliveries have resumed. We expect a tough outlook for the rest of the year, but hopefully, the beginnings of a recovery might materialise in the first quarter of next year,” he noted.
With this downtime, MeGroup has taken the opportunity to implement new methods of operating, such as boosting its online presence through social media platforms and other digital marketing strategies. It is also improving or streamlining work processes to increase efficiency and reduce operating costs.
Industry peers have also upped the ante by slashing prices. “This is where our R&amp;D lab – which can provide us with in-house and proprietary technologies – comes in. This will set us apart from the competition.”
Other competitive strengths include MeGroup’s established network and long-standing working partnerships with its brand principals. “Our businesses are cash-generating, with stable recurring income streams and negligible collection issues,” Wong pointed out.
As at 31 March 2020, MeGroup had cash and cash equivalents of RM12.5 million, compared with RM16.9 million in the year-ago period.
“We strive to be asset-light, so we can generate faster ROI from our businesses, and maintain flexibility and liquidity to move into opportunities that may arise,” he added, referring to return on investment, a financial ratio that compares the gain or loss from an investment relative to its cost.
Despite the day-to-day challenges, the self-confessed workaholic sleeps like a log every night. “Work is what keeps me going,” he chuckled.
“I’ve tried to retire, but failed every time. It’s in my blood – I’m still kicking at 73, and if I don’t work, I feel sick!”
Nonetheless, the father of two boys and a girl – aged 37 to 44 – has put a proper succession plan in place. “My kids are working in MeGroup and running the show. Hopefully, it will be a smooth transition when they finally take over the reins.”
Whatever happens, Wong has taught his children to always remain focused. “I also want them to keep a low profile – be humble, don’t be a show-off, and concentrate on the things that matter.”
“Those are essentially the key principles of life.”
MeGroup Ltd
MeGroup is a component manufacturer and dealer in the automotive industry. Under its Manufacturing business, MeGroup specialises in manufacturing noise, vibration and harshness (NVH) and non-NVH components, primarily for the automotive industry in Malaysia. It has diversified into supplying NVH parts to Johnson Controls Hitachi, a heating, ventilation and air-conditioning (HVAC) manufacturer. For its Dealership business, MeGroup owns and operates i) three Peugeot dealerships; ii) two Honda dealerships; iii) one Mazda dealership; iv) one Hyundai dealership; v) one Ford dealership; and vi) one Mitsubishi Motors dealership in Malaysia. MeGroup maintains long-standing partnerships with its manufacturing customers, and is an Approved Supplier to Proton, Perodua, Honda, Mazda among other major car makers, as well as Johnson Controls Hitachi. The Group also maintains established relationships with its dealership principals.
The company website is: <a href="https://me-grp.com/" target="_blank" rel="noopener">me-grp.com</a>. Click&nbsp;<a href="https://www.sgx.com/securities/equities/SJY" target="_blank" rel="noopener">here</a>&nbsp;for the company's StockFacts page. For the year ended 31 March 2020 financial results, click&nbsp;<a href="https://links.sgx.com/FileOpen/MeGroup%20Ltd_FY2020%20Financial%20Results%20Announcement_20200717.ashx?App=Announcement&amp;FileID=624068" target="_blank" rel="noopener">here</a>.
&nbsp;
About&nbsp;kopi-C: the Company brew
Text: Jennifer LH Tan Photo: Company file kopi-C&nbsp;is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. For previous editions of&nbsp;kopi-C: the Company brew,&nbsp;please click&nbsp;<a href="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10" target="_blank" rel="noopener">here</a>. &nbsp; For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;<a href="https://www.smartkarma.com/jennifer.t@sgx.com" target="_blank" rel="noopener">jennifer.t@sgx.com</a>.


Megroup-CEO

Engineer Wong Cheong Chee is a man who appreciates his machines.&nbsp;
As a testament to this, the Executive Chairman and CEO of SGX-listed automotive component manufacturer and dealer MeGroup Ltd spent more than four decades of his career in manufacturing.
After graduating from the University of Malaya with a degree in Mechanical Engineering in 1970, Wong started off by learning the ropes of business on the factory floor.&nbsp;
"The early years were foundation years for me," the 73-year-old recalled. “Back in those days, I was always fiddling with mechanical parts. I came to understand the role that machines and automation played in the production process, and also learned to maintain or calibrate machines to fit the factory's production needs."
"You could say that by now, I know everything about machines, since I always talk to them," he added,&nbsp;tongue firmly in cheek.
In 1995, Wong co-founded Menang Nusantara Sdn Bhd in a burst of restless&nbsp;energy, shortly after a RM60 million turnover company he co-founded – Paragon Union Bhd – was listed on Bursa Malaysia. "After Paragon went public, I briefly toyed with the idea of retiring," he recalled.
But Wong – then 48 – couldn't sit still. "I was young and restless, and I wanted to keep working, so I started Menang Nusantara with a friend. I was betting on my years of industry experience and strong relationships with my customers to make this venture work."
Menang Nusantara was initially a pure manufacturing business, and later expanded to include a dealership arm to diversify its revenues.
The journey proved to be a bumpy one, but Wong has&nbsp;no regrets. "Over the years, we experienced numerous recessions in Malaysia, more than four or five. But we pulled through each and every one of them, because of teamwork,” he recalled.
“I remember one setback we faced – a factory fire in 2016. We were able to recover and rebuild the plant in just two months, thanks to the team."
Wong's consistent comebacks from his challenges has earned him the nickname of “phoenix” among his peers, in reference to the mythical bird that rises from the ashes each time in a cycle of rebirth and regeneration.
“The highlights of my 40-year journey were the occasions when I was able to pull myself out of the pit, emerging bigger and stronger from those turbulent times,” he added.
Prudent Management
Wong has also gleaned precious lessons from each experience – a key one being prudent cash flow management. "Your operations need to be sustainable, and for that to happen, cost controls are critical. To be able to tide through price wars and downturns, you must ensure you’re not overspending."
“And every day can be a challenge, because you don’t know what’s going to come, and you need to prepare yourself for battle.”
Another highlight, he discovered, was the cohesiveness of the MeGroup team, which played an essential role when it came to problem-solving.
“When you’re faced with a crisis and sleepless nights, it’s teamwork that makes a difference – when the team comes up with a consistent strategy and moves forward in one direction.”
Listed on SGX Catalist in October 2018 as MeGroup Ltd, the Group comprises two business divisions – Manufacturing and Dealership.&nbsp;For the full year ended 31 March 2020, MeGroup reported a revenue of RM245.8 million on a net profit of RM1.2 million.&nbsp;
Its Manufacturing unit specialises in Noise, Vibration and Harshness (NVH) and non-NVH components, mostly for the automotive industry. NVH parts include headliners and engine outers that are incorporated into various sections of the automobile, such as dashboard, hood and boot, while non-NVH components include parcel trays and board assembly decks.
The Dealership business owns a portfolio of six automotive brands, ranging from Peugeot and Mazda to Hyundai and Honda, with eight dealership outlets, and one undergoing construction.
Although the outlook for Malaysia’s automotive industry has been clouded by the impact of COVID-19 and a weak economic backdrop, transportation remains a necessity. Even with new mobility solutions, the country still requires private vehicles, Wong pointed out.
Last year, the government announced plans to develop a third national car under the National Automotive Policy. MeGroup has registered its interest as a vendor to design and make NVH and non-NVH parts for the project – if it does materialise.
Reinvent, Recreate
At the same time, the Group is exploring other industries to broaden its revenues and achieve long-term sustainable growth. It is already supplying NVH components to Johnson Controls Hitachi, a heating, ventilation and air-conditioning (HVAC) manufacturer.
“Our penetration into the HVAC industry will allow us to bring our manufacturing and production capabilities to other HVAC players,” Wong added.
“Another strategy is to increase the number of products MeGroup can manufacture with its current capabilities, and supply to other sectors, such as the mattress industry, and floor carpeting services for offices and hotels,” Wong noted.
Under its dealership arm, the Group plans to obtain new brand partnerships and acquire other existing dealerships to expand organically and inorganically.
One such move was its recent contract win from Mitsubishi Motors to operate a dealership under their brand in Kuala Selangor. However, due to COVID-19, the construction and start of operations&nbsp;have been delayed&nbsp;to the July-September quarter of this year.
“MeGroup continues to be invited to bid for new NVH and non-NVH projects for new car models from different automobile brands,” Wong said. “We’re also exploring new potential business opportunities and new service offerings in the dealership outlets.”
The Group is looking to grow beyond domestic shores. “We continually seek opportunities in ASEAN to drive growth through greenfield or strategic M&amp;A possibilities. With neighbouring markets expanding into the automotive sector, this offers opportunities for us to scale our operations,” he added.
To lay the foundation for sustainable growth, MeGroup will focus on investing in new manufacturing technologies, as well as the set-up and/or acquisition of research labs. This year, it became the only NVH supplier in Malaysia to build its own sound testing facility.
“The lab allows us to innovate and test our products before mass production. We will be able to rethink, reinvent and recreate our NVH and non-NVH components, so as to be at the forefront of technology, and stay ahead of our competitors.”
Cash-Generating
Meanwhile, the biggest near-term challenge – apart from continuous price competition – is COVID-19, Wong admitted.
“Our operations were frozen for nearly three months. Since then, about 70% of our sales and deliveries have resumed. We expect a tough outlook for the rest of the year, but hopefully, the beginnings of a recovery might materialise in the first quarter of next year,” he noted.
With this downtime, MeGroup has taken the opportunity to implement new methods of operating, such as boosting its online presence through social media platforms and other digital marketing strategies. It is also improving or streamlining work processes to increase efficiency and reduce operating costs.
Industry peers have also upped the ante by slashing prices. “This is where our R&amp;D lab – which can provide us with in-house and proprietary technologies – comes in. This will set us apart from the competition.”
Other competitive strengths include MeGroup’s established network and long-standing working partnerships with its brand principals. “Our businesses are cash-generating, with stable recurring income streams and negligible collection issues,” Wong pointed out.
As at 31 March 2020, MeGroup had cash and cash equivalents of RM12.5 million, compared with RM16.9 million in the year-ago period.
“We strive to be asset-light, so we can generate faster ROI from our businesses, and maintain flexibility and liquidity to move into opportunities that may arise,” he added, referring to return on investment, a financial ratio that compares the gain or loss from an investment relative to its cost.
Despite the day-to-day challenges, the self-confessed workaholic sleeps like a log every night. “Work is what keeps me going,” he chuckled.
“I’ve tried to retire, but failed every time. It’s in my blood – I’m still kicking at 73, and if I don’t work, I feel sick!”
Nonetheless, the father of two boys and a girl – aged 37 to 44 – has put a proper succession plan in place. “My kids are working in MeGroup and running the show. Hopefully, it will be a smooth transition when they finally take over the reins.”
Whatever happens, Wong has taught his children to always remain focused. “I also want them to keep a low profile – be humble, don’t be a show-off, and concentrate on the things that matter.”
“Those are essentially the key principles of life.”
MeGroup Ltd
MeGroup is a component manufacturer and dealer in the automotive industry. Under its Manufacturing business, MeGroup specialises in manufacturing noise, vibration and harshness (NVH) and non-NVH components, primarily for the automotive industry in Malaysia. It has diversified into supplying NVH parts to Johnson Controls Hitachi, a heating, ventilation and air-conditioning (HVAC) manufacturer. For its Dealership business, MeGroup owns and operates i) three Peugeot dealerships; ii) two Honda dealerships; iii) one Mazda dealership; iv) one Hyundai dealership; v) one Ford dealership; and vi) one Mitsubishi Motors dealership in Malaysia. MeGroup maintains long-standing partnerships with its manufacturing customers, and is an Approved Supplier to Proton, Perodua, Honda, Mazda among other major car makers, as well as Johnson Controls Hitachi. The Group also maintains established relationships with its dealership principals.
The company website is: me-grp.com.  Click&nbsp;here&nbsp;for the company's StockFacts page.  For the year ended 31 March 2020 financial results, click&nbsp;here.
&nbsp;
About&nbsp;kopi-C: the Company brew
Text: Jennifer LH Tan Photo: Company file  kopi-C&nbsp;is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  For previous editions of&nbsp;kopi-C: the Company brew,&nbsp;please click&nbsp;here. &nbsp;  For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;jennifer.t@sgx.com.

MeGroup Revs Up Sustainable Growth Engines

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

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.<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">source: Capital IQ</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 potential for re-rating. </div><div></div><div>
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> .
<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">source: Capital IQ</div>
</div>

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


Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>Auto exposures are in decline among Global active investors.  Average holding weights are towards the lower end of the 9-year range, at 0.83%.  A record low of 49% of the 406 funds in our analysis have exposure to the Autos sector.</li>
<li>Fund activity over the last 6-months saw Global managers selling down stakes in <a href="https://www.smartkarma.com/entities/daimler-ag" target="_blank" data-smartkarma-citation="entities:21602:1" rel="noopener">Daimler AG (DAI GR)</a> , <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/ford-motor-co" target="_blank" data-smartkarma-citation="entities:19225:1" rel="noopener">Ford Motor Co (F US)</a> . <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> and <a href="https://www.smartkarma.com/entities/volkswagen-ag-pref" target="_blank" data-smartkarma-citation="entities:734:1" rel="noopener">Volkswagen (Pref) (VOW3 GY)</a> were the main bright spots as ownership levels grew over the period.</li>
<li>Overall, the auto industry is becoming increasingly unattractive to the average Global fund manager, with increases in <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> exposure unable to counteract significant declines in ownership across the more traditional auto manufacturers.</li>
</ul>


Auto exposures are in decline among Global active investors.  Average holding weights are towards the lower end of the 9-year range, at 0.83%.  A record low of 49% of the 406 funds in our analysis have exposure to the Autos sector.
Fund activity over the last 6-months saw Global managers selling down stakes in Daimler AG (DAI GR) , Toyota Motor (7203 JP) and Ford Motor Co (F US) . Tesla Motors (TSLA US) and Volkswagen (Pref) (VOW3 GY) were the main bright spots as ownership levels grew over the period.
Overall, the auto industry is becoming increasingly unattractive to the average Global fund manager, with increases in Tesla Motors (TSLA US) exposure unable to counteract significant declines in ownership across the more traditional auto manufacturers.


The Global Autos Break Down, Though Tesla on Full Charge

<a href="https://www.smartkarma.com/entities/hanon-systems" target="_blank" data-smartkarma-citation="entities:11506:1" rel="noopener">Hanon Systems (018880 KS)</a> share price has come off by 25% since last year's May and has not participated in the recovery like the other Korean stocks as the country has recently come out of the COVID-19 crisis. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/136/015/original/image_82251703021590504812385.png?1590504812" class="editor-image img-responsive" data-smartkarma-image-id="136015"></figure>
<div class="content-remarks">
source: Capital IQ
</div>
In this insight, we will discuss why investors should not rush to buy Hanon System's share despite the relative underperformance against the index. The strong auto sales recovery in China and South Korea will be helpful for the company but not enough to cover the weakness coming out of Europe and the Americas. 
<a href="https://www.smartkarma.com/entities/mando-corp" target="_blank" data-smartkarma-citation="entities:8119:1" rel="noopener">Mando Corp (204320 KS)</a> operates in the same segment as an auto supplier in South Korea with a geographically diversified presence although with a higher concentration in South Korea and China where the road to recovery is much more visible compared to Europe and the Americas and it is currently trading at 20% discount to book value.

Hanon Systems (018880 KS) share price has come off by 25% since last year's May and has not participated in the recovery like the other Korean stocks as the country has recently come out of the COVID-19 crisis. 


source: Capital IQ

In this insight, we will discuss why investors should not rush to buy Hanon System's share despite the relative underperformance against the index. The strong auto sales recovery in China and South Korea will be helpful for the company but not enough to cover the weakness coming out of Europe and the Americas. 
Mando Corp (204320 KS) operates in the same segment as an auto supplier in South Korea with a geographically diversified presence although with a higher concentration in South Korea and China where the road to recovery is much more visible compared to Europe and the Americas and it is currently trading at 20% discount to book value.

Hanon Systems: Still Tough and Prefer Mando

United States

Ford Motor Company designs, manufactures, and services cars and trucks.  The Company also provides vehicle-related financing, leasing, and insurance through its subsidiary.

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