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

Siri Hub Investment Digital Tokens / Credit

This research follows our first report on <a href="https://www.smartkarma.com/entities/siri-hub-investment-digital-tokens" target="_blank" data-smartkarma-citation="entities:33515:1" rel="noopener">Siri Hub Investment Digital Tokens (SIRIHUB TB CURNCY)</a> (SIRIHUB) published on 30-June ( <a href="https://www.smartkarma.com/insights/spv77-siri-hub-investment-digital-token-thailand-s-first-debt-token" target="_blank" data-smartkarma-citation="insights:53833" rel="noopener">SPV77 / Siri Hub Investment Digital Token: Thailand’s First Debt Token</a> ). We advise readers to familiarize themselves with the structure of SIRIHUB first which was laid out in our last report.XSpring Digital received an approval from Thailand’s Securities Exchange Commission (SEC) on 29-July to sell Siri Hub Investment Digital Tokens (SIRIHUB), Thailand’s first investment token. We understand Xspring has not concluded the sale yet and maintain the selling price at THB10 per token for the THB2.4bn sale. SIRIHUB-A was launched at 4.5% as per our expectation. SIRIHUB-B was launched at 8% (lower than the initial guidance of 8.25%). We attribute a lowered yield to demand for high-yielding investment in Thailand which reflects a lack of opportunities to invest outside Thailand and/or outside a traditionally low domestic yield environment. As per our opinion in the last report, we view SIRIHUB-B as a much better investment than SIRIHUB-A.We view SIRIHUB akin to 4-year 2-tier bonds issued by Siripat Four Co. Ltd. (SP4). SIRIHUB-A can be viewed as a 4%-coupon senior bond while SIRIHUB-B can be viewed as an 8%-coupon subordinated bond. Overall, we assign an UNDERWEIGHT recommendation on both SIRIHUB A and B as we believe the valuation is not compelling, compared to Sansiri’s prevalent THB bond yields. We also see the following risk elements on the token:<ul>
<li>The token has no recourse to <a href="https://www.smartkarma.com/entities/sansiri-public-co-ltd" target="_blank" data-smartkarma-citation="entities:12201:1" rel="noopener">Sansiri Public (SIRI TB)</a> (Sansiri) but the ability to pay dividends on a timely manner rests on Sansiri’s liquidity.</li>
<li>The token relies on cashflow of Siri Campus. Even though we like the potential of Siri Campus in terms of location and the up-and-coming area close to the intersection of Sukhumvit Road and Onnut Road (Soi Sukhumvit 77) area, there is no income diversification in terms of other properties where the token can draw cashflow from.</li>
</ul>All in all, we see investors buying into Thailand’s first debt token as a fare to get on the first cog railway to summit, a slow ride which will take a while to the top. It is a sightseeing trip to be the first investors rather than an investment in itself.

This research follows our first report on Siri Hub Investment Digital Tokens (SIRIHUB TB CURNCY) (SIRIHUB) published on 30-June ( SPV77 / Siri Hub Investment Digital Token: Thailand’s First Debt Token ). We advise readers to familiarize themselves with the structure of SIRIHUB first which was laid out in our last report.XSpring Digital received an approval from Thailand’s Securities Exchange Commission (SEC) on 29-July to sell Siri Hub Investment Digital Tokens (SIRIHUB), Thailand’s first investment token. We understand Xspring has not concluded the sale yet and maintain the selling price at THB10 per token for the THB2.4bn sale. SIRIHUB-A was launched at 4.5% as per our expectation. SIRIHUB-B was launched at 8% (lower than the initial guidance of 8.25%). We attribute a lowered yield to demand for high-yielding investment in Thailand which reflects a lack of opportunities to invest outside Thailand and/or outside a traditionally low domestic yield environment. As per our opinion in the last report, we view SIRIHUB-B as a much better investment than SIRIHUB-A.We view SIRIHUB akin to 4-year 2-tier bonds issued by Siripat Four Co. Ltd. (SP4). SIRIHUB-A can be viewed as a 4%-coupon senior bond while SIRIHUB-B can be viewed as an 8%-coupon subordinated bond. Overall, we assign an UNDERWEIGHT recommendation on both SIRIHUB A and B as we believe the valuation is not compelling, compared to Sansiri’s prevalent THB bond yields. We also see the following risk elements on the token:
The token has no recourse to Sansiri Public (SIRI TB) (Sansiri) but the ability to pay dividends on a timely manner rests on Sansiri’s liquidity.
The token relies on cashflow of Siri Campus. Even though we like the potential of Siri Campus in terms of location and the up-and-coming area close to the intersection of Sukhumvit Road and Onnut Road (Soi Sukhumvit 77) area, there is no income diversification in terms of other properties where the token can draw cashflow from.
All in all, we see investors buying into Thailand’s first debt token as a fare to get on the first cog railway to summit, a slow ride which will take a while to the top. It is a sightseeing trip to be the first investors rather than an investment in itself.  

Siri Hub Investment Digital Token: The Cog Railway

We are launching coverage of debt tokens with <a href="https://www.smartkarma.com/entities/siri-hub-investment-digital-tokens" target="_blank" data-smartkarma-citation="entities:33515:1" rel="noopener">Siri Hub Investment Digital Tokens (SIRIHUB TB CURNCY)</a> (SIRIHUB), Thailand’s first investment token. This report is a pre-launch report and we note that Thailand’s Securities Exchange Commission (SEC) is in the process of reviewing the launch at the time of this report. We understand XSpring Digital (formerly called SE Digital), SIRIHUB’s underwriter, has filed for SEC’s approval for the token launch since 5-May and the SEC has up to 90 days to assess the proposal. As such, we expect the SEC’s decision by 5-August.Our conversation with the SEC on 29-June leads us to believe XSpring Digital will need to revise its token prospectus in July. That said, we do not expect the token to be launched until August. We reached out to XSpring Digital to get our initial questions answered but so far the company has not replied to us. Although the sale is not finalized yet, we believe it is of investor interest to understand the proposed structure of SIRIHUB to react in time when the token is up for sale.Our initial thought on the token is that SIRIHUB-A at up to 4.5% dividend yield is unattractive, compared to <a href="https://www.smartkarma.com/entities/sansiri-public-co-ltd" target="_blank" data-smartkarma-citation="entities:12201:1" rel="noopener">Sansiri Public (SIRI TB)</a> (Sansiri)’s 4-year THB bond yield which hovers in the mid 4% handle at the time of this report. That said, SIRIHUB-B at up to 8.25% dividend yield is a much better choice, in our view, although SIRIHUB-B takes structural subordination to SIRIHUB-A. SIRIHUB-B is a better carry at 8.25% dividend yield (than SIRIHUB-A’s). Sansiri is rated “BBB+” by TRIS Rating. Assuming a one-notch lower rating for SIRIHUB-B at “BBB” on a national scale, SIRIHUB-B’s international scale rating could be in the “B” or “B-“ category. At a “B” credit rating on an international scale, we believe investors can still find 4-year Asian USD bonds with a yield-to-worst of more than an 8.25% handle.Overall, we believe the upside of both tokens is rather limited by (1) the value of Siri Campus which could be lower than THB2.4bn now on COVID-19; (2) a lack of income diversification; and (3) a lack of liquidity as Thailand’s first debt token. That said, we see both SIRIHUB-A and SIRIHUB-B as unattractive at the current offering despite the better carry for SIRIHUB-B.

We are launching coverage of debt tokens with Siri Hub Investment Digital Tokens (SIRIHUB TB CURNCY) (SIRIHUB), Thailand’s first investment token. This report is a pre-launch report and we note that Thailand’s Securities Exchange Commission (SEC) is in the process of reviewing the launch at the time of this report. We understand XSpring Digital (formerly called SE Digital), SIRIHUB’s underwriter, has filed for SEC’s approval for the token launch since 5-May and the SEC has up to 90 days to assess the proposal. As such, we expect the SEC’s decision by 5-August.Our conversation with the SEC on 29-June leads us to believe XSpring Digital will need to revise its token prospectus in July. That said, we do not expect the token to be launched until August. We reached out to XSpring Digital to get our initial questions answered but so far the company has not replied to us. Although the sale is not finalized yet, we believe it is of investor interest to understand the proposed structure of SIRIHUB to react in time when the token is up for sale.Our initial thought on the token is that SIRIHUB-A at up to 4.5% dividend yield is unattractive, compared to Sansiri Public (SIRI TB) (Sansiri)’s 4-year THB bond yield which hovers in the mid 4% handle at the time of this report. That said, SIRIHUB-B at up to 8.25% dividend yield is a much better choice, in our view, although SIRIHUB-B takes structural subordination to SIRIHUB-A. SIRIHUB-B is a better carry at 8.25% dividend yield (than SIRIHUB-A’s). Sansiri is rated “BBB+” by TRIS Rating. Assuming a one-notch lower rating for SIRIHUB-B at “BBB” on a national scale, SIRIHUB-B’s international scale rating could be in the “B” or “B-“ category. At a “B” credit rating on an international scale, we believe investors can still find 4-year Asian USD bonds with a yield-to-worst of more than an 8.25% handle.Overall, we believe the upside of both tokens is rather limited by (1) the value of Siri Campus which could be lower than THB2.4bn now on COVID-19; (2) a lack of income diversification; and (3) a lack of liquidity as Thailand’s first debt token. That said, we see both SIRIHUB-A and SIRIHUB-B as unattractive at the current offering despite the better carry for SIRIHUB-B.

SPV77 / Siri Hub Investment Digital Token: Thailand’s First Debt Token

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Thematic (Sector/Industry)

Over the next five years, a lot of things will continue to change. In this review, we highlight five possible trends and two Thai stocks each that would benefit (or be adversely affected) by them, namely: 1) an ageing society; 2) higher concentration of wealth; 3) driverless cars for ride hailing; 4) increasing fintech adoption by incumbents; and 5) a decline in both labor cost and commodity prices.We may have discussed most of these themes before, though we've never put them in one place. As they say in investing, gotta watch where the puck is going, not where it is.

Over the next five years, a lot of things will continue to change. In this review, we highlight five possible trends and two Thai stocks each that would benefit (or be adversely affected) by them, namely: 1) an ageing society; 2) higher concentration of wealth; 3) driverless cars for ride hailing; 4) increasing fintech adoption by incumbents; and 5) a decline in both labor cost and commodity prices.We may have discussed most of these themes before, though we've never put them in one place. As they say in investing, gotta watch where the puck is going, not where it is.

During the weekend, we attended a presentation by Vacharapong Potjaneenont, who is Manager for Strategy &amp; Business Development of <a href="https://www.smartkarma.com/entities/214" target="_blank" data-smartkarma-citation="entities:214:1">Siam Commercial Bank Pub Co (SCB TB)</a>, and we found it pretty interesting. Basically, his view is that fintech has been around since the 50s, and in his view, we are on the third wave...There's something with the number three. I recall someone else (maybe Microsoft CEO Nadella) saying we are on the third Industrial or Digital Revolution. Well, let's just indulge the…

During the weekend, we attended a presentation by Vacharapong Potjaneenont, who is Manager for Strategy &amp; Business Development of Siam Commercial Bank Pub Co (SCB TB), and we found it pretty interesting. Basically, his view is that fintech has been around since the 50s, and in his view, we are on the third wave...There's something with the number three. I recall someone else (maybe Microsoft CEO Nadella) saying we are on the third Industrial or Digital Revolution. Well, let's just indulge the…

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul><li>There is a boom in Bangkok, yet again.</li><li>This tends to be positive for banks.</li><li>It creates loan demand, both by developers and also companies making and selling products for construction.It also supports mortgage lending and collateral values behind loans.</li><li>A benign credit cycle, high provisions and reasonable margins is reason enough to be positive on Thai banks. Additionally is the current construction boom.</li><li>But the warning and focus of this note is that not all banks are created equal. And it may be surprising, that some of Thailand&rsquo;s newest banks are showing trends completely at odds with mainstream banks. </li><li>It pays to differentiate, even in a boom</li></ul>

There is a boom in Bangkok, yet again.This tends to be positive for banks.It creates loan demand, both by developers and also companies making and selling products for construction.It also supports mortgage lending and collateral values behind loans.A benign credit cycle, high provisions and reasonable margins is reason enough to be positive on Thai banks. Additionally is the current construction boom.But the warning and focus of this note is that not all banks are created equal. And it may be surprising, that some of Thailand&rsquo;s newest banks are showing trends completely at odds with mainstream banks. It pays to differentiate, even in a boom

Thailand: Despite Boom, Small Banks are Dull. Big Banks are Irresistible.

Thailand

XSpring Capital Public Company Limited provides financial and investment services including securities brokerage, investment advisory, and underwriting.

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XSpring Capital (ZMICO TB)

Siri Hub Investment Digital Token: The Cog Railway

Our final thought on SIRIHUB is that the token valuation is unattractive. Hence, the exposure is merely a claim to be on the first debt token in...

Bondcritic

SPV77 / Siri Hub Investment Digital Token: Thailand’s First Debt Token

Thailand's first debt token is under SEC review. See how the token is structured, how the story came together, and whether "SIRIHUB" is investable.

Bondcritic

Five Big Ideas for the Next Five Years

Over the next five years, a lot of things will continue to change. In this review, we highlight five possible trends and two Thai stocks each that...

Athaporn Arayasantiparb, CFA

Silicon Sequel: SCB on Fintech

During the weekend, we attended a presentation by Vacharapong Potjaneenont, who is Manager for Strategy & Business Development of Siam...

Athaporn Arayasantiparb, CFA

Thailand: Despite Boom, Small Banks are Dull. Big Banks are Irresistible.

There is a boom in Bangkok, yet again. This tends to be positive for banks. It creates loan demand, both by developers and also companies making...

Daniel Tabbush

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