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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a>  is an HK and China play on the instant noodle that is a highly preferred necessity during the lockdown.</li>
<li>Wheat is a major raw material for noodles and the Russian invasion of Ukraine has driven the wheat price higher. </li>
<li>So far, Nissin Food Co's share price has held up and outperformed Hang Seng but <a href="https://www.smartkarma.com/entities/indofood-cbp-sukses-makmur-tbk" target="_blank" data-smartkarma-citation="entities:17651:1" rel="noopener">Indofood CBP Sukses (ICBP IJ)</a> could provide a reference. <strong>Short</strong>.</li>
</ul>



Nissin Foods (1475 HK)  is an HK and China play on the instant noodle that is a highly preferred necessity during the lockdown.
Wheat is a major raw material for noodles and the Russian invasion of Ukraine has driven the wheat price higher. 
So far, Nissin Food Co's share price has held up and outperformed Hang Seng but Indofood CBP Sukses (ICBP IJ) could provide a reference. Short.


Nissin Food Co (1475): Wheat Price Increase Erodes Margin

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 19 based on HKEx daily reports.</li>
<li>In the past 7 days, top 3 companies that repurchased the most shares from the market were China Medical System (867.HK), Kangji Medical (9997.HK), Nissin Foods (1475.HK).</li>
<li>In the past 30 days, top 3 companies that repurchased the most shares from the market were China Gas (384.HK), Sihuan Pharmaceutical (460.HK), Fosun International (656.HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 19 based on HKEx daily reports.
In the past 7 days, top 3 companies that repurchased the most shares from the market were China Medical System (867.HK), Kangji Medical (9997.HK), Nissin Foods (1475.HK).
In the past 30 days, top 3 companies that repurchased the most shares from the market were China Gas (384.HK), Sihuan Pharmaceutical (460.HK), Fosun International (656.HK).


Hong Kong Buybacks: China Medical System, Kangji, Nissin Foods

<p><a href="https://www.smartkarma.com/entities/yihai-int-l-holding-ltd" target="_blank" data-smartkarma-citation="entities:22803:1" rel="noopener">Yihai Int’L Holding (1579 HK)</a> was trading at par with <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).</p>
<p>On a YTD basis, however, both share prices have been heavily correlated although 1<strong>) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed.</strong> This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?</p>
<p>Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> although Yihai's share price is still massively underperforming Nissin Food Holdings'.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/131/original/image_48603681281635075064982.png?1635075064" class="editor-image img-responsive" data-smartkarma-image-id="237131"></figure>
<div class="content-remarks">
<p>source: Reuters</p>
</div>

Yihai Int’L Holding (1579 HK) was trading at par with Haidilao (6862 HK) although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to Nissin Foods (1475 HK) although Yihai's share price is still massively underperforming Nissin Food Holdings'.


source: Reuters


Yihai International (1579): Diversified Away from Haidilao

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

Del Monte Philippines / Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/del-monte-philippines-inc" target="_blank" data-smartkarma-citation="entities:26988:1" rel="noopener">Del Monte Philippines (1575316D PM)</a>/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the <em>Del Monte</em> trademark for the Philippines for processed products and also sells products under the brands of <em>S&amp;W, Contadina</em> and <em>Today’s</em>.</p>
<p>The parent company is <a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd-5951cd46-129c-41bb-8eb2-58654da08425" target="_blank" data-smartkarma-citation="entities:22651:1" rel="noopener">Del Monte Pacific (DELM PM)</a> which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.</p>
</div><div><p>Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/del-monte-philippines-ipo-initiation-tempting-fruit" target="_blank" data-smartkarma-citation="insights:54769" rel="noopener">Del Monte Philippines IPO Initiation: Tempting Fruit</a>, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. </p></div></div></div>


Del Monte Philippines (1575316D PM)/DMPI is a leading producer, distributor and marketer of premium quality, healthy food and beverage products. It is a market leader in the packaged pineapple and mixed fruit, ready-to-drink juices (excluding stand-up-pouches), tomato sauce and spaghetti sauce categories in the Philippines. DMPI has the rights to the Del Monte trademark for the Philippines for processed products and also sells products under the brands of S&amp;W, Contadina and Today’s.
The parent company is Del Monte Pacific (DELM PM) which holds 87.0% of outstanding shares. Del Monte Pacific had previously tried to list DMPI on the PSE in 2018 by selling a 20% stake to raise up to $324 million at the maximum offer price of PHP29.88 per share but deferred the IPO due to market volatility.
Currently, DMPI is pre-marketing for an IPO to raise up to PHP44 billion ($0.9 billion) at the maximum offer price of PHP54.80. The IPO price range, which is generally lower than the maximum IPO price, will be set during the book building process. The pricing date is 12 August and the offer period runs from 16 to 20 August. In Del Monte Philippines IPO Initiation: Tempting Fruit, we opined that DMPI is a play on the healthy packaged and convenient packaged food and beverage categories that benefit from long-term secular tailwinds in the Philippines. DMPI’s financial track record shows it has been able to leverage its market-leading position to combine solid top-line growth with improving margins and cash generation. We concluded that DMPI’s fundamentals are attractive. In this note, we present our forecasts and take the first look at DMPI's potential valuation. 

Del Monte Philippines IPO: Valuation First-Look

<div>
<p><a href="https://www.smartkarma.com/entities/monde-nissin-corp" target="_blank" data-smartkarma-citation="entities:32188:1" rel="noopener">Monde Nissin Corp (0191881D PM)</a> is a leading food manufacturer in the Philippines with flagship brands such as <em>Lucky Me!</em> for instant noodles and <em>Quorn</em> for meat alternative products. Monde Nissin ranked first in retail sales value in the Philippines with its instant noodles, biscuits, oyster sauce and yoghurt drinks in 2020, according to Nielsen.</p>
<p>Monde Nissin shares will begin trading on the PSE on 1 June and will be the largest listing on the PSE. The IPO received strong investor demand which included a high profile line-up of cornerstone investors. The cornerstone shares represent 67.1% of the offer shares. The eleven cornerstone investors are <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, Stichting Depositary APG Emerging Markets Equity Pool (Dutch pension funds), Avanda Investment Management, Capital Group, Eastspring Investments, FIL Investment, GIC, <a href="https://www.smartkarma.com/entities/goldman-sachs-group-inc" target="_blank" data-smartkarma-citation="entities:785:1" rel="noopener">Goldman Sachs Group (GS US)</a>, M&amp;G Investment Management, NS Partners and RWC Asset Management.</p>
</div><div><p>In <a href="https://www.smartkarma.com/insights/monde-nissin-ipo-initiation-instant-karma" target="_blank" data-smartkarma-citation="insights:49745" rel="noopener">Monde Nissin IPO Initiation: Instant Karma</a>, we opined that Monde Nissin’s financial track record shows it has been able to combine modest top-line growth with improving margins and cash generation. We concluded that Monde Nissin’s fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/monde-nissin-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:51224" rel="noopener">Monde Nissin IPO: Valuation Insights</a>, we noted that the IPO price range is fair.</p></div><div>
<div class="content-highlight"><p>Our base-case DCF derived price target is PHP13.72 per share and our DCF sensitivity shows potential upside to the IPO price. Notably, our SoTP valuation of PHP15.90 is 13% above our previous SoTP valuation largely due to the significant re-rating of <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a>. Since the announcement of the final IPO price on 5 May, Beyond Meat's shares have re-rated +22%.</p></div>
<p></p>
</div>


Monde Nissin Corp (0191881D PM) is a leading food manufacturer in the Philippines with flagship brands such as Lucky Me! for instant noodles and Quorn for meat alternative products. Monde Nissin ranked first in retail sales value in the Philippines with its instant noodles, biscuits, oyster sauce and yoghurt drinks in 2020, according to Nielsen.
Monde Nissin shares will begin trading on the PSE on 1 June and will be the largest listing on the PSE. The IPO received strong investor demand which included a high profile line-up of cornerstone investors. The cornerstone shares represent 67.1% of the offer shares. The eleven cornerstone investors are AIA Group Ltd (1299 HK), Stichting Depositary APG Emerging Markets Equity Pool (Dutch pension funds), Avanda Investment Management, Capital Group, Eastspring Investments, FIL Investment, GIC, Goldman Sachs Group (GS US), M&amp;G Investment Management, NS Partners and RWC Asset Management.
In Monde Nissin IPO Initiation: Instant Karma, we opined that Monde Nissin’s financial track record shows it has been able to combine modest top-line growth with improving margins and cash generation. We concluded that Monde Nissin’s fundamentals are attractive. In Monde Nissin IPO: Valuation Insights, we noted that the IPO price range is fair.
Our base-case DCF derived price target is PHP13.72 per share and our DCF sensitivity shows potential upside to the IPO price. Notably, our SoTP valuation of PHP15.90 is 13% above our previous SoTP valuation largely due to the significant re-rating of Beyond Meat (BYND US). Since the announcement of the final IPO price on 5 May, Beyond Meat's shares have re-rated +22%.



Hong Kong

Nissin Foods Company Limited ("Nissin Foods”, together with its subsidiaries, the “Group”; Stock code: 1475) is a renowned food company in Hong Kong and Mainland China, with a diversified portfolio of well-known and highly popular brands, primarily focusing on the premium instant noodle segment. The Group officially established its presence in Hong Kong in 1984 and is the largest instant noodle company in Hong Kong. The Group primarily manufactures and sells instant noodles, high-quality frozen food products, including frozen dim sum and frozen noodles, and also sells and distributes other food and beverage products, including retort pouches, snacks, mineral water, sauce and vegetable products under its two core corporate brands, namely “NISSIN (日清)” and “DOLL (公仔)” together with a diversified portfolio of iconic household premium brands. The Group’s five flagship product brands, namely “Cup Noodles (合味道)”, “Demae Iccho (出前一丁)”, “Doll Instant Noodle (公仔麵)”, “Doll Dim Sum (公仔點心)” and “Fuku (福)” are also among the most popular choices in their respective food product categories in Hong Kong. In the Mainland China market, the Group has introduced technology innovation through the “ECO Cup” concept and primarily focuses its sales efforts in first- and second-tier cities. In addition, Nissin Foods operates business in other Asian regions including Vietnam, Taiwan and Korea markets. 

Nissin Foods is currently a constituent of five Hang Seng Indexes, namely: Hang Seng Composite Index, Hang Seng Composite SmallCap Index, Hang Seng Composite Industry Index - Consumer Staples, Hang Seng SCHK Consumption Index and Hang Seng SCHK Consumer Staples Index. Nissin Foods is eligible for trading under Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect. For more information, please visit www.nissingroup.com.hk.

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Nissin Foods (1475 HK)

Nissin Food Co (1475): Wheat Price Increase Erodes Margin

The increase in the revenues may not able to cover the loss from the increase in raw material cost. ICBP share price is a tell-tale sign. Nissin...

Henry Soediarko

Hong Kong Buybacks: China Medical System, Kangji, Nissin Foods

We highlight the top 3 companies that repurchased the most shares in HK were China Medical System Holdings Limited (867 HK), Kangji Medical (9997...

Ke Yan, CFA, FRM

Yihai International (1579): Diversified Away from Haidilao

Mispriced Yihai Intl - share price highly correlated with Haidilao although it has diversified away by growing its ready-to-eat food business that...

Henry Soediarko

Del Monte Philippines IPO: Valuation First-Look

DMPI is pre-marketing for an IPO to raise up to $0.9 billion at the maximum offer price of PHP54.80. In this note, we present our forecasts and...

Arun George

Monde Nissin IPO: Trading Debut

Monde Nissin shares will begin trading on the PSE on 1 June. Our SoTP valuation of PHP15.90 is 13% higher than our previous valuation due to Beyond...

Arun George

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