Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

<p>One good news since we last wrote about Parkway Pantai ( <a href="https://www.smartkarma.com/entities/parkway-pantai-ltd" target="_blank" data-smartkarma-citation="entities:29218:1" rel="noopener">Parkway Pantai Ltd (0794727D SP)</a>) this July ( <a href="https://www.smartkarma.com/insights/parkway-pantai-good-brand-with-limited-upside" target="_blank" data-smartkarma-citation="insights:41759" rel="noopener">Parkway Pantai: Good Brand with Limited Upside</a> ) is that the first COVID19 vaccine by <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a>  has been rolled out at the time of this writing and several potential candidates in the final phases of testing are also waiting to be approved for mass production. Although we have seen spikes of new mutated COVID19 cases in the UK and South Africa, Pfizer  believes the efficacy of its vaccine should still be more than 90% effective against the more contagious variation. The company’s claim that it could come up with a new effective vaccine for this variation in 6 weeks lends comfort to investors that there is light at the end of the tunnel.</p>
<p>Parkway Pantai’s hospital operations have in fact been less affected than what we had originally expected. Its key Singapore and Malaysian markets have seen occupancy rebounding to above 50% in 3Q20. However, Indonesia, its biggest market for its Singapore operation, is still closed due to COVID19 as the country is still struggling to control the outbreak there. Malaysia has also seen a resurgent of COVID19 cases after 3Q but management is confident that the impact will not be as bad as in 2Q.</p>
<p>PARKPT 4.25% 7/22c traded at an attractive YTM of 5.58% at the time of writing compared to other local Healthcare bonds. We believe the perpetual will likely be called on 27 July 2022 as global interest rates will stay low at least in the short and medium tenor, in our opinion, as mass vaccination to countries worldwide is a “Herculean” task that requires massive logistical co-ordination for the worldwide vaccine distribution and production. Normalcy may not return to the world till the end of 2022, in our view, when everyone gets vaccinated. As for Parkway Pantai, based on its clientele profile which is mainly the higher income group, getting themselves first to be vaccinated should not be a problem as long as they are willing to pay, in our opinion.</p>
<p>As a “BB” credit, in our view, PARKPT 4.25% Perp (7/22c)’s fair YTC should be c.4.0% versus its current YTC of 5.58%, showing a near-term upside of 158bp, at time of writing. With vaccination on the horizon, we see normalcy returning towards the end of 2021 and see asymmetric upside for the bonds on improving operational performance and value proposition versus peers. As such, we revise our recommendation on the bonds from NEUTRAL to OVERWEIGHT.</p>

One good news since we last wrote about Parkway Pantai ( Parkway Pantai Ltd (0794727D SP)) this July ( Parkway Pantai: Good Brand with Limited Upside ) is that the first COVID19 vaccine by Pfizer Inc (PFE US)  has been rolled out at the time of this writing and several potential candidates in the final phases of testing are also waiting to be approved for mass production. Although we have seen spikes of new mutated COVID19 cases in the UK and South Africa, Pfizer  believes the efficacy of its vaccine should still be more than 90% effective against the more contagious variation. The company’s claim that it could come up with a new effective vaccine for this variation in 6 weeks lends comfort to investors that there is light at the end of the tunnel.
Parkway Pantai’s hospital operations have in fact been less affected than what we had originally expected. Its key Singapore and Malaysian markets have seen occupancy rebounding to above 50% in 3Q20. However, Indonesia, its biggest market for its Singapore operation, is still closed due to COVID19 as the country is still struggling to control the outbreak there. Malaysia has also seen a resurgent of COVID19 cases after 3Q but management is confident that the impact will not be as bad as in 2Q.
PARKPT 4.25% 7/22c traded at an attractive YTM of 5.58% at the time of writing compared to other local Healthcare bonds. We believe the perpetual will likely be called on 27 July 2022 as global interest rates will stay low at least in the short and medium tenor, in our opinion, as mass vaccination to countries worldwide is a “Herculean” task that requires massive logistical co-ordination for the worldwide vaccine distribution and production. Normalcy may not return to the world till the end of 2022, in our view, when everyone gets vaccinated. As for Parkway Pantai, based on its clientele profile which is mainly the higher income group, getting themselves first to be vaccinated should not be a problem as long as they are willing to pay, in our opinion.
As a “BB” credit, in our view, PARKPT 4.25% Perp (7/22c)’s fair YTC should be c.4.0% versus its current YTC of 5.58%, showing a near-term upside of 158bp, at time of writing. With vaccination on the horizon, we see normalcy returning towards the end of 2021 and see asymmetric upside for the bonds on improving operational performance and value proposition versus peers. As such, we revise our recommendation on the bonds from NEUTRAL to OVERWEIGHT.

Parkway Pantai: Attraction from Vaccination

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Capital Markets

Jacobio Pharmaceuticals / Equity Capital Markets

<p>The terms of Jacobio's listing have been announced: a price range of HKD12-14, resulting in a pre-money valuation of US$1.1-1.3 billion and proceeds of US$140-160MM. The relatively small raise and limited uptake from Cornerstone investors indicate that the company is placing more emphasis on valuation over the amount raised. </p>
<p>The company has cutting-edge technology; a credible partner in <a href="https://www.smartkarma.com/entities/abbvie-inc" target="_blank" data-smartkarma-citation="entities:1135:1" rel="noopener">Abbvie Inc (ABBV US);</a> and extensive trial readouts in 2021. We like the deal in the lower half of the range, but caution that buyers need a long-term view given the long road to NDA filings and likely limited trading volume post-deal. </p>

The terms of Jacobio's listing have been announced: a price range of HKD12-14, resulting in a pre-money valuation of US$1.1-1.3 billion and proceeds of US$140-160MM. The relatively small raise and limited uptake from Cornerstone investors indicate that the company is placing more emphasis on valuation over the amount raised. 
The company has cutting-edge technology; a credible partner in Abbvie Inc (ABBV US); and extensive trial readouts in 2021. We like the deal in the lower half of the range, but caution that buyers need a long-term view given the long road to NDA filings and likely limited trading volume post-deal. 

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

Thematic (Sector/Industry)

<div>The vaccine announcement by <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> and <a href="https://www.smartkarma.com/entities/moderna-inc" target="_blank" data-smartkarma-citation="entities:28744:1" rel="noopener">Moderna Inc (MRNA US), </a>
</div>
<div>the laggard Singapore equities market all of a sudden leaped to joy and pushed travel-related names up, playing catch up with the rest of the world.</div>
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<a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">Singapore Airlines (SIA SP)</a> and <a href="https://www.smartkarma.com/entities/sats-ltd" target="_blank" data-smartkarma-citation="entities:19962:1" rel="noopener">SATS Ltd (SATS SP)</a> are the go-to stock for Singapore’s reopening air travel that started with the travel bubble with Hong Kong and other low-risk countries to follow. <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 the key beneficiary to the reopening of the Singapore economy, through the switching of work-from-home to work-in-office (higher ridership in the MRTs and buses that contributes to 60% of the company’s revenues), and also from the reopening of the restaurants and malls that increases mobility in the country. The low or non-existent community COVID-19 cases also help to boost the confidence in Comfort Delgro.</div>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/615/original/image_5285658631606463283499.png?1606463282" class="editor-image img-responsive" data-smartkarma-image-id="174615"></figure>
<div class="content-remarks">
<p>source: Capital IQ</p>
</div>
<p>The trade is to buy ComfortDelgro as it has less risk to the increase in pandemic and less exposure to the cross border travel unlike Singapore Airlines and SATS (whose valuations have run ahead despite the ongoing concern of the industry) that has most of their revenues exposed to the risk of the cross border travel.</p>
</div>

The vaccine announcement by Pfizer Inc (PFE US) and Moderna Inc (MRNA US), 

the laggard Singapore equities market all of a sudden leaped to joy and pushed travel-related names up, playing catch up with the rest of the world.


Singapore Airlines (SIA SP) and SATS Ltd (SATS SP) are the go-to stock for Singapore’s reopening air travel that started with the travel bubble with Hong Kong and other low-risk countries to follow. Comfortdelgro Corp (CD SP)  is the key beneficiary to the reopening of the Singapore economy, through the switching of work-from-home to work-in-office (higher ridership in the MRTs and buses that contributes to 60% of the company’s revenues), and also from the reopening of the restaurants and malls that increases mobility in the country. The low or non-existent community COVID-19 cases also help to boost the confidence in Comfort Delgro.




source: Capital IQ

The trade is to buy ComfortDelgro as it has less risk to the increase in pandemic and less exposure to the cross border travel unlike Singapore Airlines and SATS (whose valuations have run ahead despite the ongoing concern of the industry) that has most of their revenues exposed to the risk of the cross border travel.


2021 High Conviction: Singapore Travel Names in Bumpy Recovery

JD Health International  / Equity Capital Markets

<p>Healthcare’s presence in Asian capital markets has increased substantially over the last four years on the heels of substantial investments in private markets (VC/PE). Policy reforms and changes in listing rules, most notably in China, have led to an explosion of market cap creation for the sector as the universe of companies has expanded to include innovative companies, most notably pre-revenue biopharmaceutical companies. At the same time, substantial investments in digital healthcare, fueled by the COVID-19 pandemic, adds a new source of listed companies. This Insight focuses on leading unlisted healthcare companies in China, India, and ASEAN that have raised substantial amounts of capital and appear to be candidates for listing.   </p>

Healthcare’s presence in Asian capital markets has increased substantially over the last four years on the heels of substantial investments in private markets (VC/PE). Policy reforms and changes in listing rules, most notably in China, have led to an explosion of market cap creation for the sector as the universe of companies has expanded to include innovative companies, most notably pre-revenue biopharmaceutical companies. At the same time, substantial investments in digital healthcare, fueled by the COVID-19 pandemic, adds a new source of listed companies. This Insight focuses on leading unlisted healthcare companies in China, India, and ASEAN that have raised substantial amounts of capital and appear to be candidates for listing.   

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

<p style="text-align: justify;">Previous week EU finally approved new contract with the German biotech company CureVac to purchase 225 million doses of COVID-19 vaccine and option to buy additional 180 million doses next year. CureVac plans to initiate global Phase 2b/3 clinical trials as soon as possible and is going to expand its manufacturing capacities to 300 million doses in 2021 and 600 million doses in 2022. New integrated European vaccine manufacturing network will be built in collaboration with several partners. We believe, that one of them is American EV and clean energy company Tesla, working with CureVac on vaccine RNA printer (version 3 is under development). We see further upside for CureVac shares and expect positive Phase 2a and Phase 2b/3 data of its vaccine candidate CVnCoV together with 90%+ efficacy and opportunity to sell ~100 million doses of COVID-19 vaccine for emergency use in the European Union this year.  </p>

Previous week EU finally approved new contract with the German biotech company CureVac to purchase 225 million doses of COVID-19 vaccine and option to buy additional 180 million doses next year. CureVac plans to initiate global Phase 2b/3 clinical trials as soon as possible and is going to expand its manufacturing capacities to 300 million doses in 2021 and 600 million doses in 2022. New integrated European vaccine manufacturing network will be built in collaboration with several partners. We believe, that one of them is American EV and clean energy company Tesla, working with CureVac on vaccine RNA printer (version 3 is under development). We see further upside for CureVac shares and expect positive Phase 2a and Phase 2b/3 data of its vaccine candidate CVnCoV together with 90%+ efficacy and opportunity to sell ~100 million doses of COVID-19 vaccine for emergency use in the European Union this year.  

CureVac Stock May Surge Another 20-30% Under New Bull-Case Scenario

United States

Pfizer Inc. operates as a pharmaceutical company. The Company offers medicines, vaccines, medical devices, and consumer healthcare products for oncology, inflammation, cardiovascular, and other therapeutic areas. Pfizer serves customers worldwide.

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Pfizer (PFE UN)

Parkway Pantai: Attraction from Vaccination

Attractive valuation in expectation of a call in July 2022 and vaccination effects on the hospital visits across the border from Indonesia

Bondcritic

Jacobio: Management Solves for Valuation

We think that the offer terms for Jacobio's IPO are fair, but buyers need to take a long view given the small deal size and shares' limited liquidity.

Kemp Dolliver, CFA

2021 High Conviction: Singapore Travel Names in Bumpy Recovery

Long ComfortDelgro as it has less risk to the increase in pandemic unlike Singapore Airlines and SATS (whose valuations have run ahead despite the...

Henry Soediarko

Asian Healthcare - Coming of Age

This Smartkarma Originals Insight highlights 20 leading unlisted healthcare companies in Asia, mainly in digital healthcare and biopharma, that are...

Kemp Dolliver, CFA

CureVac Stock May Surge Another 20-30% Under New Bull-Case Scenario

We see further upside potential for CureVac shares as the probability of success is increasing for its vaccine candidate CVnCoV and key mRNA-based...

Andrei Zakharov

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