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

Equity Bottom-Up

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<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> released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.</p>
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<p>The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.</p>
<p>Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.</p>
<p>The company's self-developed game <em>Free Fire </em>was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.</p>
<p>In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.</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 also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.</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> has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.</p>
<p>The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.</p>
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<section class="figure">For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.</section>


Sea Ltd (SE US) released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.

The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.
Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.
The company's self-developed game Free Fire was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.
In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.
Sea Ltd (SE US) is also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.
Sea Ltd (SE US) has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.
The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.



For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.

Sea Ltd (SE US) - Metamorphosis in Motion

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

<p>Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.</p><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
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<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-earnings-forecast-and-valuation" target="_blank" rel="noopener">Coupang Pre-IPO - Earnings Forecast and Valuation</a></li>
</ul></div>

Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
Coupang Pre-IPO - Earnings Forecast and Valuation


Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>, where Gojek recently increased its own stake to 22.16%. </p>
<p>GIC will invest around US$225m to acquire circa 9% stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> through a rights issue to take place in March.</p>
<p>The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.</p>
<p>The potential customer base for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. </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 not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> probably represents the most serious potential competitive threat for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>.</p>
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<p>Valuations for the merged <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> have crept up to US$35bn-US$40bn and no doubt an early success with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will help it command a higher multiple on the listing of the combined entity. </p>
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Gojek (1379371D IJ) just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in Bank Jago Tbk PT (ARTO IJ), where Gojek recently increased its own stake to 22.16%. 
GIC will invest around US$225m to acquire circa 9% stake in Bank Jago Tbk PT (ARTO IJ) through a rights issue to take place in March.
The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.
Bank Jago Tbk PT (ARTO IJ) will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.
The potential customer base for Bank Jago Tbk PT (ARTO IJ) will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. 
Sea Ltd (SE US) is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. Sea Ltd (SE US) probably represents the most serious potential competitive threat for Bank Jago Tbk PT (ARTO IJ).

Valuations for the merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) have crept up to US$35bn-US$40bn and no doubt an early success with Bank Jago Tbk PT (ARTO IJ) will help it command a higher multiple on the listing of the combined entity. 


Gojek (1379371D IJ) - A Leg Up for Digital Finance?

<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> latest numbers were interesting in that there was evidence of declining provisions, which suggests improving credit quality ahead but what was also evident was the renewed momentum behind micro and ultra-micro loans, which now make up more than 40% of total loans but it aims for 45% by 2025.</p>
<p>Microlending and MSMEs are the bank's key differentiating factor and core competency versus its peers. It a skill-set that they have not been able to replicate, despite best efforts by some in recent years.  It is increasingly the champion of financial inclusion in Indonesia.</p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> has re-affirmed its focus on driving continued digitalization as a growth driver, which is enabling the bank to continue to expand with lower costs, even in rural areas. </p>
<p>The bank continues to increase its commitment to implement ESG practices with 63.9% of the total loan portfolio classified as financing for sustainable business activities in 2020. </p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> was also the first bank in Southeast Asia to issue sustainability bonds in 2019. The sustainability bond market has become more attractive and it's projected that the ESG financing instrument will reach USD11tn in 2025. </p>
<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> is also building digital partnerships and collaborations with P2P players, e-commerce platforms, and ride-hailing firms. </p>
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<p><a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia Persero (BBRI IJ)</a> remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending, as well as its meaningful digitalization of existing banking business as well as increasingly using digital channels to expand its reach.</p>
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Bank Rakyat Indonesia Persero (BBRI IJ) latest numbers were interesting in that there was evidence of declining provisions, which suggests improving credit quality ahead but what was also evident was the renewed momentum behind micro and ultra-micro loans, which now make up more than 40% of total loans but it aims for 45% by 2025.
Microlending and MSMEs are the bank's key differentiating factor and core competency versus its peers. It a skill-set that they have not been able to replicate, despite best efforts by some in recent years.  It is increasingly the champion of financial inclusion in Indonesia.
Bank Rakyat Indonesia Persero (BBRI IJ) has re-affirmed its focus on driving continued digitalization as a growth driver, which is enabling the bank to continue to expand with lower costs, even in rural areas. 
The bank continues to increase its commitment to implement ESG practices with 63.9% of the total loan portfolio classified as financing for sustainable business activities in 2020. 
Bank Rakyat Indonesia Persero (BBRI IJ) was also the first bank in Southeast Asia to issue sustainability bonds in 2019. The sustainability bond market has become more attractive and it's projected that the ESG financing instrument will reach USD11tn in 2025. 
Bank Rakyat Indonesia Persero (BBRI IJ) is also building digital partnerships and collaborations with P2P players, e-commerce platforms, and ride-hailing firms. 

Bank Rakyat Indonesia Persero (BBRI IJ) remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending, as well as its meaningful digitalization of existing banking business as well as increasingly using digital channels to expand its reach.


Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<p>Our analysis shows strong conviction towards <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> among the active GEM and Asia Ex-Japan managers in our analysis.  Ownership levels are increasing and a number of active managers have had the confidence to hold <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> as a significant out of benchmark position.  Furthermore, <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> was one of the more profitable positions for the GEM and Asia Ex-Japan funds that held it through 2020. </p><p>With such a rapid rise in fund ownership and a quadrupling of the share price last year, it's not unreasonable to expect a period of consolidation for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>.  For active investors this could be the time to accumulate.  Among GEM managers, 80% do not hold a position and two-thirds of Asia Ex-Japan managers are not exposed.  The risk of lost performance versus active peers and now the added risk of losing out to the benchmark for Asia Ex-Japan investors, means active investors need a good reason <strong><em>not</em></strong> to hold <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>.  Add in <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a>'s advice to buy on weakness in his insight <a href="https://www.smartkarma.com/insights/sea-ltd-se-us-extending-the-runway-for-a-bigger-plane" target="_blank" data-smartkarma-citation="insights:48464" rel="noopener">Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?</a><em>and</em> the expected inflows from the MSCI inclusion ((<a href="https://www.smartkarma.com/insights/msci-singapore-sea-change-coming-in-may-2021" target="_blank" data-smartkarma-citation="insights:45172" rel="noopener">MSCI Singapore: SEA Change Coming in May 2021)</a> ), and it's easy to see momentum continuing from here.</p><p><em>Analysis taken from our Global Emerging Market fund research, covering 242 active strategies with combined AUM of $460bn and our Asia Ex-Japan fund research, covering 97 active strategies with combined AUM of $80bn.</em></p>

Our analysis shows strong conviction towards Sea Ltd (SE US) among the active GEM and Asia Ex-Japan managers in our analysis.  Ownership levels are increasing and a number of active managers have had the confidence to hold Sea Ltd (SE US) as a significant out of benchmark position.  Furthermore, Sea Ltd (SE US) was one of the more profitable positions for the GEM and Asia Ex-Japan funds that held it through 2020. With such a rapid rise in fund ownership and a quadrupling of the share price last year, it's not unreasonable to expect a period of consolidation for Sea Ltd (SE US).  For active investors this could be the time to accumulate.  Among GEM managers, 80% do not hold a position and two-thirds of Asia Ex-Japan managers are not exposed.  The risk of lost performance versus active peers and now the added risk of losing out to the benchmark for Asia Ex-Japan investors, means active investors need a good reason not to hold Sea Ltd (SE US).  Add in Angus Mackintosh's advice to buy on weakness in his insight Sea Ltd (SE US) - Extending the Runway for a Bigger Plane?and the expected inflows from the MSCI inclusion ((MSCI Singapore: SEA Change Coming in May 2021) ), and it's easy to see momentum continuing from here.Analysis taken from our Global Emerging Market fund research, covering 242 active strategies with combined AUM of $460bn and our Asia Ex-Japan fund research, covering 97 active strategies with combined AUM of $80bn.

Sea Ltd:  Rising Momentum Among Active Investors Ahead of Index Inclusion

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)

Sea Ltd (SE US) - Metamorphosis in Motion

Sea Ltd continues to achieve higher than expected rates of growth both for its digital entertainment and e-commerce business, with digital...

Angus Mackintosh

Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Coupang aims to raise up to US$3.6bn in its US listing via selling primary and secondary shares. In this note, we’ll talk about the lock-up, index...

Sumeet Singh

Gojek (1379371D IJ) - A Leg Up for Digital Finance?

The move by GIC to invest in Bank Jago represents a vote of confidence in Gojek's digital financial strategy and places it ahead of its competitors...

Angus Mackintosh

Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital

Bank Rakyat Indonesia remains one of our top picks amongst the Indonesian banks, with its renewed focus on its core competency in microlending and...

Angus Mackintosh

Sea Ltd: Rising Momentum Among Active Investors Ahead of Index Inclusion

Our analysis shows strong conviction towards Sea Ltd (SE US) among the active GEM and Asia Ex-Japan managers in our analysis.

Steven Holden

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