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)

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<div>During COVID-19, tech stocks have led the markets supported by demand expansion, strong balance sheets filled with cash, and innovative products. At the end of the cycle, there should be a rotation towards cyclical and value stocks but this time around is policy-induced recovery and during the COVID-19 crisis, tech stocks have led the recovery ahead of the cyclical. The question is whether this will carry on and large tech names to continue leading market recovery while cyclical drag their feet?</div>
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<div>The regulator in China has given dominant tech names a slap in the wrist with the anti-trust law that proposes to democratize the payment systems that will inevitably break up the monopolies and these companies will lose their customers' stickiness. </div>
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<div>In light of the <strong>antitrust</strong> law and the real economic recovery in China, investors should start to underweight technology stocks in China such as Tencent, Alibaba, Meituan, and start to overweight travel and tourism stocks such as <a href="https://www.smartkarma.com/entities/air-china-ltd-a" target="_blank" data-smartkarma-citation="entities:1080:1" rel="noopener">Air China Ltd (A) (601111 CH)</a> , <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> , <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> and also Industrials such as <a href="https://www.smartkarma.com/entities/zoomlion-heavy-industry-h" target="_blank" data-smartkarma-citation="entities:7817:1" rel="noopener">Zoomlion Heavy Industry H (1157 HK)</a> and <a href="https://www.smartkarma.com/entities/sany-heavy-equipment-intl" target="_blank" data-smartkarma-citation="entities:11104:1" rel="noopener">Sany Heavy Equipment Intl (631 HK)</a>expecting that construction works can resume at full capacity anytime soon. </div>
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<div>Globally, dominant tech stocks (FANGS) such as <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> , <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a> , <a href="https://www.smartkarma.com/entities/netflix-inc" target="_blank" data-smartkarma-citation="entities:20451:1" rel="noopener">Netflix Inc (NFLX US)</a> and <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet Inc Cl C (GOOG US)</a> should start to be underweight due to the potential punitive measures from the House if Democrats win. Investors should start to overweight industrial stocks such as <a href="https://www.smartkarma.com/entities/caterpillar-inc" target="_blank" data-smartkarma-citation="entities:697:1" rel="noopener">Caterpillar Inc (CAT US)</a> and staples such as <a href="https://www.smartkarma.com/entities/procter-gamble-co" target="_blank" data-smartkarma-citation="entities:978:1" rel="noopener">Procter &amp; Gamble Co (PG US)</a> and <a href="https://www.smartkarma.com/entities/nestle-sa-020546b9-e58a-465b-a5ac-98e84143bf4c" target="_blank" data-smartkarma-citation="entities:27908:1" rel="noopener">Nestle SA (NESN SW)</a> . </div>
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<div>Investors should also consider start building positions in blue-chip with moat names such as <a href="https://www.smartkarma.com/entities/visa-inc-class-a-shares" target="_blank" data-smartkarma-citation="entities:8707:1" rel="noopener">Visa Inc Class A Shares (V US)</a> and <a href="https://www.smartkarma.com/entities/travelers-cos-inc" target="_blank" data-smartkarma-citation="entities:10300:1" rel="noopener">Travelers Cos (TRV US)</a> as they provide stability and proxy to America's economic recovery. </div>


During COVID-19, tech stocks have led the markets supported by demand expansion, strong balance sheets filled with cash, and innovative products. At the end of the cycle, there should be a rotation towards cyclical and value stocks but this time around is policy-induced recovery and during the COVID-19 crisis, tech stocks have led the recovery ahead of the cyclical. The question is whether this will carry on and large tech names to continue leading market recovery while cyclical drag their feet?


The regulator in China has given dominant tech names a slap in the wrist with the anti-trust law that proposes to democratize the payment systems that will inevitably break up the monopolies and these companies will lose their customers' stickiness. 



In light of the antitrust law and the real economic recovery in China, investors should start to underweight technology stocks in China such as Tencent, Alibaba, Meituan, and start to overweight travel and tourism stocks such as Air China Ltd (A) (601111 CH) , Travelsky Technology Ltd H (696 HK) , Cathay Pacific Airways (293 HK) and also Industrials such as Zoomlion Heavy Industry H (1157 HK) and Sany Heavy Equipment Intl (631 HK)expecting that construction works can resume at full capacity anytime soon. 

Globally, dominant tech stocks (FANGS) such as Facebook Inc A (FB US) , Apple Inc (AAPL US) , Netflix Inc (NFLX US) and Alphabet Inc Cl C (GOOG US) should start to be underweight due to the potential punitive measures from the House if Democrats win. Investors should start to overweight industrial stocks such as Caterpillar Inc (CAT US) and staples such as Procter &amp; Gamble Co (PG US) and Nestle SA (NESN SW) . 

Investors should also consider start building positions in blue-chip with moat names such as Visa Inc Class A Shares (V US) and Travelers Cos (TRV US) as they provide stability and proxy to America's economic recovery. 

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

Equity Bottom-Up

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<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> has announced that it intends to seek approval for A stock split at its AGM on 14th December, the normal reason for which is to improve liquidity in the shares by making a company more accessible for retail investors. We see this as a potential precursor to further corporate actions along the line, involving some form of group restructuring, and this gives the company a more liquid currency to do this.</p>
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<p>This may involve some form of reorganization within the group, which holds its media assets under <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> but a number of other digital economy assets under <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" data-sk="tooltip_parent" rel="noopener">Emtek (EMTK IJ)</a> including a stake in e-commerce player Bukalapak and leading digital payments company Dana (a 50/50 JV with Ant Financial (<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>).</p>
<p><a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/microsoft-corp" data-sk="tooltip_parent" rel="noopener">Microsoft Corp (MSFT US)</a> has recently announced it will invest US$100m into Bukalapak, which is now valued at US$3bn.</p>
<p>Looking at the valuation of <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/sea-ltd" data-sk="tooltip_parent" rel="noopener">Sea Ltd (SE US),</a> which is trading on 13x EV/Sales, it is highly likely the <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" data-sk="tooltip_parent" rel="noopener">Emtek (EMTK IJ)</a> can command a higher valuation if it becomes more accessible, given there are no other ways to get listed exposure to Indonesia's booming e-commerce.</p>
<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> currently trades on 4.6x FY20E EV/Sales.  Investors are likely to pay a premium for access to a liquid <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>, with a strong mix of cash-generating media assets and high growth digital assets.  </p>
<p>We also continue to like <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ),</a> as Indonesia's top media player with an increasingly digital twist through <a href="http://vidio.com/" target="_blank" data-stringify-link="http://Vidio.com" data-sk="tooltip_parent" rel="noopener">Vidio.com</a>. Please see <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" target="_blank" data-stringify-link="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin</a> for more details.</p>


Emtek (EMTK IJ) has announced that it intends to seek approval for A stock split at its AGM on 14th December, the normal reason for which is to improve liquidity in the shares by making a company more accessible for retail investors. We see this as a potential precursor to further corporate actions along the line, involving some form of group restructuring, and this gives the company a more liquid currency to do this.

This may involve some form of reorganization within the group, which holds its media assets under PT Surya Citra Media Tbk (SCMA IJ) but a number of other digital economy assets under Emtek (EMTK IJ) including a stake in e-commerce player Bukalapak and leading digital payments company Dana (a 50/50 JV with Ant Financial (Alibaba Group (BABA US)).
Microsoft Corp (MSFT US) has recently announced it will invest US$100m into Bukalapak, which is now valued at US$3bn.
Looking at the valuation of Sea Ltd (SE US), which is trading on 13x EV/Sales, it is highly likely the Emtek (EMTK IJ) can command a higher valuation if it becomes more accessible, given there are no other ways to get listed exposure to Indonesia's booming e-commerce.
Emtek (EMTK IJ) currently trades on 4.6x FY20E EV/Sales.  Investors are likely to pay a premium for access to a liquid Emtek (EMTK IJ), with a strong mix of cash-generating media assets and high growth digital assets.  
We also continue to like PT Surya Citra Media Tbk (SCMA IJ), as Indonesia's top media player with an increasingly digital twist through Vidio.com. Please see PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin for more details.

Emtek (EMTK IJ) - Arise a New Champion of Indonesia Tech?

Cross Asset Strategy

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<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: The Insight <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation</a> was improperly attributed to Thomas Monaco. It was published by <a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a>.</strong></em></p>
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<p>The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.</p>
<p>We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  </p>
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<p><strong><a href="https://www.smartkarma.com/insights/smartkarma-corporate-webinar-indo-banks-the-worst-is-over" target="_blank" data-smartkarma-citation="insights:44882" rel="noopener">Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over</a></strong>-<strong> 10th November at 4 pm.</strong></p>
<p>For our next Corporate Webinar, we welcome <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a>'s Group Head of Investor Relations, <a href="https://www.smartkarma.com/profiles/yohan-setio" target="_blank" rel="noopener">Yohan Setio</a>, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a>.</p>
<h2>Indonesia's Recovery and the Next Digital Darling</h2>
<p>This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> as core ways to play this recovery. </p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ),</a> which is the major shareholder of <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.</p>
<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. </p>
<h3>Macro Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-2-top-10-stock-picks" target="_blank" data-smartkarma-citation="insights:40851" rel="noopener">Thai Strategy 2021 (Part 2): Top 10 Stock Picks,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> lays out his top stock picks in Thailand for next year.</p>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-3-sector-outlooks" target="_blank" data-smartkarma-citation="insights:40864" rel="noopener">Thai Strategy 2021 (Part 3): Sector Outlooks,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> provides us with his sector strategy in Thailand for the coming year. </p>
<h3>Equity Bottom Up</h3>
<p>In an Indonesian Insight,<a href="https://www.smartkarma.com/insights/astra-international-asii-ij-an-auto-recovery-story-with-a-golden-digital-twist" target="_blank" rel="noopener"> Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist</a>, CrossASEAN Insight provider<a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener"> Angus Mackintosh</a> returns to look at<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" rel="noopener"> Astra International (ASII IJ)</a> after a conversation with management. </p>
<p>In <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" target="_blank" data-smartkarma-citation="insights:44914" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits one of Indonesia's leading media companies, which has an increasingly digital twist.</p>
<p>In <a href="https://www.smartkarma.com/insights/aem-holdings-optimistic-on-fy21-fair-value-remains-at-5-sgd-41-upside" target="_blank" data-smartkarma-citation="insights:44915" rel="noopener">AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside),</a> CrossASEAN Insight Provider <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> revisits <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> after an impressive set of results and remains positive.</p>
<p>In <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> writes on this smaller Indonesian lender with a positive slant.</p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-still-not-a-great-eastern" target="_blank" data-smartkarma-citation="insights:44901" rel="noopener">Oversea Chinese Banking Corp – Still Not A Great Eastern,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> looked in detail at <a href="https://www.smartkarma.com/entities/great-eastern-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern Holdings (GE SP)</a> numbers ahead of <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">Oversea Chinese Banking Corp. (OCBC SP)</a> results. </p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-solid" target="_blank" data-smartkarma-citation="insights:45061" rel="noopener">Oversea Chinese Banking Corp. – Solid,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. </p>
<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener"></a>In<a href="https://www.smartkarma.com/insights/dbs-group-holdings-not-trending-the-right-way-yet" target="_blank" rel="noopener"> DBS Group Holdings – Not Trending The Right Way Yet</a>,<a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" rel="noopener"> Thomas J. Monaco</a> reports back<a href="https://www.smartkarma.com/entities/dbs-group-holdings-ltd" target="_blank" rel="noopener"> DBS Group Holdings (DBS SP)</a>'s post its recent 3Q2020 results with a chequered view.</p>
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<p>In this Thai Insight,<a href="https://www.smartkarma.com/insights/hmpro-expect-government-stimulus-scheme-drive-4q20-recover-qoq" target="_blank" rel="noopener"> HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> circle back to Thailand's leading home improvements player <a href="https://www.smartkarma.com/entities/home-product-center-pcl" target="_blank" data-smartkarma-citation="entities:9906:1" rel="noopener">Home Product Center (HMPRO TB)</a>. </p>
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<p>In<a href="https://www.smartkarma.com/insights/synex-solid-earnings-growth-outlook-but-largely-priced-in" target="_blank" rel="noopener"> SYNEX: Solid Earnings Growth Outlook but Largely Priced In</a>,<a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener"> Country Group</a> provides a view on<a href="https://www.smartkarma.com/entities/synnex-thailand-pcl" target="_blank" rel="noopener"> Synnex Thailand (SYNEX TB),</a> following the recent run-up in the share price. </p>
<p>In this Thai Insight, <a href="https://www.smartkarma.com/insights/scc-strong-3q20-thanks-to-petrochemical-spread" target="_blank" rel="noopener">SCC: Strong 3Q20 Thanks to Petrochemical Spread</a>, our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> return to look at<a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" rel="noopener"> Siam Cement (SCC TB)</a> post 3Q2020 results. </p>
<p>In <a href="https://www.smartkarma.com/insights/mc-prominent-denim-brand-with-new-growth-momentum" target="_blank" data-smartkarma-citation="insights:45077" rel="noopener">MC: Prominent Denim Brand with New Growth Momentum,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a>initiate on this leading Thai denim apparel player. They initiate coverage of <a href="https://www.smartkarma.com/entities/mc-group-pcl" target="_blank" data-smartkarma-citation="entities:17093:1" rel="noopener">MC Group Pcl (MC TB)</a> with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.</p>
<h3>Credit Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/lippo-karawaci-earnings-flash-q3-fy-2020-results-lucror-analytics" target="_blank" rel="noopener">Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results</a>, credit specialist<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> looks at<a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" rel="noopener"> Lippo Karawaci (LPKR IJ)'s</a> after its recent results, which continued to be robust in Q32020. </p>
<p>In <a href="https://www.smartkarma.com/insights/chandra-asri-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44814" rel="noopener">Chandra Asri - Earnings Flash - 9M FY 2020 Results</a> credit specialist <a href="https://www.smartkarma.com/profiles/leonard-law-cfa" target="_blank" data-smartkarma-citation="accounts:7106" rel="noopener">Leonard Law, CFA</a> circles back to this leading chemicals player post 3Q2020 results.</p>


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The Insight BJBR: Positive Fundamental Momentum at a Decent Valuation was improperly attributed to Thomas Monaco. It was published by Paul Hollingworth.



The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  

Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over- 10th November at 4 pm.
For our next Corporate Webinar, we welcome Bank Mandiri Persero (BMRI IJ)'s Group Head of Investor Relations, Yohan Setio, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider Angus Mackintosh.
Indonesia's Recovery and the Next Digital Darling
This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and Astra International (ASII IJ) as core ways to play this recovery. 
Sea Ltd (SE US) is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is Emtek (EMTK IJ), which is the major shareholder of PT Surya Citra Media Tbk (SCMA IJ) but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.
Emtek (EMTK IJ) has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. 
Macro Insights
In Thai Strategy 2021 (Part 2): Top 10 Stock Picks, our Thai guru Athaporn Arayasantiparb, CFA lays out his top stock picks in Thailand for next year.
In Thai Strategy 2021 (Part 3): Sector Outlooks, our Thai guru Athaporn Arayasantiparb, CFA provides us with his sector strategy in Thailand for the coming year. 
Equity Bottom Up
In an Indonesian Insight, Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist, CrossASEAN Insight provider Angus Mackintosh returns to look at Astra International (ASII IJ) after a conversation with management. 
In PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia's leading media companies, which has an increasingly digital twist.
In AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside), CrossASEAN Insight Provider Nicolas Van Broekhoven revisits AEM Holdings (AEM SP) after an impressive set of results and remains positive.
In BJBR: Positive Fundamental Momentum at a Decent Valuation,Thomas J. Monaco writes on this smaller Indonesian lender with a positive slant.
In Oversea Chinese Banking Corp – Still Not A Great Eastern,Thomas J. Monaco looked in detail at Great Eastern Holdings (GE SP) numbers ahead of Oversea Chinese Banking Corp. (OCBC SP) results. 
In Oversea Chinese Banking Corp. – Solid,Thomas J. Monaco revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. 
In DBS Group Holdings – Not Trending The Right Way Yet, Thomas J. Monaco reports back DBS Group Holdings (DBS SP)'s post its recent 3Q2020 results with a chequered view.



In this Thai Insight, HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ, our friends at Country Group circle back to Thailand's leading home improvements player Home Product Center (HMPRO TB). 



In SYNEX: Solid Earnings Growth Outlook but Largely Priced In, Country Group provides a view on Synnex Thailand (SYNEX TB), following the recent run-up in the share price. 
In this Thai Insight, SCC: Strong 3Q20 Thanks to Petrochemical Spread, our friends at Country Group return to look at Siam Cement (SCC TB) post 3Q2020 results. 
In MC: Prominent Denim Brand with New Growth Momentum, our friends at Country Groupinitiate on this leading Thai denim apparel player. They initiate coverage of MC Group Pcl (MC TB) with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.
Credit Insights
In Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results, credit specialist Trung Nguyen looks at Lippo Karawaci (LPKR IJ)'s after its recent results, which continued to be robust in Q32020. 
In Chandra Asri - Earnings Flash - 9M FY 2020 Results credit specialist Leonard Law, CFA circles back to this leading chemicals player post 3Q2020 results.

The Week that Was in ASEAN@Smartkarma - Indonesia's Recovery and the Next Digital Darling

PT Surya Citra Media Tbk / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> published a very respectable set of results this week, with positive signs of recovery on TV advertising and strong growth in its digital efforts through Vidio.com.</p>
<p>A major highlight was a marked improvement in margins, as the company saw significantly reduced programming costs over the period due to an increased reliance on re-runs. </p>
<p>FMCG customers have come back in 3Q2020 and will also underpin growth in 4Q2020 but the resumption of profitable sponsored programming, often interactive, from e-commerce players will help to further lift growth in advertising.</p>
<p>Vidio.com is firing on all cylinders, with 950,000 paying subscribers and 60m monthly active users (MAUs), with the draw of SCMA's rich content offering drawing in customers. </p>
<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> remains a high-quality way to play the recovery in the advertising market, with a significant recovery already underway. This is underpinned by both FMCG customers as well as e-commerce companies, which have big marketing budgets. Vidio.com goes from strength to strength and looks increasingly able to stand alone without bringing in a strategic investor. The company still looks attractive on an FY21E PER of 17.8x versus its 5-year average of 19.1x, especially given its increasing digital exposure through Vidio.com.</p>

PT Surya Citra Media Tbk (SCMA IJ) published a very respectable set of results this week, with positive signs of recovery on TV advertising and strong growth in its digital efforts through Vidio.com.
A major highlight was a marked improvement in margins, as the company saw significantly reduced programming costs over the period due to an increased reliance on re-runs. 
FMCG customers have come back in 3Q2020 and will also underpin growth in 4Q2020 but the resumption of profitable sponsored programming, often interactive, from e-commerce players will help to further lift growth in advertising.
Vidio.com is firing on all cylinders, with 950,000 paying subscribers and 60m monthly active users (MAUs), with the draw of SCMA's rich content offering drawing in customers. 
PT Surya Citra Media Tbk (SCMA IJ) remains a high-quality way to play the recovery in the advertising market, with a significant recovery already underway. This is underpinned by both FMCG customers as well as e-commerce companies, which have big marketing budgets. Vidio.com goes from strength to strength and looks increasingly able to stand alone without bringing in a strategic investor. The company still looks attractive on an FY21E PER of 17.8x versus its 5-year average of 19.1x, especially given its increasing digital exposure through Vidio.com.

PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin

<div class="content-highlight">
<p>The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.</p>
<p>We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  </p>
</div><h3>Macro Insights</h3><p>In <a href="https://www.smartkarma.com/insights/agong-asserts-himself-preventing-change-of-pm-but-disallowing-emergency-rule" target="_blank" data-smartkarma-citation="insights:44572" rel="noopener">Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule,</a> CrossASEAN Chief Economist <a href="https://www.smartkarma.com/profiles/prasenjit-k-basu" target="_blank" data-smartkarma-citation="accounts:612" rel="noopener">Prasenjit K. Basu</a> comments on the ongoing political upheaval in Malaysia. </p><p>In <a href="https://www.smartkarma.com/insights/trouble-down-south-it-s-not-just-the-virus" target="_blank" data-smartkarma-citation="insights:44698" rel="noopener">Trouble Down South: It's Not Just the Virus,</a><a href="https://www.smartkarma.com/profiles/dr-jim-walker" target="_blank" data-smartkarma-citation="accounts:1628" rel="noopener">Dr. Jim Walker</a> gives his prescriptions on why South East Asia has been such a poor performer this year. </p><p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-1-key-themes" target="_blank" data-smartkarma-citation="insights:40842" rel="noopener">Thai Strategy 2021 (Part 1): Key Themes,</a> out Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> lays out his thoughts for the outlook for the Thai market next year. </p><h3>Equity Bottom-Up Insights</h3><p>In his Indonesian Insight, <a href="https://www.smartkarma.com/insights/matahari-department-store-lppf-ij-too-early-to-be-early" target="_blank" data-smartkarma-citation="insights:44460" rel="noopener">Matahari Department Store (LPPF IJ) - Too Early to Be Early,</a> Cross ASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> circles back to the country's largest department store operator post its recent results. </p><p>In <a href="https://www.smartkarma.com/insights/akr-corporindo-akra-ij-great-omnibus-expectations" target="_blank" data-smartkarma-citation="insights:44611" rel="noopener">AKR Corporindo (AKRA IJ) - Great Omnibus Expectations,</a> CrossASEAN insight provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> revisits <a href="https://www.smartkarma.com/entities/akr-corporindo-tbk-pt" target="_blank" rel="noopener">AKR Corporindo (AKRA IJ)</a> after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.</p><p>In a Malaysian Insight, <a href="https://www.smartkarma.com/insights/ql-resources-ql-take-profit" target="_blank" data-smartkarma-citation="insights:44598" rel="noopener">QL Resources (QL): Take Profit?,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits this commodity turned retail play, through its Family Mart business. </p><p>In <a href="https://www.smartkarma.com/insights/far-east-hospitality-trust-feht-beneficiary-of-opening-up" target="_blank" data-smartkarma-citation="insights:44649" rel="noopener">Far East Hospitality Trust (FEHT): Beneficiary of Opening Up,</a> CrossASEAN Insight Provider<a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" rel="noopener"> Henry Soediarko</a> takes an initial look at<a href="https://www.smartkarma.com/entities/far-east-hospitality-trust" target="_blank" rel="noopener"> Far East Hospitality Trust (FEHT SP),</a> the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. </p><p>In <a href="https://www.smartkarma.com/insights/bca-profit-returns" target="_blank" data-smartkarma-citation="insights:44605" rel="noopener">BCA – Profit Returns,</a> banking specialist <a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" data-smartkarma-citation="accounts:12" rel="noopener">Daniel Tabbush</a> revisits <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. </p><p>In <a href="https://www.smartkarma.com/insights/bts-potential-positive-catalysts-ahead" target="_blank" data-smartkarma-citation="insights:44691" rel="noopener">BTS: Potential Positive Catalysts Ahead,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> revisit this Thai transportation play with a more positive slant.</p><p>In <a href="https://www.smartkarma.com/insights/pttep-4q20-earnings-to-soften-from-lower-asp-and-volume-sales" target="_blank" data-smartkarma-citation="insights:44740" rel="noopener">PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> assess the prospects for <a href="https://www.smartkarma.com/entities/ptt-exploration-and-production-public-company-limited" target="_blank" data-smartkarma-citation="entities:261:1" rel="noopener">PTT E&amp;P (PTTEP TB)</a> going into the end of the year.</p><h3>Credit Insights</h3><p>In this Insight, <a href="https://www.smartkarma.com/insights/japfa-comfeed-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44743" rel="noopener">Japfa Comfeed - Earnings Flash - 9M FY 2020 Results,</a> Senior Credit Analyst<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> discusses <a href="https://www.smartkarma.com/entities/japfa-comfeed-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8258:1" rel="noopener">Japfa Comfeed Indonesia (JPFA IJ)'</a>s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. </p><p>In <a href="https://www.smartkarma.com/insights/pan-brothers-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44708" rel="noopener">Pan Brothers - Earnings Flash - 9M FY 2020 Results,</a><a href="https://www.smartkarma.com/companies/lucror-analytics" target="_blank" rel="noopener">Lucror Analytics</a> zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment. </p>


The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
Macro InsightsIn Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule, CrossASEAN Chief Economist Prasenjit K. Basu comments on the ongoing political upheaval in Malaysia. In Trouble Down South: It's Not Just the Virus,Dr. Jim Walker gives his prescriptions on why South East Asia has been such a poor performer this year. In Thai Strategy 2021 (Part 1): Key Themes, out Thai guru Athaporn Arayasantiparb, CFA lays out his thoughts for the outlook for the Thai market next year. Equity Bottom-Up InsightsIn his Indonesian Insight, Matahari Department Store (LPPF IJ) - Too Early to Be Early, Cross ASEAN Insight Provider Angus Mackintosh circles back to the country's largest department store operator post its recent results. In AKR Corporindo (AKRA IJ) - Great Omnibus Expectations, CrossASEAN insight provider Angus Mackintosh revisits AKR Corporindo (AKRA IJ) after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.In a Malaysian Insight, QL Resources (QL): Take Profit?, CrossASEAN Insight Provider Henry Soediarko revisits this commodity turned retail play, through its Family Mart business. In Far East Hospitality Trust (FEHT): Beneficiary of Opening Up, CrossASEAN Insight Provider Henry Soediarko takes an initial look at Far East Hospitality Trust (FEHT SP), the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. In BCA – Profit Returns, banking specialist Daniel Tabbush revisits Bank Central Asia (BBCA IJ) and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. In BTS: Potential Positive Catalysts Ahead,Country Group revisit this Thai transportation play with a more positive slant.In PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales, our friends at Country Group assess the prospects for PTT E&amp;P (PTTEP TB) going into the end of the year.Credit InsightsIn this Insight, Japfa Comfeed - Earnings Flash - 9M FY 2020 Results, Senior Credit Analyst Trung Nguyen discusses Japfa Comfeed Indonesia (JPFA IJ)'s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. In Pan Brothers - Earnings Flash - 9M FY 2020 Results,Lucror Analytics zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment. 

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

Singapore

Sea Limited offers information technology services. The Company provides online personal computer and mobile digital content, e-commerce, and payment platforms. Sea serves customers worldwide.

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Sea (SE US)

Tech Sell-Off: Stop or Carry On?

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Emtek (EMTK IJ) - Arise a New Champion of Indonesia Tech?

Emtek recently announced its intention to seek approval for a stock split at its AGM in December. We see this as a precursor for further corporate...

Angus Mackintosh

The Week that Was in ASEAN@Smartkarma - Indonesia's Recovery and the Next Digital Darling

The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across SE...

Angus Mackintosh

PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin

SCMA remains a high-quality way to play the recovery in the advertising market, with an increasingly digital twist through Vidio.com

Angus Mackintosh

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

The Week that Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights from across South East...

Angus Mackintosh

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