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

Cross Asset Strategy

<ul>
<li>The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.</li>
<li>The past week has seen Insights on <a href="https://www.smartkarma.com/entities/grab-holdings-inc" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (GRAB US)</a>, <a href="https://www.smartkarma.com/entities/sumber-alfaria-trijaya-tbk-pt" target="_blank" data-smartkarma-citation="entities:15659:1" rel="noopener">Sumber Alfaria Trijaya (AMRT IJ)</a>, <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a>, and the <a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106:1" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> deal.</li>
<li>We also explored online groceries in South-East Asia as we see increasing interest in the space plus <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> also lays out his top picks for 2022 performance.</li>
</ul>


The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week has seen Insights on Grab (GRAB US), Sumber Alfaria Trijaya (AMRT IJ), Semen Indonesia (Gresik) (SMGR IJ), and the Mapletree Commercial Trust (MCT SP) deal.
We also explored online groceries in South-East Asia as we see increasing interest in the space plus Nicolas Van Broekhoven also lays out his top picks for 2022 performance.


The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

<ul>
<li>
<strong>Our</strong> <strong>Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%</strong>.</li>
<li>
<strong>Out of the 34 stocks that appeared in our Q3-2021 screen, </strong>15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.</li>
<li><strong>Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, </strong></li>
<li>
<strong>As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: </strong>Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.</li>
</ul>



Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.

Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.
Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, 

As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.


Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

Rex International Holding / Equity Bottom-Up

<p>For our next Webinar, we have the pleasure of welcoming 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>, who will talk to us about some of his favourite Singapore-based small- and mid-cap investment ideas and his view on them going forward.</p><div><div><h3>The webinar will be hosted on Wednesday, 11 August 2021, 17:00 SGT/HKT.</h3></div></div><div><div>
<div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=86724910057" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div>
<p>Nicolas Van Broekhoven is a generalist investor with a preference for small and mid-cap companies and special situations. He grew up in Europe, went to university in the US, and lives in Singapore, which has given him a broad scope on the world and investing in general.</p>
</div></div>

For our next Webinar, we have the pleasure of welcoming Insight Provider Nicolas Van Broekhoven, who will talk to us about some of his favourite Singapore-based small- and mid-cap investment ideas and his view on them going forward.The webinar will be hosted on Wednesday, 11 August 2021, 17:00 SGT/HKT.
Register for the Webinar here
Nicolas Van Broekhoven is a generalist investor with a preference for small and mid-cap companies and special situations. He grew up in Europe, went to university in the US, and lives in Singapore, which has given him a broad scope on the world and investing in general.


Smartkarma Webinar | Singapore Investment Ideas

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p><a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> has <a href="https://links.sgx.com/FileOpen/202108_01%20Major%20and%20Connected%20Transaction%20in%20Relation%20to%20the%20Proposed%20Acquisition%20of%20ARA%20Asset%20Managament%20Limited.ashx?App=Announcement&amp;FileID=677405" target="_blank" rel="noopener">announced</a> it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.</p>
<p>Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.</p>
<p>All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.</p>
<p>The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>.</p>
<p>There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.</p>
<p>Much more below the fold. </p>
</div>


ESR Cayman (1821 HK) has announced it is acquiring unlisted ARA Asset Management for US$5.2bn, the completion of which will result in the world's third-largest real estate management company with total assets under management of ~US$129bn.
Under the terms of the US$5,192mn transaction, ESR will issue US$4.7bn via new ESR shares (US$4.286mn) and vendor loan notes (US$387mn); and US$519mn in cash, to be funded by a US$250mn placement to SMBC, and the remainder (US$269mn) in debt. The scrip/cash split is 90/10.
All of the ARA shareholders are rolling over their shares  - and will mostly be subject to a six-month lock-up - and will hold ~28% of the enlarged entity at completion.
The transaction requires the approval from ESR shareholders by way of an ordinary resolution. Irrevocables totaling 4.6%, to vote in favour of the deal, have been received from ESR's founders, together with OMERS and JD.com Inc. (9618 HK).
There are various pre-conditions attached to the deal, with an EGM expected to be convened before 31 October. The deal may be wrapped up late 4Q21, early 1Q22.
Much more below the fold. 


ESR Cayman (1821 HK) Takes Out ARA Asset Management

<div>
<p>Back on the 6 January 2010, the SGX issued a <a href="https://api2.sgx.com/sites/default/files/2018-09/Consultation%2BPaper%2Bon%2BProposed%2BRevisions%2Bto%2BMainboard%2BAdmission%2BCriteria%2Band%2Bthe%2BIntroduction%2Bof%2BSPAC.pdf" target="_blank" rel="noopener">consultation paper</a> on the "<em>Proposed Revisions to Mainboard Admission Criteria and the Introduction of SPAC</em>", and following the feedback at that time, SGX determined the timing was not ideal to introduce special purpose acquisition company (SPACs).</p>
</div>
<div>
<p>Following a flurry of SPAC listings in the US in 2020, my discussion with the SGX late last year indicated a white paper on SPACs was expected to be issued in the first half of this year. This was discussed in <em><a href="https://skr.ma/5UGLq" target="_blank" rel="noopener">Virtual IPOs/Direct Listings: Uninhibited Price Discovery</a>.</em></p>
</div>
<div>
<p>The SGX <a href="https://api2.sgx.com/sites/default/files/2021-03/Consultation%20Paper%20on%20Proposed%20Listing%20Framework%20for%20Special%20Purpose%20Acquisition%20Companies.pdf" target="_blank" rel="noopener">announced</a> on the 31 March a regulatory framework for SPACs to list on the SGX and subsequent to the feedback phase ending on the 28 April, the framework may be finalised by the middle of this year. </p>
</div>
<div>
<p>Media reports are now emerging that Temasek-backed Vertex Holdings is set to be Singapore's first SPAC.</p>
<p>With US$5bn of assets under management, 30-year old Vertex has the necessary pedigree to establish the country's first (successful) listing.</p>
<p>More below the fold.</p>
<p></p>
<p></p>
</div>
<div>
<p></p>
</div>


Back on the 6 January 2010, the SGX issued a consultation paper on the "Proposed Revisions to Mainboard Admission Criteria and the Introduction of SPAC", and following the feedback at that time, SGX determined the timing was not ideal to introduce special purpose acquisition company (SPACs).


Following a flurry of SPAC listings in the US in 2020, my discussion with the SGX late last year indicated a white paper on SPACs was expected to be issued in the first half of this year. This was discussed in Virtual IPOs/Direct Listings: Uninhibited Price Discovery.


The SGX announced on the 31 March a regulatory framework for SPACs to list on the SGX and subsequent to the feedback phase ending on the 28 April, the framework may be finalised by the middle of this year. 


Media reports are now emerging that Temasek-backed Vertex Holdings is set to be Singapore's first SPAC.
With US$5bn of assets under management, 30-year old Vertex has the necessary pedigree to establish the country's first (successful) listing.
More below the fold.







Vertex Holdings: Singapore's Showcasing SPAC

Singapore

CNMC Goldmine Holdings Ltd. explores for gold and processes mined ore into gold dore.  The Company operates in Kelantan State of Malaysia.

Enviro-Hub Holdings Limited is an investment holding company whose subsidiaries operate geotechnic and piling works, and develop properties.  The Company also sells, services and rents engineering hardware, construction machinery and equipment, and recycles metals and plastics.

Pacific Star Development Limited is a property investment management and development firm. The Company invests and develops office, retail, and residential properties throughout Southeast Asia . Pacific Star Development also engages in the provision of aluminum works and the manufacturing of traction devices and vehicle parts.

China Sunsine Chemical Holdings Limited produces rubber chemicals, primarily rubber accelerators and other related rubber chemicals such as anti-scorching agents.

China Sunsine Chemical Holdings Ltd (CSSC SP)

Sapphire Corp Limited is an investment holding company that invests in infrastructure and mining operations businesses. The Company's subsidiaries specialize in design and construction for rail transport infrastructure, as well as mining and resources related businesses.

NSL Ltd. manufactures construction materials and chemicals, and markets engineering products and services.  The Company manufactures and trades lime, industrial chemicals and spreader cranes, provides environmental and engineering services, building products and services, and engages in property and resort development.

AsiaPhos Limited explores and develops mineral properties. The Company focuses on the exploration of phosphate mining properties, processing and refining phosphate rocks, and producing phosphate based chemical products.

China Mining International Limited is a mining company. The Company mines for minerals in China.

Avarga Limited operates as an investment holding company. The Company, through its subsidiaries, focuses on paper manufacturing, power generation, and building materials distribution. Avarga also recycles corrugated cartons, newspapers, magazines, office waste, and any other printed paper material. Avarga serves customers worldwide.

Nico Steel Holdings Limited is a full service coil center that primarily provides metallurgical solutions to meet the needs of various industries.  The Company provides commercial and customized ferrous and non-ferrous materials in strip-in-coils to metal stamping and fabrication companies.

PT Archi Indonesia Tbk operates as a mining company. The Company explores and develops silver and gold projects. Archi Indonesia serves customers worldwide.

Jilin Liyuan Precision Manufacturing Co., Ltd manufactures and sells aluminum ex trusion profiles.  The Company's products include military, industrial, architec tural,  decoration and electronic aluminum profiles.

Jilin Liyuan Precision Manufactrg (002501 CH)

Beijing Lier High-temperature Materials Co.,Ltd. manufactures and sells steel, construction material, non-ferrous metals, and other refractory material.  The Company also designs, develops, constructs, installs, equips, uses, and maintains industrial furnace.

Beijing Lier High Temperatr Mtrls (002392 CH)

Jiangsu Alcha Aluminum Company Ltd. manufactures and markets pure aluminum foil, hydrophilic-coated aluminum foil, and aluminum scrip coil.

Jiangsu Alcha Aluminum Co, Ltd. (002160 CH)

Nippon Yakin Kogyo Co., Ltd. is a stainless steel producer.  The Company also produces super alloy, alloyed metal for electronic materials, and stainless processed products.

Nittetsu Mining Co., Ltd., an affiliate of Nippon Steel Group, mines for limestone mining for the steel industry.  The Company also smelts copper ore into ingots, and produces flame-retardant ceramic papers, mining machinery, and environment-related products.  Nittetsu Mining also operates real estate.

Xingfa Aluminium Holdings Ltd manufactures architectural and industrial aluminum profiles. The Company's products include sliding windows, casement windows, sliding doors, and others. Xingfa also offers equipment, such as fusion casting, extrusion, surface treatment, vertical coating, fluorocarbon coating, and mould making center equipment.

Jayaswal Neco Industries Ltd. manufactures steel and steel products.  The Company produces steel for manufacturers of automobiles, appliances, and other products; produces ferrous and non-ferrous castings for the railroad, automobile, construction, and valve manufacturing industries; and mines coal.

Tata Steel Long Products Limited manufactures sponge iron and sponge iron products. Tata Iron & Steel Company (TISCO) is a majority shareholder in the company.

AICHI STEEL CORPORATION is a manufacturer of specialty steel.   The Company's products include rolled steel and forged products.  Aichi Steel jointly works with Toyota Motors to develop automobile parts.  The Company also makes magnetic and electronic parts, including plastic magnets.

Straits Trading Company Limited operates as an investment holding company that positions its investments in real estate, hospitality, resources and other investments in the Asia Pacific region. The Company is also engaged in tin mining and smelting through its subsidiary.

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Straits Trading (STRTR SP)

The Week That Was in ASEAN@Smartkarma - Grab Expands, Alfamart, and Mapletree Mega-Merger

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity...

Angus Mackintosh

Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

As we move through into Q1 2022, we expect to see volatility around highly priced & leveraged names. This screen is a key starting point towards...

David Lepper

Smartkarma Webinar | Singapore Investment Ideas

Join us on 11 August, 5pm SGT, when we talk to Nicolas Van Broekhoven about some of his favourite Singapore-based small- and mid-cap investment...

Smartkarma Research

ESR Cayman (1821 HK) Takes Out ARA Asset Management

This looks like a great deal for ESR. But the company looks full here compared to historical metrics. Plus there is an indication of further...

David Blennerhassett

Vertex Holdings: Singapore's Showcasing SPAC

Vertex, Temasek's venture capital arm, appears to tick all the right boxes towards instilling a modicum of confidence in Singapore's initial foray...

David Blennerhassett

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