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

<ul>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.</li>
<li>The past week has seen Insights on <a href="https://www.smartkarma.com/entities/grab-holdings-inc" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (GRAB US)</a>, <a href="https://www.smartkarma.com/entities/sumber-alfaria-trijaya-tbk-pt" target="_blank" data-smartkarma-citation="entities:15659:1" rel="noopener">Sumber Alfaria Trijaya (AMRT IJ)</a>, <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a>, and the <a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106:1" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> deal.</li>
<li>We also explored online groceries in South-East Asia as we see increasing interest in the space plus <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> also lays out his top picks for 2022 performance.</li>
</ul>


The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week has seen Insights on Grab (GRAB US), Sumber Alfaria Trijaya (AMRT IJ), Semen Indonesia (Gresik) (SMGR IJ), and the Mapletree Commercial Trust (MCT SP) deal.
We also explored online groceries in South-East Asia as we see increasing interest in the space plus Nicolas Van Broekhoven also lays out his top picks for 2022 performance.


The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> is a "funny" stock to follow. On a full-year basis, the company has always been profitable since its IPO in 2012. Yet investors value the company as if it is perenially going out of business. The company mostly trades at a single-digit P/E and has zero sell-side coverage. Management has been mostly shareholder-friendly and paid out very regular dividends to long-term shareholders.Since our last insight in August we have received many questions from old and new investors: can this last? Surely, this must be a one-off profit for Pc Partner? Are the numbers real? How do you value this business? What is going on here? Why is it so cheap?After weeks of speaking to competitors and industry contacts in Taiwan, the US, and Singapore we are fundamentally more optimistic that this period of supernatural profits is not behind us for a while. We are making this statement knowing full-well that the industry that Pc Partner is a part of can be very fickle and the outlook can change quickly.All that being said we believe (oh oh, the most dangerous words!)this time is different. Supply-chain constraints and strong gaming demand coupled with TSMC implementing the largest price increase in a decade have meant that 3Q21 pricing has continued to increase over 1H21. We are now entering seasonally the strongest quarter with all indications that pricing will remain exceptional. Bottom line: Pc Partner has been wrongly valued by investors for too long. We are raising our forecast for FY21 profits substantially, make some FY22 scenario analysis for the bears and raise our Fair Value to 18 HKD, or 143% upside from here. *our headline is not a typo: At yesterday's close of 7.4 HKD, this stock trades at 1.2x P/E and 40% FY21 dividend yield. More details are below the fold.

PC Partner (1263 HK) is a "funny" stock to follow. On a full-year basis, the company has always been profitable since its IPO in 2012. Yet investors value the company as if it is perenially going out of business. The company mostly trades at a single-digit P/E and has zero sell-side coverage. Management has been mostly shareholder-friendly and paid out very regular dividends to long-term shareholders.Since our last insight in August we have received many questions from old and new investors: can this last? Surely, this must be a one-off profit for Pc Partner? Are the numbers real? How do you value this business? What is going on here? Why is it so cheap?After weeks of speaking to competitors and industry contacts in Taiwan, the US, and Singapore we are fundamentally more optimistic that this period of supernatural profits is not behind us for a while. We are making this statement knowing full-well that the industry that Pc Partner is a part of can be very fickle and the outlook can change quickly.All that being said we believe (oh oh, the most dangerous words!)this time is different. Supply-chain constraints and strong gaming demand coupled with TSMC implementing the largest price increase in a decade have meant that 3Q21 pricing has continued to increase over 1H21. We are now entering seasonally the strongest quarter with all indications that pricing will remain exceptional. Bottom line: Pc Partner has been wrongly valued by investors for too long. We are raising our forecast for FY21 profits substantially, make some FY22 scenario analysis for the bears and raise our Fair Value to 18 HKD, or 143% upside from here. *our headline is not a typo: At yesterday's close of 7.4 HKD, this stock trades at 1.2x P/E and 40% FY21 dividend yield. More details are below the fold. 

PC Partner: Just the Wrong Price; Raising Fair Value Est to 18 HKD; 1.2x P/E and 40% Div Yield FY21

<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> reported solid 2020 results but last week's earnings call provided a mixed outlook. On the one hand, there is great demand for GPU's and this is likely to continue into 2H21. On the other hand, the companies' two main suppliers <a href="https://www.smartkarma.com/entities/advanced-micro-devices-inc" target="_blank" data-smartkarma-citation="entities:19009:1" rel="noopener">Advanced Micro Devices (AMD US)</a> and <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA Corp (NVDA US)</a> can not deliver GPUs fast enough. On the positive side, this is leading to increased ASP (+15%) but on the negative side, volumes are dropping (-20/-30%) while costs (labor, logistics, memory) are rising.Clearly, this is an industry-wide issue and not Pc Partner specific but it does mean that 1H21 will still be stronger than 1H20 but weaker vs 2H20. Fortunately, Pc Partner remains cheap and it will pay a 0.22 HKD dividend (6.4% dividend yield) by mid-July. Investors can also look forward to an interim dividend in August. The downside in the stock is limited but the upside is capped until supply issues at Nvidia and AMD are resolved. We lower our Fair Value estimate to 4 HKD (based on 6x 0.67 HKD FY21 EPS vs 0.75 HKD prior estimate), which leaves another 17% upside. Since IPO the company has traded on a multiple of 4x (low end)-6x (high-end).

PC Partner (1263 HK) reported solid 2020 results but last week's earnings call provided a mixed outlook. On the one hand, there is great demand for GPU's and this is likely to continue into 2H21. On the other hand, the companies' two main suppliers Advanced Micro Devices (AMD US) and NVIDIA Corp (NVDA US) can not deliver GPUs fast enough. On the positive side, this is leading to increased ASP (+15%) but on the negative side, volumes are dropping (-20/-30%) while costs (labor, logistics, memory) are rising.Clearly, this is an industry-wide issue and not Pc Partner specific but it does mean that 1H21 will still be stronger than 1H20 but weaker vs 2H20. Fortunately, Pc Partner remains cheap and it will pay a 0.22 HKD dividend (6.4% dividend yield) by mid-July. Investors can also look forward to an interim dividend in August. The downside in the stock is limited but the upside is capped until supply issues at Nvidia and AMD are resolved. We lower our Fair Value estimate to 4 HKD (based on 6x 0.67 HKD FY21 EPS vs 0.75 HKD prior estimate), which leaves another 17% upside. Since IPO the company has traded on a multiple of 4x (low end)-6x (high-end). 

PC Partner: Great Demand, but Limited Supply of GPU's Created Mixed 2021 Outlook

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> is gunning for new highs if it can sustain gains above the 5.0 direction pivot barrier. Near term strength is exhausting but a pullback sets up a fresh buying opportunity to firmly clear 5.0 and challenge the high at 7.40. Long call on December 8 <a href="https://www.smartkarma.com/insights/pc-partner-macro-bullish-wedge" target="_blank" data-smartkarma-citation="insights:46126" rel="noopener">PC Partner Macro Bullish Wedge</a> has cleared some key levels and geared for further gains.8.80 is our new high projection.

PC Partner (1263 HK) is gunning for new highs if it can sustain gains above the 5.0 direction pivot barrier. Near term strength is exhausting but a pullback sets up a fresh buying opportunity to firmly clear 5.0 and challenge the high at 7.40. Long call on December 8 PC Partner Macro Bullish Wedge has cleared some key levels and geared for further gains.8.80 is our new high projection.

<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> has reached our 3 HKD Fair Value target set in September last year. When our insight <a href="https://www.smartkarma.com/insights/pc-partner-poor-man-s-play-on-nvidia-part-2-trades-at-2x-fy20-p-e-and-14-dividend-yield" target="_blank" data-smartkarma-citation="insights:43227" rel="noopener">PC Partner: Poor-Man's Play on Nvidia  (Part 2); Trades at 2x FY20 P/E and 14% Dividend Yield</a> was published shares were trading around 1.66 HKD and skepticism around the company's prospects was high.Now that 3 HKD is in reach: where to from here?A preview before PC Partner FY20 results which will be out on 26 March 2021:<ul>
<li>Positive FY20 profit alert in the coming 30 days</li>
<li>FY20 earnings and revenue to meet consensus forecasts</li>
<li>0.22 HKD dividend for FY20</li>
<li>+/-20% upside to FY21 consensus as GPU tightness results in significant margin expansion</li>
<li>Crypto miners competing with historical GPU buyers (gaming, data, etc)</li>
<li>FY21 gross margins to improve from 9% in 1H20 to 12% in 1H21</li>
<li>Shortage of Nvidia and AMD GPU to last entire 1H21 = positive for pricing power</li>
<li>Fair Value raised to 4.5 HKD (55% upside)</li>
</ul>More details below...

PC Partner (1263 HK) has reached our 3 HKD Fair Value target set in September last year. When our insight PC Partner: Poor-Man's Play on Nvidia  (Part 2); Trades at 2x FY20 P/E and 14% Dividend Yield was published shares were trading around 1.66 HKD and skepticism around the company's prospects was high.Now that 3 HKD is in reach: where to from here?A preview before PC Partner FY20 results which will be out on 26 March 2021:
Positive FY20 profit alert in the coming 30 days
FY20 earnings and revenue to meet consensus forecasts
0.22 HKD dividend for FY20
+/-20% upside to FY21 consensus as GPU tightness results in significant margin expansion
Crypto miners competing with historical GPU buyers (gaming, data, etc)
FY21 gross margins to improve from 9% in 1H20 to 12% in 1H21
Shortage of Nvidia and AMD GPU to last entire 1H21 = positive for pricing power
Fair Value raised to 4.5 HKD (55% upside)
More details below...

Preview PC Partner FY20 Earnings + Outlook: Tight GPU Margin Gives FY21 Upside Potential

Hong Kong

Goldpac Group Limited manufactures, supplies and distributes financial cards, card personalization services, on-side card insurance system solutions, magnetic strip cards and authentication smart cards. The Company offers its products and services throughout China.

China Display Optoelectronics Technology Holdings Limited provides small-to-medium-sized display modules. The Company is primarily engaged in the research and development, manufacturing, and sales and distribution of LCD modules for handheld mobile devices on an ODM basis.

China Display Optoelectronics Technology Holdings (334 HK)

China Display Optoelectronics Technology Holdings

Futong Technology Development Holdings Ltd. distributes information technology products. The Company distributes servers, system storage products, and software, and offers technical support.

Jolimark Holdings Limited, through its subsidiaries, manufactures and sells business and tax control equipment under its own brand name.  The Company also manufactures business and tax control equipment and other electronic equipment, and distributes printers manufactured by Seiko Epson Corp. in the People's Republic of China.

Karrie International Holdings Ltd, through its subsidiaries, manufactures and sells computer casings, video cassette housings and moulds, office automation products, plastic and metal parts, moulds, and provides electronic manufacturing services.

Phoenitron Holdings Ltd. manufactures and sells smart cards, plastic cards, and the customized smart card application systems.  The Company also provides hardware support.  Phoenitron Holdings also is a scrap auto importer and recycler in China.

Changhong Jiahua Holdings Limited, through its subsidiaries, trades consumer electronic products and related parts and components.  The Company also manufactures and sells the data broadcasting hardware and software and provides data broadcasting and related services.

Ju Teng International Holdings Ltd. manufactures semi-finished consumer goods. The Company produces casings for notebook computers.  Ju Teng's manufacturing includes plastic injection molding, spray painting, metal tooling and stamping, and assembly.

S.A.S. Dragon Holdings Ltd. designs, develops, sources, and provides quality assurance and logistics management services of electronic components and semiconductors products. The products are used in mobile phones, consumer electronics, computers, telecommunication and lighting products. The Company operates in China, Hong Kong, Taiwan and Korea.

China Aerospace International Holdings Limited, through its subsidiaries, manufactures plastic, liquid crystal display, audio-video, printed circuit boards, telecommunication, intelligent chargers and security system, and other products. The Company also invests in real estate properties, provides financial services, and operates trading businesses.

Avalue Technology Inc. is mainly engaged in the business of manufaturing , importing and exporting of industrial system board. The main products include System On Module (SOM), Embedded Computing, Network Computing, Network Appliance, and Applied Computing.

Sindoh Co., Ltd. manufactures office equipment such as copiers, facsimiles, printers, and copier related products.  The Company also offers financial services through its subsidiaries.

Yuan High-Tech Development Co., Ltd. manufactures and markets multimedia cards. The Company's products include graphics and encoder cards.

Unitech Computer Co., Ltd. manufactures and designs personal computers and computers peripheral equipment. The Company's products also includes the automatic data capture products such as hand held scanners, decoders, and portable data collectors.

Compucase Enterprise manufactures and markets computer cases and switching power supplies.  In addition, the Company exports stainless steel wheel hubs to the United States.

Routon Electronic Co., Ltd. manufactures and markets telecommunication electronic products.  The Company's products include IC card payphones, phone bill meters, automatic card vending machines, smart card payphones, and other related products.

E-Investment&Development Co., Ltd. develops and manufactures mobile modules. The Company produces slide hinge module of cellular phone and mock-up for cellular phone.

Shuttle Inc. manufactures and markets computer mainboards, interface cards, audio cards, and variable graphics adapter cards.

Infortrend Technology Inc. develops, manufactures, and markets RAID (Redundant Array of Inexpensive Disk) controllers and other related products.

Mildef Crete Inc. distributes laptop and desktop computers, and peripherals. The Company also manufactures and markets laptops for special industries, such as military, public safety, and industrial applications.

PC Partner Group Ltd. is principally engaged in the design, development and manufacture of video graphics cards. The Group manufactures various electronics components and products for customers under its electronics manufacturing services division and also manufactures other personal computers related products.

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PC Partner (1263 HK)

The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity...

Angus Mackintosh

PC Partner: Just the Wrong Price; Raising Fair Value Est to 18 HKD; 1.2x P/E and 40% Div Yield FY21

Pc Partner has been wrongly valued for too long. We significantly raise FY21 earnings, show how FY22 earnings could look like, and present a matrix...

Nicolas Van Broekhoven

PC Partner: Great Demand, but Limited Supply of GPU's Created Mixed 2021 Outlook

Pc Partner reported solid FY20 results. During last week's earnings call the company explained industry dynamics are mixed and result in us...

Nicolas Van Broekhoven

PC Partner New High Charge

PC Partner (1263 HK) is gunning for new highs if it can sustain gains above the 5.0 direction pivot barrier. Near term strength is exhausting but a...

Thomas Schroeder

Preview PC Partner FY20 Earnings + Outlook: Tight GPU Margin Gives FY21 Upside Potential

PC Partner will enjoy rising gross margins in FY21 which will benefit profits and dividends going forward. We forecast another 55% upside from...

Nicolas Van Broekhoven

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