Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January?

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) Alibaba: Antitrust Concerns2) Tencent Under Pressure From Antitrust Push3) POTUS Executive Order: New OFAC Clarification 4) China Logistics: Major Shareholders Seek to Exit 5) Kuaishou Technology IPO6) Yidu Tech IPO7) TOPIX Inclusion: ODK Solutions 8) New Horizon IPO9) Goldwin Bullish for Future Growth10) Yaoko: A Difficult 2021 Coming11) IQIYI Valuation12) Digital Currency: Still Remember Facebook Libra/​Diem?13) China Dental Care Industry14) ZTO Express &amp; BEST Inc15) Infrastructure Asset-Backed Securities: New Asset Class for Asia16) Japan Airport Terminal17) Will Biden Get Officially Inaugurated on 20 January? 

Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

China and US Equity Analyst

Roger Xie

Cross Asset Strategy

<ul>
<li>According to FT, <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> digital currency project, Libra, is preparing to launch as early as January 2021 and its value will be backed by a single currency, the US dollar. This project is still awaiting approval from FINMA (the Swiss-based Financial Market Supervisory Authority) and will works as a stablecoin, which is much less volatile than cryptocurrencies such as Bitcoin. </li>
<li>We view the slim-down version of Libra, now called Diem, as a feasible alternative to original proposal. The full-blown version 2.0 of Libra is backed by multiple currencies (such as USD, EUR, and GBP). And 1 Libra is proposed to be calculated as 0.5 LibraUSD, 0.3 LibraEUR, and 0.2 LibraGBP. However, multiple currency reserve will pose addition regulatory obstacles, as how much weights and what currency will be determined. With Libra is backed by USD only now, there is not much road blocks for Libra to be launched next year. </li>
<li>China is accelerating its efforts to launch its sovereign digital currency. In October, the People’s Bank of China published a draft law that would give legal status to the Digital Currency Electronic Payment (DCEP) system, and for the first time the digital yuan has been included and defined as part of the country’s sovereign fiat currency. The broad acceptance and launches of digital currency is the high conviction idea for 2021, such as China's Digital Currency Electronic Payment (DCEP) system and <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> Libra/Diem projects. We have highlighted China's race to digital currency in the following: <a href="https://www.smartkarma.com/insights/china-a-share-strategy-leading-the-race-for-digital-currency" target="_blank" rel="noopener">China A-Share Strategy: Leading the Race for Digital Currency</a>
</li>
</ul>


According to FT, Facebook Inc A (FB US) digital currency project, Libra, is preparing to launch as early as January 2021 and its value will be backed by a single currency, the US dollar. This project is still awaiting approval from FINMA (the Swiss-based Financial Market Supervisory Authority) and will works as a stablecoin, which is much less volatile than cryptocurrencies such as Bitcoin. 
We view the slim-down version of Libra, now called Diem, as a feasible alternative to original proposal. The full-blown version 2.0 of Libra is backed by multiple currencies (such as USD, EUR, and GBP). And 1 Libra is proposed to be calculated as 0.5 LibraUSD, 0.3 LibraEUR, and 0.2 LibraGBP. However, multiple currency reserve will pose addition regulatory obstacles, as how much weights and what currency will be determined. With Libra is backed by USD only now, there is not much road blocks for Libra to be launched next year. 
China is accelerating its efforts to launch its sovereign digital currency. In October, the People’s Bank of China published a draft law that would give legal status to the Digital Currency Electronic Payment (DCEP) system, and for the first time the digital yuan has been included and defined as part of the country’s sovereign fiat currency. The broad acceptance and launches of digital currency is the high conviction idea for 2021, such as China's Digital Currency Electronic Payment (DCEP) system and Facebook Inc A (FB US) Libra/Diem projects. We have highlighted China's race to digital currency in the following: China A-Share Strategy: Leading the Race for Digital Currency



Digital Currency: Still Remember Facebook Libra/Diem ?

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

<a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> is having a strong finish to the year with its audience share shooting to record levels due to some very popular soap operas together with the resumption of shows such as Indonesia Idol and Masterchef. 
For 9M2020, <a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> saw an -8% decline in overall advertising revenue but a +34% increase in digital advertising and 3Q2020 saw a +50% YoY increase. Overall ad revenues expected to return to get back to near to pre-pandemic levels in 4Q2020.
The company now has multiple digital and social media channels to grow its digital advertising revenues including YouTube, <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a>, TikTok, and its own highly successful RCTI+App. It now has a staggering total of 168m subscribers and followers across its various digital channels.
<a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> has successfully launched its eTV Mall, for which it has a 50-year patent which will prevent competitors from copying this model. 
We expect a strong recovery in earnings in 2020, with EPS expected to rebound by +19% and margin also expected to rebound, as costs stabilize. The company has also reduced debt so will go into 2021 with a stronger balance sheet. 
<a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a> now trades on 6.75x FY21E PER versus its 3-year average forward PER of 8.1x. Its successful move into the digital sphere could also lead to a re-rating of the share closer to 10x, where it was trading pre-pandemic and remain positive on the company.

Media Nusantara Citra (MNCN IJ) is having a strong finish to the year with its audience share shooting to record levels due to some very popular soap operas together with the resumption of shows such as Indonesia Idol and Masterchef. 
For 9M2020, Media Nusantara Citra (MNCN IJ) saw an -8% decline in overall advertising revenue but a +34% increase in digital advertising and 3Q2020 saw a +50% YoY increase. Overall ad revenues expected to return to get back to near to pre-pandemic levels in 4Q2020.
The company now has multiple digital and social media channels to grow its digital advertising revenues including YouTube, Facebook Inc A (FB US), TikTok, and its own highly successful RCTI+App. It now has a staggering total of 168m subscribers and followers across its various digital channels.
Media Nusantara Citra (MNCN IJ) has successfully launched its eTV Mall, for which it has a 50-year patent which will prevent competitors from copying this model. 
We expect a strong recovery in earnings in 2020, with EPS expected to rebound by +19% and margin also expected to rebound, as costs stabilize. The company has also reduced debt so will go into 2021 with a stronger balance sheet. 
Media Nusantara Citra (MNCN IJ) now trades on 6.75x FY21E PER versus its 3-year average forward PER of 8.1x. Its successful move into the digital sphere could also lead to a re-rating of the share closer to 10x, where it was trading pre-pandemic and remain positive on the company.  

Media Nusantara Citra (MNCN IJ) - Harnessed to Digital Growth

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Alibaba Group Holding  / Equity Bottom-Up

*SAMR Sideshow: The State Administration for Market Regulations (SAMR) fined Alibaba Holdings (BABA.US) [Alibaba] on December 14, 2020, SAMR has also launched an inquiry into alleged monopolistic practices at Alibaba whereby it pressures merchants who sell goods on Taobao and Tmall to commit to not selling on competitor platforms which is considered “standard market practice” by Alibaba. The most equitable outcome to this practice, in our view, could be the termination of these exclusive relationships, which no doubt will negatively impact revenues – but this is just a sideshow; and*Moving A Rubber Tree Plant: More importantly, however, Alibaba’s Ant Group was summoned to meet with the People’s Bank of China (PBOC), China Banking and Insurance Regulatory Commission (CBIRC), China Securities Regulatory Commission (CSRC), and State Administration of Foreign Exchange (SAFE) – which now follow the abrupt cancellation of Ant Group’s enormous USD 34 bn IPO – the largest IPO in history. A crackdown on Alibaba/Ant and other fintech firms was likely to happen at some point given the unbridled systemic risk they pose both on the lending and funding front which is overshadowed by technology.

*SAMR Sideshow: The State Administration for Market Regulations (SAMR) fined Alibaba Holdings (BABA.US) [Alibaba] on December 14, 2020, SAMR has also launched an inquiry into alleged monopolistic practices at Alibaba whereby it pressures merchants who sell goods on Taobao and Tmall to commit to not selling on competitor platforms which is considered “standard market practice” by Alibaba. The most equitable outcome to this practice, in our view, could be the termination of these exclusive relationships, which no doubt will negatively impact revenues – but this is just a sideshow; and*Moving A Rubber Tree Plant: More importantly, however, Alibaba’s Ant Group was summoned to meet with the People’s Bank of China (PBOC), China Banking and Insurance Regulatory Commission (CBIRC), China Securities Regulatory Commission (CSRC), and State Administration of Foreign Exchange (SAFE) – which now follow the abrupt cancellation of Ant Group’s enormous USD 34 bn IPO – the largest IPO in history. A crackdown on Alibaba/Ant and other fintech firms was likely to happen at some point given the unbridled systemic risk they pose both on the lending and funding front which is overshadowed by technology.  

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

<a href="https://www.smartkarma.com/entities/starhub-ltd" target="_blank" data-smartkarma-citation="entities:119:1" rel="noopener">Starhub Ltd (STH SP)</a> pay-TV has been the problem child alongside the Mobile segment due to overcrowded space, led to a higher churn in the number of subscribers coupled with a lower ARPU, followed by a decline in the share price. <a href="https://www.smartkarma.com/entities/the-walt-disney-co" target="_blank" data-smartkarma-citation="entities:15439:1" rel="noopener">The Walt Disney Co (DIS US)</a> + coming to Singapore will cause a further decline in the Pay-TV ARPU. Starhub's Enterprise Business which recently has gained momentum and for the first time in almost 3 years, its revenue contribution almost equaled Mobile's. As a result, the revenue in Q3 2020 went up 2% compared to the average of 1H 2020. <div class="content-highlight">After underperforming Singtel by 20% for the past 3 years, it is now maybe the time for Starhub to play catch up with the Enterprise Business finally is taking off. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain. </div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/625/original/image_25922309421608537778217.png?1608537778" class="editor-image img-responsive" data-smartkarma-image-id="179625"></figure><div class="content-remarks">source: Capital IQ</div>

Starhub Ltd (STH SP) pay-TV has been the problem child alongside the Mobile segment due to overcrowded space, led to a higher churn in the number of subscribers coupled with a lower ARPU, followed by a decline in the share price. The Walt Disney Co (DIS US) + coming to Singapore will cause a further decline in the Pay-TV ARPU. Starhub's Enterprise Business which recently has gained momentum and for the first time in almost 3 years, its revenue contribution almost equaled Mobile's. As a result, the revenue in Q3 2020 went up 2% compared to the average of 1H 2020. After underperforming Singtel by 20% for the past 3 years, it is now maybe the time for Starhub to play catch up with the Enterprise Business finally is taking off. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain. source: Capital IQ

Starhub (STH): Disney Is Coming but Enterprise Is Gaining Momentum

United States

Meta Platforms Inc. operates as a social technology company. The Company builds applications and technologies that help people connect, find communities, and grow businesses. meta Platform is also involved in advertisements, augmented and virtual reality.

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Smartkarma North Asia Weekly: Alibaba Antitrust, OFAC Clarification, China Logistics, & Kuaishou IPO

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK...

Douglas Kim

Digital Currency: Still Remember Facebook Libra/Diem ?

The broad acceptance and launches of digital currency is the high conviction idea for 2021, such as China's Digital Currency Electronic Payment...

Roger Xie

Media Nusantara Citra (MNCN IJ) - Harnessed to Digital Growth

MNCN is rapidly transforming to a play not only on FTA TV advertising but also on growth in digital advertising through a number of different channels

Angus Mackintosh

Alibaba Group Holding – Go Limp

ALIBABA GROUP HOLDINGS: SAMR And Chinese Regulators Are Taking A Run At Alibaba/Ant Group Over Antitrust and Systemic Risk Issues.

Thomas J. Monaco

Starhub (STH): Disney Is Coming but Enterprise Is Gaining Momentum

Starhub's Enterprise Business finally is taking off, almost equal to the Mobile. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain.

Henry Soediarko

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