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

<p><a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a> share price astronomic rise has benefited from the COVID-19 panic reaction and its position of being the government distributor for surgical masks throughout the country. Investors were expecting that the surgical masks to be sold at a premium price but the reality is the government instructed the company to sell at Rp 100,000 per box, instead of the overhyped price at Rp 500,000 to 850,000 previously. </p>
<p>Since its lows (Rp 600) on the 19th of March 2020, the share price has increased by 458% when it reached its high of Rp 3,350. After a couple of days of profit-taking, investors who bought at Rp 600 still made <strong>3x</strong> at today's close price. </p>
<p>At the beginning of the pandemic, people made their own masks from cloth. As surgical masks' availability has improved, some people still like cloth-based masks although clearly, this is not as effective as surgical masks. <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a> launched non-surgical but anti-microbial and water-resistant masks based on their own technology with a history of manufacturing army uniform with the same functionalities that I discussed in <a href="https://www.smartkarma.com/insights/sritex-sril-undervalued-with-more-products-and-b2c" target="_blank" data-smartkarma-citation="insights:43490" rel="noopener">Sritex (SRIL): Undervalued with More Products and B2C</a> .</p>
<p>The most expensive stock in LQ45, <a href="https://www.smartkarma.com/entities/perusahaan-gas-negara-perser" target="_blank" data-smartkarma-citation="entities:1584:1" rel="noopener">Perusahaan Gas Negara Perser (PGAS IJ)</a> , is trading at 81x PER so Kimia Farma is really expensive at 190x PER on the back of the surgical mask distributors across Indonesia although the margin is very questionable given the market price for surgical masks have plummeted. </p>
<p><strong>For existing shareholder</strong> - it is really time to get out before the stock price plummets</p>
<p><strong>For long-short investors</strong> - the stock is worth shorting for short term gains if there is borrow. Given the small market capitalization, borrow may be tough but the liquidity has improved (USD 5 million ADTV) thus there is a chance for borrow availability. </p>

Kimia Farma Persero (KAEF IJ) share price astronomic rise has benefited from the COVID-19 panic reaction and its position of being the government distributor for surgical masks throughout the country. Investors were expecting that the surgical masks to be sold at a premium price but the reality is the government instructed the company to sell at Rp 100,000 per box, instead of the overhyped price at Rp 500,000 to 850,000 previously. 
Since its lows (Rp 600) on the 19th of March 2020, the share price has increased by 458% when it reached its high of Rp 3,350. After a couple of days of profit-taking, investors who bought at Rp 600 still made 3x at today's close price. 
At the beginning of the pandemic, people made their own masks from cloth. As surgical masks' availability has improved, some people still like cloth-based masks although clearly, this is not as effective as surgical masks. Sri Rejeki Isman (SRIL IJ) launched non-surgical but anti-microbial and water-resistant masks based on their own technology with a history of manufacturing army uniform with the same functionalities that I discussed in Sritex (SRIL): Undervalued with More Products and B2C .
The most expensive stock in LQ45, Perusahaan Gas Negara Perser (PGAS IJ) , is trading at 81x PER so Kimia Farma is really expensive at 190x PER on the back of the surgical mask distributors across Indonesia although the margin is very questionable given the market price for surgical masks have plummeted. 
For existing shareholder - it is really time to get out before the stock price plummets
For long-short investors - the stock is worth shorting for short term gains if there is borrow. Given the small market capitalization, borrow may be tough but the liquidity has improved (USD 5 million ADTV) thus there is a chance for borrow availability. 

Kimia Farma (KAEF): National Service Is Charity

<p><strong>Expand when your peers retreat</strong>. That is what <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a> management has done in this COVID-19 period. It has launched more products from daily wear to COVID-19 related products such as non-medical masks (B2C) and PPE (B2B). It has won a mandate to become a PPE supplier to chain hospitals such as <a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> and <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> .</p>
<p>Among LQ45 constituents, Sritex has the lowest PER while other COVID-19 related stocks such as <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> and <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> trade at 27x and 50x PER respectively. Compared to other PPE and gloves manufacturers in Malaysia such as <a href="https://www.smartkarma.com/entities/top-glove-corp-bhd" target="_blank" data-smartkarma-citation="entities:20759:1" rel="noopener">Top Glove Corp (TOPG MK)</a> and <a href="https://www.smartkarma.com/entities/hartalega-holdings-bhd" target="_blank" data-smartkarma-citation="entities:10230:1" rel="noopener">Hartalega Holdings (HART MK)</a> , Sritex is trading at a deep discount. </p>

Expand when your peers retreat. That is what Sri Rejeki Isman (SRIL IJ) management has done in this COVID-19 period. It has launched more products from daily wear to COVID-19 related products such as non-medical masks (B2C) and PPE (B2B). It has won a mandate to become a PPE supplier to chain hospitals such as Siloam International Hospital (SILO IJ) and Mitra Keluarga Karyasehat Tbk (MIKA IJ) .
Among LQ45 constituents, Sritex has the lowest PER while other COVID-19 related stocks such as Kalbe Farma (KLBF IJ) and Mitra Keluarga Karyasehat Tbk (MIKA IJ) trade at 27x and 50x PER respectively. Compared to other PPE and gloves manufacturers in Malaysia such as Top Glove Corp (TOPG MK) and Hartalega Holdings (HART MK) , Sritex is trading at a deep discount. 

Sritex (SRIL): Undervalued with More Products and B2C

Mitra Keluarga Karyasehat Tbk / Equity Bottom-Up

<p>The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. </p>
<p>Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.</p>

The finding of the COVID-19 vaccine is not a risk to the company's expanding EBITDA margin (from 35% to between 45-50%) as the demand for COVID-19 specific testing and medical service will continue for a few years longer. The Ministry of Health capped the price but it is still at a premium compared to the non-COVID-19 service rate. 
Trading at a 15% PER premium to the domestic peers, the company is valued at a 39% EV/EBITDA discount to the regional peers (thus it is still favorable to ASEAN investors) despite being the most profitable and pristine balance sheet. BUY.

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

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

Hygeia Healthcare Group / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia will commence trading on Monday, 29 June. Hygeia priced its IPO at HK$18.50, at the top-end of the indicative price range of HK$17.00-18.50 per share. Hygeia raised net proceeds of HK$2,072 million ($267 million).</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hygeia-healthcare-ipo-initiation-on-call" target="_blank" rel="noopener">our initiation note</a>, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. In light of Hygeia's attractive fundamentals (solid organic growth, margin progression and cash generation), we think that the IPO price still offers some upside potential. </p></div></div></div>

Hygeia Healthcare Group (6078 HK) is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia will commence trading on Monday, 29 June. Hygeia priced its IPO at HK$18.50, at the top-end of the indicative price range of HK$17.00-18.50 per share. Hygeia raised net proceeds of HK$2,072 million ($267 million).In our initiation note, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. In light of Hygeia's attractive fundamentals (solid organic growth, margin progression and cash generation), we think that the IPO price still offers some upside potential. 

<div><p><a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (1702613D CH)</a> is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia has launched a Hong Kong IPO to raise net proceeds of $245-267 million.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/hygeia-healthcare-ipo-initiation-on-call" target="_blank" rel="noopener">our initiation note</a>, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. Overall, we think that a reasonable valuation and strong cornerstone support makes Hygeia tempting at the proposed pricing range. </p></div></div></div>

Hygeia Healthcare Group (1702613D CH) is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related services in 2019, according to Frost &amp; Sullivan. Hygeia has launched a Hong Kong IPO to raise net proceeds of $245-267 million.In our initiation note, we stated that Hygeia is a play on China’s oncology healthcare service market which is influenced by structural trends such as increasing market share of radiotherapy, the rise of private hospitals and the growing popularity of multi-discipline treatments. Overall, we think that a reasonable valuation and strong cornerstone support makes Hygeia tempting at the proposed pricing range. 

Hygeia Healthcare IPO: Valuation Insights

Indonesia

Mitra Keluarga Karyasehat Tbk PT engages in hospital management and business services. The Company operates hospitals located in the Greater Jakarta Area, Surabaya and Tegal.

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Mitra Keluarga Karyasehat Tbk (MIKA IJ)

Kimia Farma (KAEF): National Service Is Charity

•Get a mandate to distribute mask throughout Indonesia - Estimated revenues and margin, How much compared to the last year’s earnings •Share Price...

Henry Soediarko

Sritex (SRIL): Undervalued with More Products and B2C

Expand when your peers retreat. That is what Sri Rejeki Isman (SRIL IJ)

Henry Soediarko

Mitra Keluarga (MIKA): Margin Expansion from COVID-19

The finding of the COVID

Henry Soediarko

Hygeia Healthcare IPO: Trading Debut

Hygeia Healthcare Group (6078 HK) is the largest oncology healthcare group in China as measured by the revenue generated from radiotherapy-related...

Arun George

Hygeia Healthcare IPO: Valuation Insights

Hygeia Healthcare Group (1702613D CH) is the largest oncology healthcare group in China as measured by the revenue generated from...

Arun George

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