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

Equity Bottom-Up

*Worries In Both Hong Kong and Mainland China: The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and*Poor Capital Management Becoming A Big Problem: Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling.

*Worries In Both Hong Kong and Mainland China: The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and*Poor Capital Management Becoming A Big Problem: Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling. 

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

Crowds at the workplace have started to come back, and vaccination centers are empty, both indicating that the vaccination drive has reached its peak and while outbreak cases are springing up, the Multi Ministry Task Force of the Singapore government has not issued a cautious note for a lockdown again or preference to work-from-home. 
At SGD 1.6/share, Comfortdelgro's share price is still 20% away from the lows in 2018 and 37% away from the pre-COVID-19 level. The recent earnings indicated that it has reached slightly more than 50% of the pre-COVID-19 level and with the reopening on scheduled, it is almost certain that the company's net earnings can go back to the pre-COVID-19 level. The bigger question is when- will it be another quarter or another half year?
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For the long term, bargain hunters long-term investors, and at the risk of sounding like a broken record, <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> provides the best exposure for ground transport reopening theme especially when Singapore's vaccination rate is one of the highest globally. 
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Crowds at the workplace have started to come back, and vaccination centers are empty, both indicating that the vaccination drive has reached its peak and while outbreak cases are springing up, the Multi Ministry Task Force of the Singapore government has not issued a cautious note for a lockdown again or preference to work-from-home. 
At SGD 1.6/share, Comfortdelgro's share price is still 20% away from the lows in 2018 and 37% away from the pre-COVID-19 level. The recent earnings indicated that it has reached slightly more than 50% of the pre-COVID-19 level and with the reopening on scheduled, it is almost certain that the company's net earnings can go back to the pre-COVID-19 level. The bigger question is when- will it be another quarter or another half year?

For the long term, bargain hunters long-term investors, and at the risk of sounding like a broken record, Comfortdelgro Corp (CD SP) provides the best exposure for ground transport reopening theme especially when Singapore's vaccination rate is one of the highest globally. 


<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>is back to profit after a gruelling 1 year navigating around the COVID-19 situation in Singapore and their other geographical presence around the world. As Singapore hit a high vaccination rate, there is a lot of potential for further restrictions relaxation that will increase mobility in the country, which will increase ridership in Singapore. 
The Australian's business IPO could unlock the value for ComfortDelgro to double from the current market capitalization that makes it even sweeter to own Comfortdelgro.

Comfortdelgro Corp (CD SP)is back to profit after a gruelling 1 year navigating around the COVID-19 situation in Singapore and their other geographical presence around the world. As Singapore hit a high vaccination rate, there is a lot of potential for further restrictions relaxation that will increase mobility in the country, which will increase ridership in Singapore. 
The Australian's business IPO could unlock the value for ComfortDelgro to double from the current market capitalization that makes it even sweeter to own Comfortdelgro. 

Comfortdelgro (CD): Reopening and Australia IPO

Thematic (Sector/Industry)

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 
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This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 
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In this report, we identify that <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> , <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and <a href="https://www.smartkarma.com/entities/singapore-post-ltd" target="_blank" data-smartkarma-citation="entities:150:1" rel="noopener">Singapore Post (SPOST SP)</a>as winners while <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> and <a href="https://www.smartkarma.com/entities/genting-singapore-ltd" target="_blank" data-smartkarma-citation="entities:439:1" rel="noopener">Genting Singapore (GENS SP)</a>as losers.

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 

This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP) and Genting Singapore (GENS SP)as losers. 

Singapore Mini Lockdown: Winners and Losers

*No Results Surprise Post-Profit Warning: In January 2021, MTR Corp (66.HK) [MTR] issued a profit warning for FY 2020, suggesting that the company faced significant operational and valuation challenges, which led to its first loss since listing two decades ago. As warned, MTR announced losses of HKD 4.8 bn both related to the impact of the COVID-19 pandemic and a troubled mega project;*2021 Not Looking Much Better: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain through most of 2021 as business conditions continue to worsen; and* New Projects Remain In Progress: The construction of Shatin-Central Link is in progress, Tuen Ma Line Phase 1 (Tai Wai to Kai Tak) has already opened, and the full Tuen Ma Line is scheduled to be completed in 3Q21. The 1Q22 opening of the Hung Hom to Admiralty section is likely to be delayed.

*No Results Surprise Post-Profit Warning: In January 2021, MTR Corp (66.HK) [MTR] issued a profit warning for FY 2020, suggesting that the company faced significant operational and valuation challenges, which led to its first loss since listing two decades ago. As warned, MTR announced losses of HKD 4.8 bn both related to the impact of the COVID-19 pandemic and a troubled mega project;*2021 Not Looking Much Better: The decision by the Hong Kong government to close all but three border checkpoints since the beginning of 2020 is likely to remain through most of 2021 as business conditions continue to worsen; and* New Projects Remain In Progress: The construction of Shatin-Central Link is in progress, Tuen Ma Line Phase 1 (Tai Wai to Kai Tak) has already opened, and the full Tuen Ma Line is scheduled to be completed in 3Q21. The 1Q22 opening of the Hung Hom to Admiralty section is likely to be delayed.  

Hong Kong

MTR Corporation Limited provides public transport services in Hong Kong.  The Company owns and operates the Mass Transit Railway.  The Company also develops, sells, and manages residential and commercial properties.  In addition, MTR leases commercial facilities and provides services along the Railway, such as advertising, telecommunication facilities, and provides consultancy services.

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MTR Corp (66 HK)

Link REIT – Looking For Handouts

LINK REIT: The Hong Kong's rental reversion rate remained challenged in FY 1H22 at positive single digits. Mainland expansion likely will be...

Thomas J. Monaco

Comfortdelgro (CD): On-The-Ground Survey

it is almost certain that the company's net earnings can go back to pre-COVID-19 level; the question is when? Will it take another quarter or...

Henry Soediarko

Comfortdelgro (CD): Reopening and Australia IPO

The Australian's business IPO could unlock the value for ComfortDelgro to double from the current market that makes it even sweeter to own...

Henry Soediarko

Singapore Mini Lockdown: Winners and Losers

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP)...

Henry Soediarko

MTR Corp – Struggles Set To Continue

MTR CORP: As warned, MTR announced losses of HKD 4.8 bn both due to the impact of COVID-19 and a troubled mega project. With border closures to...

Thomas J. Monaco

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