IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Dayamitra Telekomunikasi PT / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/pt-dayamitra-telekomunikasi" target="_blank" data-smartkarma-citation="entities:34741:1" rel="noopener">Mitratel (1319Z IJ)</a> is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a>.Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. Indonesia's tower industry is fast consolidating into an oligopoly with three large tower companies which are Mitratel, <a href="https://www.smartkarma.com/entities/sarana-menara-nusantara-pt" target="_blank" data-smartkarma-citation="entities:6848:1" rel="noopener">Sarana Menara Nusantara (TOWR IJ)</a> (Protelindo) and <a href="https://www.smartkarma.com/entities/tower-bersama-infrastructure" target="_blank" data-smartkarma-citation="entities:3537:1" rel="noopener">Tower Bersama Infrastructure (TBIG IJ)</a>. In comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract.<div class="content-highlight">The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. Overall, Mitratel's fundamentals tick all the right boxes, in our view. </div>

Mitratel (1319Z IJ) is the largest telco tower owner and operator in Indonesia based on the number of telecommunication towers owned as of 30 June 2021, according to Analysys Mason. Mitratel is a subsidiary of Telekomunikasi Indonesia (TLKM IJ).Mitratel has launched an IPO to raise IDR20.0-24.9 trillion ($1.4-1.8 billion) at the IPO price range of IDR775-975 per share. Bookbuilding will close on 4 November and the shares are set to list on 22 November. Indonesia's tower industry is fast consolidating into an oligopoly with three large tower companies which are Mitratel, Sarana Menara Nusantara (TOWR IJ) (Protelindo) and Tower Bersama Infrastructure (TBIG IJ). In comparison to other major regions (US, Western Europe, China and India), the tower industry in Indonesia offers an attractive mix of high EBITDA margin, low capex, no colocation discount and no obligation to provide power in the contract.The tower industry also benefits from predictable revenue due to long-term contracts and high renewal rates. Mitratel's contracted revenue based on agreements with customers for all types of leases is IDR30.7 trillion, and the average remaining life of lease agreements is 6.3 years, as of 30 June 2021. Overall, Mitratel's fundamentals tick all the right boxes, in our view. 

Mitratel (Dayamitra Telekomunikasi) IPO Initiation: Control Tower

Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

Equity Bottom-Up

Sarana Menara Nusantara / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/6848" target="_blank" data-smartkarma-citation="entities:6848:1">Sarana Menara Nusantara Pt (TOWR IJ)</a> (SMN) is the largest independent tower operator in Indonesia. Switching costs, economies of scale, and guaranteed long-term contracts within the industry are offset by strong bargaining power of suppliers and customers. The presence of economies of scale and switching costs should lead to consolidation in the industry with the largest independent tower companies gaining share and bargaining power. Among the large independent tower companies, SMN is best positioned to take advantage of growth opportunities, as it is the most conservatively financed, the most operationally efficient and the most capital efficient tower company. The tower industry should continue to grow with the 4G network rollout estimated to be only 15-20% and annual price escalation tied to Indonesian CPI within contracts. Operating leverage should allow profit to grow faster than revenue growth. Despite the business quality and growth outlook, the company trades on a EV/EBITDA of 9.45 times. A conservative base case with a revenue CAGR of 4.9% over the next ten years along with conservative capital efficiency assumptions leads to 18% upside in 2018 and 68% upside over the next five years making SMN an attractive investment opportunity.

Sarana Menara Nusantara Pt (TOWR IJ) (SMN) is the largest independent tower operator in Indonesia. Switching costs, economies of scale, and guaranteed long-term contracts within the industry are offset by strong bargaining power of suppliers and customers. The presence of economies of scale and switching costs should lead to consolidation in the industry with the largest independent tower companies gaining share and bargaining power. Among the large independent tower companies, SMN is best positioned to take advantage of growth opportunities, as it is the most conservatively financed, the most operationally efficient and the most capital efficient tower company. The tower industry should continue to grow with the 4G network rollout estimated to be only 15-20% and annual price escalation tied to Indonesian CPI within contracts. Operating leverage should allow profit to grow faster than revenue growth. Despite the business quality and growth outlook, the company trades on a EV/EBITDA of 9.45 times. A conservative base case with a revenue CAGR of 4.9% over the next ten years along with conservative capital efficiency assumptions leads to 18% upside in 2018 and 68% upside over the next five years making SMN an attractive investment opportunity.

Sarana Menara Nusantar (TOWR:IJ) The Leading Indonesian Tower Company at Attractive Valuations

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New Street Research

Research is provided by our team of experienced analysts. Our work is idea driven, based on independence of thought, sector expertise, and firmly focused on fundamentals and valuation of telecoms and internet names globally. New Street is headquartered in London with offices in New York, Singapore and Australia. 

New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:

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US Telecoms, Cable, Satellite and Towers
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Pan European Telecom Services and Cable

While 2016 was a quiet year for the Indonesian towercos, we remain positive on their long-term prospects. <a href="https://www.smartkarma.com/entities/6848" target="_blank" data-smartkarma-citation="entities:6848:1">Protelindo (TOWR IJ)</a> announced FY16 results in-line with expectations. Revenue growth of +11% YoY was largely driven by the purchase of 2,500 towers from <a href="https://www.smartkarma.com/entities/15028" target="_blank" data-smartkarma-citation="entities:15028:1">XL Axiata (EXCL IJ)</a> in 2016. We estimate underlying growth was close to +5% YoY. There was good news on the small cells side, with  I-Forte reporting 2H16 revenue growth of 67% YoY, and now representing 5-6% of total revenue.  We see…

While 2016 was a quiet year for the Indonesian towercos, we remain positive on their long-term prospects. Protelindo (TOWR IJ) announced FY16 results in-line with expectations. Revenue growth of +11% YoY was largely driven by the purchase of 2,500 towers from XL Axiata (EXCL IJ) in 2016. We estimate underlying growth was close to +5% YoY. There was good news on the small cells side, with  I-Forte reporting 2H16 revenue growth of 67% YoY, and now representing 5-6% of total revenue.  We see…

Indonesian Towers: Protelindo (TOWR IJ) Targets Shareholder Returns While Still Looking for Growth.

Asean Telco Analyst. Ex CLSA, JPMorgan & HSBC

Luis Antonio Hilado

Thematic (Sector/Industry)

<ul><li>Telco service providers continue to face the challenges of pressure on traditional sources of carriage revenue and from attempts to realize real and/or market valuation upside from OTT forays</li><li>The need for speed continues to provide grounds for governments and consumers to keep telco capex high and suppress returns</li></ul>

Telco service providers continue to face the challenges of pressure on traditional sources of carriage revenue and from attempts to realize real and/or market valuation upside from OTT foraysThe need for speed continues to provide grounds for governments and consumers to keep telco capex high and suppress returns

Untethered Thoughts: Setting the Base (Bias) Line

Returns in emerging market wireless telecoms have bottomed as the sector takes a capex holiday after the 4G roll-out. We continue to like low-return markets where we look for returns to rise (e.g. India, Indonesia, China are prime examples). We have also become more bullish where returns are high and stable (e.g. Hong Kong). A number of markets continue to face tough conditions typically due to rising spectrum payments (e.g. Malaysia and Thailand).Higher returns imply higher cash flows and that is good news for both debt reduction and rising dividends. it also may encourage more M&amp;A, an area we think makes sense for in market consolidation and fixed/wireless convergence.In terms of stocks, we favor names such as <a href="https://www.smartkarma.com/entities/953" target="_blank" data-smartkarma-citation="entities:953:1">Bharti Airtel (BHARTI IN)</a> , <a href="https://www.smartkarma.com/entities/1016" target="_blank" data-smartkarma-citation="entities:1016:1">China Unicom (762 HK)</a>, Telefonica Brasil, <a href="https://www.smartkarma.com/entities/15028" target="_blank" data-smartkarma-citation="entities:15028:1">XL Axiata (EXCL IJ)</a> and <a href="https://www.smartkarma.com/entities/873" target="_blank" data-smartkarma-citation="entities:873:1">PCCW (8 HK)</a>. Top shorts include <a href="https://www.smartkarma.com/entities/946" target="_blank" data-smartkarma-citation="entities:946:1">Maxis (MAXIS MK)</a> and <a href="https://www.smartkarma.com/entities/947" target="_blank" data-smartkarma-citation="entities:947:1">AIS (ADVANC TB)</a> .

Returns in emerging market wireless telecoms have bottomed as the sector takes a capex holiday after the 4G roll-out. We continue to like low-return markets where we look for returns to rise (e.g. India, Indonesia, China are prime examples). We have also become more bullish where returns are high and stable (e.g. Hong Kong). A number of markets continue to face tough conditions typically due to rising spectrum payments (e.g. Malaysia and Thailand).Higher returns imply higher cash flows and that is good news for both debt reduction and rising dividends. it also may encourage more M&amp;A, an area we think makes sense for in market consolidation and fixed/wireless convergence.In terms of stocks, we favor names such as Bharti Airtel (BHARTI IN) , China Unicom (762 HK), Telefonica Brasil, XL Axiata (EXCL IJ) and PCCW (8 HK). Top shorts include Maxis (MAXIS MK) and AIS (ADVANC TB) .

Emerging Market Telecoms: Returns Have Bottomed. Outlook Improves.

Indonesia

PT Inti Bangun Sejahtera Tbk is is an independent tower company.  The Company engages in leasing space and other broadcast equipment for wireless signal transmission at tower sites under long-term lease agreement with mobile operators and wireless cable television providers.

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Inti Bangun Sejahtera (IBST IJ)

Mitratel (Dayamitra Telekomunikasi) IPO Initiation: Control Tower

Mitratel has launched an IPO to raise $1.4-1.8 billion. Mitratel is well-placed to benefit from industry consolidation. Overall, Mitratel's...

Arun George

Sarana Menara Nusantar (TOWR:IJ) The Leading Indonesian Tower Company at Attractive Valuations

Sarana Menara Nusantara Pt (TOWR IJ) (SMN) is the largest independent tower operator in Indonesia. Switching costs, economies of scale, and...

Reperio Capital

Indonesian Towers: Protelindo (TOWR IJ) Targets Shareholder Returns While Still Looking for Growth.

While 2016 was a quiet year for the Indonesian towercos, we remain positive on their long-term prospects. Protelindo (TOWR IJ) announced FY16...

New Street Research

Untethered Thoughts: Setting the Base (Bias) Line

Telco service providers continue to face the challenges of pressure on traditional sources of carriage revenue and from attempts to realize real...

Luis Antonio Hilado

Emerging Market Telecoms: Returns Have Bottomed. Outlook Improves.

Returns in emerging market wireless telecoms have bottomed as the sector takes a capex holiday after the 4G roll-out. We continue to like...

New Street Research

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