Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Mandarin Oriental International / Equity Bottom-Up

<ul>
<li>Hong Kong is - very gradually - rolling back Covid restrictions</li>
<li>That's a welcome relief for tourists, and for hospitality companies dependent on tourism. </li>
<li>
<a href="https://www.smartkarma.com/entities/mandarin-oriental-international-ltd" target="_blank" data-smartkarma-citation="entities:4773:1" rel="noopener"><strong>Mandarin Oriental International (MAND SP)</strong></a> is trading cheap at 0.7x P/B against 1.8x on average (five years) pre-Covid.</li>
</ul>


Hong Kong is - very gradually - rolling back Covid restrictions
That's a welcome relief for tourists, and for hospitality companies dependent on tourism. 

Mandarin Oriental International (MAND SP) is trading cheap at 0.7x P/B against 1.8x on average (five years) pre-Covid.


Mandarin Oriental (MAND SP): Life Is Suite

Event-Driven

<ul>
<li>According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire <strong><a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a></strong>'s 33-storey Three Exchange Square.</li>
<li>This "news" is straight out of left field. For its part, HKL said the market rumour is pure speculation.</li>
<li>HKL's P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid. </li>
</ul>


According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)'s 33-storey Three Exchange Square.
This "news" is straight out of left field. For its part, HKL said the market rumour is pure speculation.
HKL's P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid. 


Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a></strong> (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.</li>
<li>The reweighting follows the cancellation of the 59% shareholding in JMH held by <strong><a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a></strong>, which was privatised last year.</li>
<li>I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.</li>
</ul>



Jardine Matheson Holdings (JM SP) (JMH) has shed ~8% since MSCI said it was cutting the conglomerate's weighing in two indices.
The reweighting follows the cancellation of the 59% shareholding in JMH held by Jardine Strategic Holdings (JS SP), which was privatised last year.
I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.


<p>Yesterday after the close of trading, <a href="https://www.smartkarma.com/entities/hongkong-land-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15465:1" rel="noopener">Hongkong Land (HKL SP)</a> <a href="https://links.sgx.com/FileOpen/HKLH0906.ashx?App=Announcement&amp;FileID=682657" target="_blank" rel="noopener">announced</a> a US$500mn share buyback program, which will run until 31st December 2022.</p>
<p>As the holding of treasury shares is not permitted in HKL’s constitution, any shares repurchased will be canceled.</p>
<p>Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. That's pretty meaningful.</p>
<p>Jardine evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.</p>
<p>At a ~68% discount its NAV of US$14.75 (as at 30 June) - even after today's move - HKL is cheap. Jardines think so too.</p>
<p>Buy on any weakness.</p>

Yesterday after the close of trading, Hongkong Land (HKL SP) announced a US$500mn share buyback program, which will run until 31st December 2022.
As the holding of treasury shares is not permitted in HKL’s constitution, any shares repurchased will be canceled.
Based on the average daily volume over the last year of US$9-10mn, this buyback is roughly equivalent to ~15% of daily volume through to 2022 year-end. That's pretty meaningful.
Jardine evidently believes it makes good business sense to buy back its own shares in place of deploying capital into HKL's investment and development property portfolio.
At a ~68% discount its NAV of US$14.75 (as at 30 June) - even after today's move - HKL is cheap. Jardines think so too.
Buy on any weakness.

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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<p>The overall Indonesian market has traded sideways this year, rising by only +2.45% YTD, despite a strong economic recovery in 2Q2021. This is mainly due to the Emergency PPKM measures put in place as the COVID-19 cases spiked in June, with strict measures coming into effect on 3rd July</p>
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<p>In fact, new cases peaked out in Indonesia on 15th July and have been on a steep decline since herd immunity and increased vaccinations helped to calm the situation.</p>
<p>Recent conversations with retailers such as <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ),</a> <a href="https://www.smartkarma.com/entities/ace-hardware-indonesia" target="_blank" data-smartkarma-citation="entities:12808:1" rel="noopener">Ace Hardware Indonesia (ACES IJ)</a>, and <a href="https://www.smartkarma.com/entities/pt-matahari-department-store" target="_blank" data-smartkarma-citation="entities:5230:1" rel="noopener">Matahari Department Store (LPPF IJ)</a> reveal a significantly improved picture in August.</p>
<div>One positive impact from last year's pandemic is that companies in a number of different sectors have adopted operational policies that allow them to operate more efficiently even in a lockdown situation.</div>
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<div>With the Indonesian market massively under-owned by foreign investors, we see this recent market correction as an opportunity.  Foreigner positioning is at the lowest level in a decade, which suggests potential inflows as recovery comes through.</div>
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<div>We recommend buying banks, autos, retailers, cement, digital economy proxies, telcos as data enablers, and property as a reflation trade. We remain positive on healthcare but see some pricing risk for testing services and declining COVID-19 related revenues. </div>
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The overall Indonesian market has traded sideways this year, rising by only +2.45% YTD, despite a strong economic recovery in 2Q2021. This is mainly due to the Emergency PPKM measures put in place as the COVID-19 cases spiked in June, with strict measures coming into effect on 3rd July

In fact, new cases peaked out in Indonesia on 15th July and have been on a steep decline since herd immunity and increased vaccinations helped to calm the situation.
Recent conversations with retailers such as Mitra Adiperkasa (MAPI IJ), Ace Hardware Indonesia (ACES IJ), and Matahari Department Store (LPPF IJ) reveal a significantly improved picture in August.
One positive impact from last year's pandemic is that companies in a number of different sectors have adopted operational policies that allow them to operate more efficiently even in a lockdown situation.


With the Indonesian market massively under-owned by foreign investors, we see this recent market correction as an opportunity.  Foreigner positioning is at the lowest level in a decade, which suggests potential inflows as recovery comes through.

We recommend buying banks, autos, retailers, cement, digital economy proxies, telcos as data enablers, and property as a reflation trade. We remain positive on healthcare but see some pricing risk for testing services and declining COVID-19 related revenues. 










CrossASEAN Indonesia Strategy - The Stars Are Aligned

Singapore

YHI International Limited distributes automotive products comprising tires, alloy wheels, automotive batteries and related products.  The Company also designs, develops, and manufactures alloy wheels.

Listed on the SGX Mainboard since December 1995, Thakral Corporation Ltd has two divisions – Lifestyle Division and Investment Division.

The Group’s Investment Division invests directly or with co-investors in real estate and other investment opportunities including property-backed financial instruments. The Group also earns income from the services rendered from originating, packaging and managing the projects. The Investment Division, through a joint venture, has expanded its businesses into development and management of retirement living resorts in Australia under the GemLife brand. Taking advantage of the upward trend in the Japanese property sector and the country’s low interest rate, the Group has also expanded its investment footprint to Japan. With the completion of the acquisition of The Riverwalk office property, the Group has extended its property investments to Singapore. 

The Group’s Lifestyle Division is focused on marketing and distributing brands in the beauty, wellness and lifestyle categories, working with leading e-commerce platforms as well as traditional retailers. The brands distributed by the Lifestyle Division include at-home beauty and wellness device brands MTG Refa, ikoo, Panasonic, PMD, DermaWand, Philips, TriPollar, T3, MTG SIXPAD, Style Seat and Slendertone, skin and hair care brands John Masters Organics, Codage and Institut Karite Paris as well as lifestyle brands such as DJI. The Lifestyle Division is also creating an e-commerce retail platform for at-home beauty devices in China, in a joint venture with UK-based CurrentBody.com Limited, a leader in this space. 

Greater China including Hong Kong, Southeast Asia and India are key markets for the Lifestyle Division and Australia, Japan and Singapore for the Investment Division.

The Hour Glass Limited retails and wholesales watches, jewelry and related products through its subsidiaries. The Company also manufactures watches and invests in properties.

Stamford Tyres Corporation Limited retails and distributes tires and wheels for passenger, commercial, industrial, and agricultural vehicles. The Company also provides tire retreading, equipment trading, and motor vehicle servicing. Stamford Tyres manufactures and sells aluminum alloy wheels.

Cortina Holdings Limited retails and distributes luxury watches in the Asia Pacific region.  The Company also trades, imports, and exports pens, lighters, and clocks.

Metro Holdings Limited operates department store, develops and invests in properties, as well as undertakes building contract works.  The Company also distributes building and construction materials.

Ossia International Limited markets and distributes sporting goods, footwear, accessories, apparel, sports equipment, and golf related products.  The Company, through its subsidiaries, operates Internet business, designs and distributes apparel, fashion footwear, and sports and fashion accessories.  In addition, Ossia also invests in properties and provides consultancy services.

Isetan (Singapore) Limited operates department stores and trades general merchandise with wholesale and retail operations.

Second Chance Properties Limited is a wholesaler and retailer of ready-made garments. The Group also retails gold, jewelry and tidbits, and invests in properties.

Challenger Technologies Limited operates superstore retails and small outlet retails. The Company sells information technology products and provides services related to its products. Through its subsidiary, the Company also supplies and installs electronic signage for buildings, business premises and promotional events.

Inchcape PLC is a global automotive distributor and retailer. The Company acts as a vehicle and parts distributor in multiple markets. In these markets, Inchcape has exclusive responsibility for managing the value chain on behalf of a focused portfolio of premium and luxury brand partners. Over two thirds of the Group profit is derived from Asia Pacific and emerging markets.

LKQ Corporation offers automotive products and services. The Company provides alternative collision replacement parts, recycled engines and transmissions, as well as remanufactured engines. LKQ offers customers in North America, Central America and Europe replacement systems, components and parts for the repair of automobiles and light, medium, and heavy-duty trucks.

Canon Marketing Japan Inc. distributes all Canon products in the domestic market.  The Company sells copying machines, printers, digital cameras, facsimile, scanner, projectors, and calculators.

Wuchan Zhongda Group Co.,Ltd. offers supply chain services. The Company purchases and distributes metal materials, ores, automobiles, chemicals, rubbers, and energy products. Wuchan Zhongda Group also conducts finance, medical, thermal power, and public utility businesses.

S.A. D'Ieteren N.V. imports to and distributes European- and Asian-manufactured cars in Belgium.  The Company offers vehicle glass repair and replacement services in Europe, North and South America, Asia, Australia, and New Zealand.

Pool Corporation is a wholesale distributor of swimming pool supplies, equipment and related leisure products. The Company's inventory includes a diverse range of products, from construction materials, replacement parts and fencing to pool care products and spas.

Liaoning Cheng Da Co., Ltd. imports and exports a variety of textile products including knitting products, household textile products, and apparel.  The Company also operates pharmaceutical chain stores and provides processing services.

Zhejiang Orient Holdings Co., Ltd. imports and exports textile products.  The Company exports cotton and wool knitwear, household textile products, and accessories, as well as imports textile raw materials and equipment.  Zhejiang Orient also provides apparel processing services, acts as a cargo transportation agency, and operates in properties.

Anhui Xinhua Media Co Ltd wholesales, retails, publishes textbook, graphic book, audio, and vieo products.  The Company also operates trading, property management and property leasing businesses.

PALTAC CORPORATION. is a wholesaler. The Company distributes cosmetics, daily necessities, and medicine to drug stores, convenience stores, supermarkets, and home centers. Paltac also operates and manages logistics centers.

Jardine Cycle & Carriage Limited operates as an investment holding company. The Company, through its subsidiaries, invests in automotive, consumer finance, utilities and infrastructure, heavy equipment and mining, property, agribusiness, cement, and consumer products businesses. Jardine Cycle & Carriage serves customers in South East Asia.

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Jardine Cycle & Carriage (JCNC SP)

Mandarin Oriental (MAND SP): Life Is Suite

Mandarin Oriental is trading cheap at 0.7x P/B against 1.8x on average (5 years) pre-Covid. Business will continue to improve from here. The...

David Blennerhassett

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

Reportedly two PRC firms and a mainland bank intend to acquire Hongkong Land''s Three Exchange Square. HKL said the rumor is pure speculation....

David Blennerhassett

Jardine Matheson (JM SP): MSCI Blues

Given JMH's strong underlying operating performance, the 40% discount to NAV - one in which there are discounts of discounts, JMH is attractive...

David Blennerhassett

Hongkong Land's (HKL SP) Big Buyback

HKL has historically traded cheap, both on a standalone basis, and with respect to peers. This buyback is the catalyst to narrow that discount to...

David Blennerhassett

CrossASEAN Indonesia Strategy - The Stars Are Aligned

Indonesia has been through the worse in terms of the recent covid surge and is now on the cusp of a steep recovery at a time when foreign weighting...

Angus Mackintosh

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