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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a> is Thailand's leading decorative paints player with a 48% market share and a good track record but it has become caught up by association with <a href="https://www.smartkarma.com/entities/stark-corporation-public-company-limited" target="_blank" data-smartkarma-citation="entities:6337:1" rel="noopener">STARK Corporation</a>.</li>
<li>This looks like a guilt by association sell down given there are no visible business connections between <a href="https://www.smartkarma.com/entities/stark-corporation-public-company-limited" target="_blank" data-smartkarma-citation="entities:6337:1" rel="noopener">STARK</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a> but the eldest son of the family controls Stark.</li>
<li>The second son of the Patriarch is CEO of <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint</a>, which is otherwise enjoying a strong recovery in demand plus lower input costs. Valuations have declined to attractive levels. </li>
</ul>



TOA Paint is Thailand's leading decorative paints player with a 48% market share and a good track record but it has become caught up by association with STARK Corporation.
This looks like a guilt by association sell down given there are no visible business connections between STARK and TOA Paint but the eldest son of the family controls Stark.
The second son of the Patriarch is CEO of TOA Paint, which is otherwise enjoying a strong recovery in demand plus lower input costs. Valuations have declined to attractive levels. 


TOA Paint (Thailand) (TOA TB) - An Unfortunate Turn of Events

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

<ul>
<li>I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of <a href="https://www.smartkarma.com/entities/thai-union-group-pcl" target="_blank" data-smartkarma-citation="entities:161:1" rel="noopener">Thai Union Group (TU TB)</a>. </li>
<li>As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>


I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of Thai Union Group (TU TB). 
As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
In this note, we talk about the not-so-positive aspects of the deal.


I-Tail Corporation Pre-IPO - The Negatives - Non-Uniform Growth

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

There is a BIG trade coming up starting next Monday. If you have exposure in Indonesia, it is worth thinking about. <hr>Back in January 2021, Bloomberg reported that <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> - the country's largest lender by assets - was "exploring a plan to raise at least US$1bn through a rights issue."Almost a year ago in October 2020 BBRI signed a conditional deal to merge their Shariah-compliant unit with those of <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> and <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia Persero (BBNI IJ)</a> and there had been talks (since Feb 2020?) with the government for BBRI to take over state-owned pawnshop lender PT Pegadaian and financing firm PT Permodalan Nasional Madani to provide affordable loans to SMEs. A deal for BBRI to take over those two firms was <a href="https://www.reuters.com/article/bank-bri-ma-idUSL4N2KE2J5" target="_blank" rel="noopener">decided</a> in early February, and the need for a rights issue was set, though this required parliamentary approval and BBRI needed shareholder approval for the rights issue - which it announced in June and <a href="https://www.thejakartapost.com/adv/2021/07/23/bri-egms-approves-rights-issue-of-28-billion-shares.html" target="_blank" rel="noopener">received</a> in July - under the mechanism of Capital Increase by Granting Securities Subscription Rights First (PMHMETD). <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> discussed the bank's initiatives and aspirations in the micro lending space in <a href="https://www.smartkarma.com/insights/bank-rakyat-indonesia-bbri-ij-both-micro-and-digital" target="_blank" data-smartkarma-citation="insights:48613" rel="noopener">Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital</a> in February followed by a discussion of the rights issue itself in early July in <a href="https://www.smartkarma.com/insights/bank-rakyat-indonesia-bbri-ij-ultra-micro-and-digital-aspirations-in-place" target="_blank" data-smartkarma-citation="insights:54111" rel="noopener">Bank Rakyat Indonesia (BBRI IJ) - Ultra-Micro and Digital Aspirations in Place</a>. Angus made a strong case for the bank in both insights and they are worth a read. The shares have basically had an overhang in place since early this year but in June when it became clear the rights issue would be Very Large, that overhang became more pronounced. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/528/original/Screenshot+2021-09-08+at+2.18.15+PM.png?1631081912" class="editor-image img-responsive" data-smartkarma-image-id="228528"></figure></section>The presentation made to get this past shareholders (never really in doubt as the govt owns 57%) announced the development of an "Ultra-Micro segment" to create an Ultra-Micro Ecosystem as the foundation for further growth, structured under Ultra Micro Holding owned by BRI, in the form of previous precedents of SOE development platforms such as Biofarma/<a href="https://www.smartkarma.com/entities/indofarma-tbk-pt" target="_blank" data-smartkarma-citation="entities:5319:1" rel="noopener">Indofarma (INAF IJ)</a> and Inalum's investment in Indonesian mining companies. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/228/527/original/Screenshot+2021-09-08+at+2.02.45+PM.png?1631080980" class="editor-image img-responsive" data-smartkarma-image-id="228527"></figure></section>The way this would be done is a rights offering to offer 230,128,553 rights for every 1,000,000,000 Existing Shares (roughly 0.23013 for 1), with the government contributing its ownership of Pegadaian and PNM in kind to fulfil its rights exercise consideration payment.That means the ~0.23 to 1 Rights Offering would be in effect for the other 43% of holders, which is a vast array of local and international institutions and local retail shareholders, with an Exercise Price of IDR 3400/share, and assuming 100% participation, that would garner IDR 41.15trln in proceeds, which, according to the roadshow <a href="https://www.ir-bri.com/misc/PS/2021/RI-Deal-Roadshow-Presentation-Final.pdf" target="_blank" rel="noopener">presentation</a> released in early September, "will be used for working capital for BRI in order to develop an ultra-micro ecosystem as well as micro and small businesses."The shares traded on the regular market went ex-rights today. Rights will be distributed on 10 September, traded from 13-22 September and exercised in the same period, with the last day for Excess Rights Subscription the 24 September and allotment of Excess Rights on 27 September.There is considerable opportunity here. Some short-term, some longer-term. But it is considerable because there is a fair bit of potential overhang here.I consider the opportunity set below the fold.

There is a BIG trade coming up starting next Monday. If you have exposure in Indonesia, it is worth thinking about. Back in January 2021, Bloomberg reported that Bank Rakyat Indonesia Persero (BBRI IJ) - the country's largest lender by assets - was "exploring a plan to raise at least US$1bn through a rights issue."Almost a year ago in October 2020 BBRI signed a conditional deal to merge their Shariah-compliant unit with those of Bank Mandiri Persero (BMRI IJ) and Bank Negara Indonesia Persero (BBNI IJ) and there had been talks (since Feb 2020?) with the government for BBRI to take over state-owned pawnshop lender PT Pegadaian and financing firm PT Permodalan Nasional Madani to provide affordable loans to SMEs. A deal for BBRI to take over those two firms was decided in early February, and the need for a rights issue was set, though this required parliamentary approval and BBRI needed shareholder approval for the rights issue - which it announced in June and received in July - under the mechanism of Capital Increase by Granting Securities Subscription Rights First (PMHMETD). Angus Mackintosh discussed the bank's initiatives and aspirations in the micro lending space in Bank Rakyat Indonesia (BBRI IJ) - Both Micro and Digital in February followed by a discussion of the rights issue itself in early July in Bank Rakyat Indonesia (BBRI IJ) - Ultra-Micro and Digital Aspirations in Place. Angus made a strong case for the bank in both insights and they are worth a read. The shares have basically had an overhang in place since early this year but in June when it became clear the rights issue would be Very Large, that overhang became more pronounced. The presentation made to get this past shareholders (never really in doubt as the govt owns 57%) announced the development of an "Ultra-Micro segment" to create an Ultra-Micro Ecosystem as the foundation for further growth, structured under Ultra Micro Holding owned by BRI, in the form of previous precedents of SOE development platforms such as Biofarma/Indofarma (INAF IJ) and Inalum's investment in Indonesian mining companies. The way this would be done is a rights offering to offer 230,128,553 rights for every 1,000,000,000 Existing Shares (roughly 0.23013 for 1), with the government contributing its ownership of Pegadaian and PNM in kind to fulfil its rights exercise consideration payment.That means the ~0.23 to 1 Rights Offering would be in effect for the other 43% of holders, which is a vast array of local and international institutions and local retail shareholders, with an Exercise Price of IDR 3400/share, and assuming 100% participation, that would garner IDR 41.15trln in proceeds, which, according to the roadshow presentation released in early September, "will be used for working capital for BRI in order to develop an ultra-micro ecosystem as well as micro and small businesses."The shares traded on the regular market went ex-rights today. Rights will be distributed on 10 September, traded from 13-22 September and exercised in the same period, with the last day for Excess Rights Subscription the 24 September and allotment of Excess Rights on 27 September.There is considerable opportunity here. Some short-term, some longer-term. But it is considerable because there is a fair bit of potential overhang here.I consider the opportunity set below the fold. 

Bank Rakyat Indonesia (BBRI)'s Mega Rights Issue - Plenty of Opportunity Short-Term and Long-Term

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>Krung Thai is our sole best value pick among the Thai banks, having solid post-provision profitability, near double digit ROE, a sound balance sheet and attractive PBV and PE ratios</li>
<li>We downgrade Kasikorn from buy to neutral, as it has an unattractive PEG and we believe it is more exposed to credit quality deterioration and potential cost of risk reversal</li>
<li>Bank Ayudhya is suffering from further credit quality deterioration which led to spike in its cost of risk; it now has the lowest NPL coverage relative to the peer group</li>
</ul>


Krung Thai is our sole best value pick among the Thai banks, having solid post-provision profitability, near double digit ROE, a sound balance sheet and attractive PBV and PE ratios
We downgrade Kasikorn from buy to neutral, as it has an unattractive PEG and we believe it is more exposed to credit quality deterioration and potential cost of risk reversal
Bank Ayudhya is suffering from further credit quality deterioration which led to spike in its cost of risk; it now has the lowest NPL coverage relative to the peer group


Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Thematic (Sector/Industry)

<ul><li>The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay cutting rates towards the latter half of this year.</li><li>The narrative surrounding ‘imminent’ rate cuts that dominated market perception near the end of last year has been thwarted by the Fed’s chair Jerome Powell suggesting that rates are likely to remain elevated, without the market completely discounting the possibility of further rate hikes.</li><li>The immediate fallout from the higher-than-expected March inflation figures led to a systematic drop in Asian currencies, especially for some ASEAN based currencies, such as the Malaysian Ringgit, that have already been embattled by weakening currency against the dollar since the start of this year.</li></ul>

The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay cutting rates towards the latter half of this year.The narrative surrounding ‘imminent’ rate cuts that dominated market perception near the end of last year has been thwarted by the Fed’s chair Jerome Powell suggesting that rates are likely to remain elevated, without the market completely discounting the possibility of further rate hikes.The immediate fallout from the higher-than-expected March inflation figures led to a systematic drop in Asian currencies, especially for some ASEAN based currencies, such as the Malaysian Ringgit, that have already been embattled by weakening currency against the dollar since the start of this year.

Strong ASEAN Banks Poised Well to Face Uncertain Rate Outlook

Thailand

SCB X Public Company Limited provides banking services. The Bank offers accounts, loans, cards, deposits, insurance, investment, payment, digital banking, and other related services. SCB X serves customers worldwide.

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Siam Commercial Bank (SCB TB)

TOA Paint (Thailand) (TOA TB) - An Unfortunate Turn of Events

TOA Paint is Thailand's leading decorative paints player, with a good track record but has been sold off due to its association with beleaguered...

Angus Mackintosh

I-Tail Corporation Pre-IPO - The Negatives - Non-Uniform Growth

I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of...

Sumeet Singh

Bank Rakyat Indonesia (BBRI)'s Mega Rights Issue - Plenty of Opportunity Short-Term and Long-Term

Bank Rakyat (BBRI) Indonesia's largest bank by assets, has a rights issue (stock went ex-rights today). The bank hopes to raise $2.8bn from its...

Travis Lundy

Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...

Victor Galliano

Strong ASEAN Banks Poised Well to Face Uncertain Rate Outlook

The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay...

Criat

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

TOA Paint (Thailand) (TOA TB) - An Unfortunate Turn of Events

TOA Paint is Thailand's leading decorative paints player, with a good track record but has been sold off due to its association with beleaguered...

Angus Mackintosh

I-Tail Corporation Pre-IPO - The Negatives - Non-Uniform Growth

I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of...

Sumeet Singh

Bank Rakyat Indonesia (BBRI)'s Mega Rights Issue - Plenty of Opportunity Short-Term and Long-Term

Bank Rakyat (BBRI) Indonesia's largest bank by assets, has a rights issue (stock went ex-rights today). The bank hopes to raise $2.8bn from its...

Travis Lundy

Thai Banks 2Q24 Screener; We Stick with Krung Thai for Best Value, We Downgrade Kasikorn to Neutral

​Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...

Victor Galliano

Strong ASEAN Banks Poised Well to Face Uncertain Rate Outlook

The strong showing of economic data from the US for the first three months of 2024 has spurred bets that the Federal Reserve’s is going to delay...

Criat

Krung Thai is our value Thai bank pick, with best of peers ROE and a strong balance sheet, while Kasikorn is downgraded to neutral due to credit...