Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

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

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally) border shut down in the region, therefore, the tourists' arrival in Singapore has dropped significantly, causing a low ridership in the taxi division. 
Recovery seems on the way as the Singapore government has slowly but surely eased off border restrictions, allowing safe countries such as Brunei Darussalam and New Zealand tourists to visit without stay-at-home notice while also allowing other Asian countries such as China, Thailand, Vietnam, Taiwan, Malaysia, Macao and Australia (excluding Victoria) will be required to undergo a stay-home-notice at their own residence for 7 instead of previously 14 days. There is a talk with the Indonesian government to open an essential "green lane" that could mean medical tourism. 
For the past 10 years, the number of tourists from Indonesia and China competed for the top two spots thanks to the warm bilateral relationship between Singapore and the two countries, superior healthcare facilities in Singapore and cultural closeness.
<div>Currently, the company is valued at 28 times historical earnings so with increasing profitability in the next half of the year, the valuation ranges around 18-21x PER. Compared to other transport-related peers such as <a href="https://www.smartkarma.com/entities/japan-airport-terminal-co" target="_blank" data-smartkarma-citation="entities:18034:1" rel="noopener">Japan Airport Terminal Co (9706 JP)</a> , Comfort Delgro trades at a 86% discount in EV/EBITDA while to <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> , it trades at a 30% discount in PER. BUY.</div>

Comfortdelgro Corp (CD SP) share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally) border shut down in the region, therefore, the tourists' arrival in Singapore has dropped significantly, causing a low ridership in the taxi division. 
Recovery seems on the way as the Singapore government has slowly but surely eased off border restrictions, allowing safe countries such as Brunei Darussalam and New Zealand tourists to visit without stay-at-home notice while also allowing other Asian countries such as China, Thailand, Vietnam, Taiwan, Malaysia, Macao and Australia (excluding Victoria) will be required to undergo a stay-home-notice at their own residence for 7 instead of previously 14 days. There is a talk with the Indonesian government to open an essential "green lane" that could mean medical tourism. 
For the past 10 years, the number of tourists from Indonesia and China competed for the top two spots thanks to the warm bilateral relationship between Singapore and the two countries, superior healthcare facilities in Singapore and cultural closeness.
Currently, the company is valued at 28 times historical earnings so with increasing profitability in the next half of the year, the valuation ranges around 18-21x PER. Compared to other transport-related peers such as Japan Airport Terminal Co (9706 JP) , Comfort Delgro trades at a 86% discount in EV/EBITDA while to MTR Corp (66 HK) , it trades at a 30% discount in PER. BUY.

Comfort Delgro (CD): Undervalued and Recovery in Ridership

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<div>•BEST &amp; WORST 5th AUGUST •</div><div>
The 'best' and 'worst' from yesterday's large-cap announcements came from<a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp (6753 JP)</a>and <a href="https://www.smartkarma.com/entities/japan-airport-terminal-co" target="_blank" data-smartkarma-citation="entities:18034:1" rel="noopener">Japan Airport Terminal (9706 JP)</a>, respectively - the former driven by forecasts while the latter achieved a 'maximum negative' Results Score  More extensive coverage follows in the DETAIL section below.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/783/original/2020-08-06_05-58-08.png?1596661124" class="editor-image img-responsive" data-smartkarma-image-id="150783"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/784/original/2020-08-06_05-59-13.png?1596661176" class="editor-image img-responsive" data-smartkarma-image-id="150784"></figure><div class="content-caption">Source • Japan Analytics</div>
<hr>
</div><div>DAILY STATS</div><hr><div>PERCENTAGES - 66% of quarterly results,  75% of annual forecasts/revisions and 82% of interim forecasts have negative Scores and 29% of companies reporting lost money for the quarter.</div><hr><div>172 Quarterly Results</div><div><ul>
<li>
Results Score: 28% Positive / 6% Neutral / 66% Negative</li>
<li>
Average Results Score Change: -3.1 points</li>
<li>
Average % Change in Revenue: -12.3% Quarter YoY / -2.6% Rolling TTM YoY </li>
<li>
Average Operating Profit Margin Change: -2.0 ppt</li>
<li>
Percentage Making Quarterly Losses: 29%</li>
</ul></div><hr><div>72 Annual • 45 Interim Forecasts/Revisions</div><div><ul>
<li>
Annual Forecast/Revision Score: 18% Positive / 7% Neutral / 75% Negative</li>
<li>
Interim Forecast/Revision Score Change: 16% Positive / 2% Neutral / 82% Negative</li>
<li>
Average Forecast/Revision Score Change: -11.2 points</li>
</ul></div>

•BEST &amp; WORST 5th AUGUST •
The 'best' and 'worst' from yesterday's large-cap announcements came fromSharp (6753 JP)and Japan Airport Terminal (9706 JP), respectively - the former driven by forecasts while the latter achieved a 'maximum negative' Results Score  More extensive coverage follows in the DETAIL section below.
Source • Japan Analytics

DAILY STATSPERCENTAGES - 66% of quarterly results,  75% of annual forecasts/revisions and 82% of interim forecasts have negative Scores and 29% of companies reporting lost money for the quarter.172 Quarterly Results

Results Score: 28% Positive / 6% Neutral / 66% Negative

Average Results Score Change: -3.1 points

Average % Change in Revenue: -12.3% Quarter YoY / -2.6% Rolling TTM YoY 

Average Operating Profit Margin Change: -2.0 ppt

Percentage Making Quarterly Losses: 29%
72 Annual • 45 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 18% Positive / 7% Neutral / 75% Negative

Interim Forecast/Revision Score Change: 16% Positive / 2% Neutral / 82% Negative

Average Forecast/Revision Score Change: -11.2 points


🇯🇵 JAPAN • Results & Revisions 5th August - Lasertec, Olympus, JAT, Sysmex, Honda, Sharp

If the country were to change its target to the wealthy clients then the question is whether <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> going to be a good proxy for tourism's sweet spot in Thailand? Before COVID-19 break, Thailand's tourism scene was popular with the Chinese middle class and tons of backpackers from all over the world thanks, partly to a couple of Hollywood movies such as The Beach and Hangover Part II that presented the world with the opposite views of what the country has to offer for tourists. 
The Civil Aviation Authority of Thailand (CAAT) recently mentioned that the ban on commercial international flights might not be lifted on July 1st as previously planned, and if at some point the ban will be lifted, business travelers will likely be the first allowed to travel. 
Concession service (26% contribution) will be reduced by 20% and 50% EBITDA followed by 15 ppts EBITDA margin reduction as the company extended rent holiday to its tenants. 
The bigger question is whether AOT is still a good proxy for Thai tourism given the predictably muted growth in the tourist arrival and the Tourism Ministry's aim to focus on the quality rather than quantity? It is likely that peers such as <a href="https://www.smartkarma.com/entities/minor-international-pcl" target="_blank" data-smartkarma-citation="entities:2154:1" rel="noopener">Minor International (MINT TB)</a> , <a href="https://www.smartkarma.com/entities/central-plaza-hotel-pcl" target="_blank" data-smartkarma-citation="entities:18213:1" rel="noopener">Central Plaza Hotel (CENTEL TB)</a> , <a href="https://www.smartkarma.com/entities/central-pattana-pcl-0b7fb113-16e1-4535-be8b-02dce5bbcd92" target="_blank" data-smartkarma-citation="entities:17188:1" rel="noopener">Central Pattana Pub (CPN TB)</a>, or <a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Medical Services (BDMS TB)</a> to benefit from the shift in focus in the short run. In addition to that, AOT is trading at 50%, 97%, and 65% premium in PER, PBR, and EV/EBITDA multiples to the Thai Tourism stock peers. No rush on having AOT in my portfolio.

If the country were to change its target to the wealthy clients then the question is whether Airports of Thailand (AOT TB) going to be a good proxy for tourism's sweet spot in Thailand? Before COVID-19 break, Thailand's tourism scene was popular with the Chinese middle class and tons of backpackers from all over the world thanks, partly to a couple of Hollywood movies such as The Beach and Hangover Part II that presented the world with the opposite views of what the country has to offer for tourists. 
The Civil Aviation Authority of Thailand (CAAT) recently mentioned that the ban on commercial international flights might not be lifted on July 1st as previously planned, and if at some point the ban will be lifted, business travelers will likely be the first allowed to travel. 
Concession service (26% contribution) will be reduced by 20% and 50% EBITDA followed by 15 ppts EBITDA margin reduction as the company extended rent holiday to its tenants. 
The bigger question is whether AOT is still a good proxy for Thai tourism given the predictably muted growth in the tourist arrival and the Tourism Ministry's aim to focus on the quality rather than quantity? It is likely that peers such as Minor International (MINT TB) , Central Plaza Hotel (CENTEL TB) , Central Pattana Pub (CPN TB), or Bangkok Dusit Medical Services (BDMS TB) to benefit from the shift in focus in the short run. In addition to that, AOT is trading at 50%, 97%, and 65% premium in PER, PBR, and EV/EBITDA multiples to the Thai Tourism stock peers. No rush on having AOT in my portfolio. 

<a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> share price has rallied post the initial sell-off in the back of COVID-19 yet the key revenue driver, tourists' arrival, has not shown any sign of improvement as no vaccine has been found and governments are taking a very cautious stance on cross border travel fearing a second outbreak. 
Thailand's Ministry of Finance, a major shareholder of AOT, may need to sell some stake in AOT as they have to deal with Thai Airway's bankruptcy proceeding and difficult economic environment due to lack of tourists' arrival (17% of GDP).
AOT is still trading at 41x PER, 6x PBR, and 27x EV/EBITDA - a 75% PER premium, 164% PBR premium, and 107% EV/EBITDA premium to its peers.  The valuations clearly do not reflect the gloomy outlook of the tourism industry in Thailand that <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> is in. Still Negative...

Airports of Thailand (AOT TB) share price has rallied post the initial sell-off in the back of COVID-19 yet the key revenue driver, tourists' arrival, has not shown any sign of improvement as no vaccine has been found and governments are taking a very cautious stance on cross border travel fearing a second outbreak. 
Thailand's Ministry of Finance, a major shareholder of AOT, may need to sell some stake in AOT as they have to deal with Thai Airway's bankruptcy proceeding and difficult economic environment due to lack of tourists' arrival (17% of GDP).
AOT is still trading at 41x PER, 6x PBR, and 27x EV/EBITDA - a 75% PER premium, 164% PBR premium, and 107% EV/EBITDA premium to its peers.  The valuations clearly do not reflect the gloomy outlook of the tourism industry in Thailand that Airports of Thailand (AOT TB) is in. Still Negative...

Airport of Thailand (AOT): No Sign of Improvement Yet

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/139/255/original/2020-06-11_08-36-54.png?1591832240" class="editor-image img-responsive" data-smartkarma-image-id="139255"></figure><div class="content-caption">Source: Japan Analytics</div>STRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through the current euphoria and assess where business risk is concentrated among larger Japanese companies. According to Tokyo Shoko Research, 171 listed Japanese firms have raised nearly ¥10 trillion in new funds to weather COVID-19.ALTMAN Z-SCORES - The first Insight will update our earlier Who's<a href="https://www.smartkarma.com/insights/japan-who-s-swimming-naked-part-2-altman-z-score" target="_blank" data-smartkarma-citation="insights:37316" rel="noopener"> Swimming Naked?</a> Insight and focus on the Altman Z-Score as updated for the most recent quarterly results for both manufacturing and non-manufacturing companies.  In each category, ee will look at both the companies that are below Altman's 'distress' levels and those companies that have the most significant negative deviation from their seven-year average score. Only six of the bottom-thirty manufacturing and five of the bottom-thirty manufacturing companies have outperformed over one year. Many are already Oversold and offer potential value opportunities -as with <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan Motor (7201 JP)</a> which is now as distressed as when Carlos Ghosn first arrived.  QUASI-FINANCIAL FIRMS - The Z-Score methodology does not work for financial firms. Accordingly, five non-financial companies which have significant financial subsidiaries -  <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post (6178 JP)</a>, <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>- have been excluded from this analysis.

Source: Japan AnalyticsSTRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through the current euphoria and assess where business risk is concentrated among larger Japanese companies. According to Tokyo Shoko Research, 171 listed Japanese firms have raised nearly ¥10 trillion in new funds to weather COVID-19.ALTMAN Z-SCORES - The first Insight will update our earlier Who's Swimming Naked? Insight and focus on the Altman Z-Score as updated for the most recent quarterly results for both manufacturing and non-manufacturing companies.  In each category, ee will look at both the companies that are below Altman's 'distress' levels and those companies that have the most significant negative deviation from their seven-year average score. Only six of the bottom-thirty manufacturing and five of the bottom-thirty manufacturing companies have outperformed over one year. Many are already Oversold and offer potential value opportunities -as with Nissan Motor (7201 JP) which is now as distressed as when Carlos Ghosn first arrived.  QUASI-FINANCIAL FIRMS - The Z-Score methodology does not work for financial firms. Accordingly, five non-financial companies which have significant financial subsidiaries -  Rakuten (4755 JP), Z Holdings (4689 JP), Japan Post (6178 JP), Softbank Group (9984 JP) and Sony (6758 JP)- have been excluded from this analysis. 

🇯🇵 JAPAN - Stress Tests Part 1 - Altman Z-Scores

Japan

Japan Airport Terminal Co., Ltd. constructs, manages and maintains passenger terminals and airport facilities at Haneda and Narita airports.  The Company operates parking-lots, souvenir shops, and duty-free stores.  Japan Airport Terminal, through its subsidiaries, manages restaurants and in-flight meal services.

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Japan Airport Terminal Co (9706 JP)

Comfort Delgro (CD): Undervalued and Recovery in Ridership

Comfortdelgro Corp (CD SP) share price was battered around 40% due to the COVID-19 induced (domestically) Circuit Breaker and (internationally)...

Henry Soediarko

🇯🇵 JAPAN • Results & Revisions 5th August - Lasertec, Olympus, JAT, Sysmex, Honda, Sharp

•BEST & WORST 5th AUGUST • The 'best' and 'worst' from yesterday's large-cap announcements came fromSharp (6753 JP)and Japan Airport Terminal...

Campbell Gunn

AOT: Still a Valid Proxy for Tourism?

If the country were to change its target to the wealthy clients then the question is whether Airports of Thailand (AOT TB) going to be a good proxy...

Henry Soediarko

Airport of Thailand (AOT): No Sign of Improvement Yet

Airports of Thailand (AOT TB) share price has rallied post the initial sell-off in the back of COVID-19 yet the key revenue driver, tourists'...

Henry Soediarko

🇯🇵 JAPAN - Stress Tests Part 1 - Altman Z-Scores

STRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through...

Campbell Gunn

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