ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Integra Indocabinet Tbk PT / Equity Bottom-Up

It is a good feeling to discover an Indonesian company, which is an industry leader with a strong brand, has a high-quality customer base, a long-term growth trajectory, and one that plays on the country's home advantages. I visited <a href="https://www.smartkarma.com/entities/integra-indocabinet-tbk-pt" target="_blank" data-smartkarma-citation="entities:27356:1" rel="noopener">Integra Indocabinet Tbk PT (WOOD IJ)</a> in Jakarta recently and found it just one of those rare companies. <a href="https://www.smartkarma.com/entities/integra-indocabinet-tbk-pt" target="_blank" data-smartkarma-citation="entities:27356:1" rel="noopener">Integra Indocabinet Tbk PT (WOOD IJ)</a> is the largest vertically integrated timber products company in Indonesia, with business activities ranging from forestry concession ownership, to manufacturing fully-assembled and knocked down furniture, to furniture retailing, and wooden building components. The company has one of the largest Forestry Stewardship Council (FSC) Certified forestry concessions in Indonesia, which supplies a good portion of its raw material needs. It has a well-developed manufacturing facility close to Surabaya, with the capability to manufacture high-quality furniture, knock-down furniture, and building components, with ample capacity to drive near term growth. It has a high-quality customer base in the us and Europe including Target, <a href="https://www.smartkarma.com/entities/costco-wholesale-corp" target="_blank" data-smartkarma-citation="entities:18404:1" rel="noopener">Costco Wholesale (COST US)</a>, <a href="https://www.smartkarma.com/entities/home-depot-inc" target="_blank" data-smartkarma-citation="entities:8399:1" rel="noopener">Home Depot Inc (HD US),</a> and <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US),</a> as well as <a href="https://www.smartkarma.com/entities/ikea-of-sweden-ab" target="_blank" data-smartkarma-citation="entities:28050:1" rel="noopener">IKEA of Sweden AB (4168877Z SS)</a>, Zara Home, and H&amp;M Home, which underlines its ability to produce high quality products. It is diversifying its wooden building components into door frames, kitchen cabinets and blinds, which all have high growth prospects. China faces the possibility of anti-dumping duties on kitchen cabinets of up to 60%, which plays to WOOD's advantage.It is a beneficiary of the US/China Trade war, with Indonesian furniture imports attracting zero tariffs versus 25% for China. Indonesia only makes up 2% of furniture imports to the US versus 50% for China, which leaves significant scope for gaining market share.<a href="https://www.smartkarma.com/entities/integra-indocabinet-tbk-pt" target="_blank" data-smartkarma-citation="entities:27356:1" rel="noopener">Integra Indocabinet Tbk PT (WOOD IJ)</a> is a high-quality manufacturer in an area where Indonesia has a key advantage, especially versus China. It has high quality and relatively diverse customer base and a strong track record, with strong growth prospects ahead.  Factoring in +40% revenue growth in 2019 and a conservative +25% in 2020 with stable margins, <a href="https://www.smartkarma.com/entities/integra-indocabinet-tbk-pt" target="_blank" data-smartkarma-citation="entities:27356:1" rel="noopener">Integra Indocabinet Tbk PT (WOOD IJ)</a> does not look expensive on 11.7x FY20E PER, given its strong potential for growth from both exports, especially to the US, as well as a positive diversification in the company's product mix.

It is a good feeling to discover an Indonesian company, which is an industry leader with a strong brand, has a high-quality customer base, a long-term growth trajectory, and one that plays on the country's home advantages. I visited Integra Indocabinet Tbk PT (WOOD IJ) in Jakarta recently and found it just one of those rare companies. Integra Indocabinet Tbk PT (WOOD IJ) is the largest vertically integrated timber products company in Indonesia, with business activities ranging from forestry concession ownership, to manufacturing fully-assembled and knocked down furniture, to furniture retailing, and wooden building components. The company has one of the largest Forestry Stewardship Council (FSC) Certified forestry concessions in Indonesia, which supplies a good portion of its raw material needs. It has a well-developed manufacturing facility close to Surabaya, with the capability to manufacture high-quality furniture, knock-down furniture, and building components, with ample capacity to drive near term growth. It has a high-quality customer base in the us and Europe including Target, Costco Wholesale (COST US), Home Depot Inc (HD US), and Amazon.com Inc (AMZN US), as well as IKEA of Sweden AB (4168877Z SS), Zara Home, and H&amp;M Home, which underlines its ability to produce high quality products. It is diversifying its wooden building components into door frames, kitchen cabinets and blinds, which all have high growth prospects. China faces the possibility of anti-dumping duties on kitchen cabinets of up to 60%, which plays to WOOD's advantage.It is a beneficiary of the US/China Trade war, with Indonesian furniture imports attracting zero tariffs versus 25% for China. Indonesia only makes up 2% of furniture imports to the US versus 50% for China, which leaves significant scope for gaining market share.Integra Indocabinet Tbk PT (WOOD IJ) is a high-quality manufacturer in an area where Indonesia has a key advantage, especially versus China. It has high quality and relatively diverse customer base and a strong track record, with strong growth prospects ahead.  Factoring in +40% revenue growth in 2019 and a conservative +25% in 2020 with stable margins, Integra Indocabinet Tbk PT (WOOD IJ) does not look expensive on 11.7x FY20E PER, given its strong potential for growth from both exports, especially to the US, as well as a positive diversification in the company's product mix. 

Integra Indocabinet Tbk PT (WOOD IJ) - Flatpack Wonder - On the Ground in J-Town

Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Event-Driven

In a recently published interview, <a href="https://www.livemint.com/companies/news/ikea-finds-mattresses-score-over-bookcases-in-india-1554752934010.html" target="_blank">IKEA's chief executive confirmed </a>that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( <a href="https://www.smartkarma.com/insights/consumption-diary-as-ikea-storms-india-gsk-wants-a-way-out-actionable-insights-from-smartkarma" target="_blank" data-smartkarma-citation="insights:23284">Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma</a> ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad and sales are mostly limited to low-value items and mattresses. Overwhelming crowds had thronged the store for weeks post its opening in August 2018 ( Consumption Diary: As IKEA Storms India, GSK Wants a Way Out; Actionable Insights from Smartkarma ), suggestive of India's large pent up demand for quality affordable home products. However, during our ground check in the year-end holiday season, we were surprised to note that while visitors came in large numbers, shoppers were sparse in furniture segment and billing counter was nearly empty. Apart from the kitchen supplies area and a good turnout at the food section, shopping seemed lacklustre. Why isn't IKEA's attractive price-product proposition able to convert curious walk-in visitors to loyal customers?
In the detailed note below, we look into possible reasons why IKEA's furniture sales arent commensurate with high footfalls, based on the store visit and our analysis of Indian shopper's preferences/constraints with respect to home products purchase. We believe many shoppers are constrained by access to purchase than affordability, given lack of credit options. We also compare IKEA with existing large home products retailers in India and look at the scope of IKEA's opportunity/challenges as it expands presence across geographies and formats in India.

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

Netherlands

IKEA of Sweden AB retails home and office furnishing products. The Company offers furniture, home and kitchen appliances, lighting, textile, carpets, decoration, and other products. IKEA of Sweden serves customers worldwide.

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IKEA of Sweden AB (4168877Z SS)

Integra Indocabinet Tbk PT (WOOD IJ) - Flatpack Wonder - On the Ground in J-Town

It is a good feeling to discover an Indonesian company, which is an industry leader with a strong brand, has a high-quality customer base, a...

Angus Mackintosh

IKEA in India: Decoding the Case of the Curious Shopper & Slow Offtake for High-Value Items

In a recently published interview, IKEA's chief executive confirmed that offtake in furniture has been slow at its only store in India at Hyderabad...

Devi Subhakesan

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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