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

<div class="content-highlight">
<p>This past week's offering of Insights across 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.</p>
<p>Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma.</a></p>
</div><h2>Macro Insights</h2><p>In <a href="https://www.smartkarma.com/insights/mid-year-thai-strategy-review-2020-focus-on-recovery-plays" target="_blank" data-smartkarma-citation="insights:38781" rel="noopener">Mid-Year Thai Strategy Review 2020: Focus on Recovery Plays,</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 thoughts and recommendations for 2H2020 in Thailand. </p><h2>Equity Bottom-Up  Insights</h2><p>In <a href="https://www.smartkarma.com/insights/telekomunikasi-indonesia-tlkm-ij-nurturing-the-new-economy" target="_blank" data-smartkarma-citation="insights:40041" rel="noopener">Telekomunikasi Indonesia (TLKM IJ) - Nurturing the New Economy,</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 Indonesia's largest telco and finds it making significant strides into the digital economy. </p><p>In <a href="https://www.smartkarma.com/insights/valuetronics-value-sp-cash-is-an-important-asset-expansion-in-vietnam-continues" target="_blank" data-smartkarma-citation="insights:40015" rel="noopener">Valuetronics (VALUE SP): Cash Is an Important Asset + Expansion in Vietnam Continues,</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 this electronics player and although valuations look cheap, it faces headwinds from its predominantly Chinese production together with a large market focus on the USA. </p><p>In <a href="https://www.smartkarma.com/insights/comfort-delgro-cd-back-to-office-bto" target="_blank" data-smartkarma-citation="insights:40020" rel="noopener">Comfort Delgro (CD): Back-To-Office (BTO),</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> circles back to this Singapore taxi operator in light of a lifting of the circuit breaker in the near future.</p><p>In <a href="https://www.smartkarma.com/insights/bdo-unibank-is-a-capital-raise-next" target="_blank" data-smartkarma-citation="insights:39969" rel="noopener">BDO Unibank – Is A Capital Raise Next?,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> zeros in on Philippine bank <a href="https://www.smartkarma.com/entities/bdo-unibank-inc" target="_blank" data-smartkarma-citation="entities:329:1" rel="noopener">BDO Unibank Inc (BDO PM)</a> after the announcement of a special loan loss provision. </p><p>In <a href="https://www.smartkarma.com/insights/singapore-air-the-rights-distribution-vol-is-your-friend" target="_blank" data-smartkarma-citation="insights:39991" rel="noopener">Singapore Air - The Rights Distribution - Vol Is Your Friend,</a><a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> revisits <a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">Singapore Airlines (SIA SP)</a> post its rights issue. </p><p>In <a href="https://www.smartkarma.com/insights/singapore-air-aftermath-of-the-rights" target="_blank" data-smartkarma-citation="insights:39837" rel="noopener">Singapore Air - Aftermath of the Rights,</a><a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> takes a step back and reviews the potential post-rights positioning for <a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">Singapore Airlines (SIA SP).</a></p><p>In <a href="https://www.smartkarma.com/insights/vgi-most-solid-player-in-media-sector" target="_blank" data-smartkarma-citation="insights:40073" rel="noopener">VGI: Most Solid Player in Media Sector,</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> revisit <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> having attended the analyst meeting on 2nd June, where they came back with a neutral tone. </p><p>In <a href="https://www.smartkarma.com/insights/gulf-fastest-growing-utility-player-in-thailand" target="_blank" data-smartkarma-citation="insights:40103" rel="noopener">GULF: Fastest Growing Utility Player in Thailand,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> initiate coverage of <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> with a BUY rating, based on a 2021E target price of Bt44.6, derived from a sum-of-the-parts (SOTP) methodology.</p><p>In <a href="https://www.smartkarma.com/insights/singapore-press-reach-for-1-18" target="_blank" data-smartkarma-citation="insights:39976" rel="noopener">Singapore Press Reach for SGD1.18,</a> technical analysis specialist <a href="https://www.smartkarma.com/profiles/thomas-schroeder" target="_blank" data-smartkarma-citation="accounts:381" rel="noopener">Thomas Schroeder</a> works his magic on <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> and takes a bearish view on the removal from the Index the company created.</p><h2>
<a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener"></a>Sector and Thematic Insights</h2><p>In <a href="https://www.smartkarma.com/insights/singapore-reits-new-rental-relief-framework-for-smes" target="_blank" data-smartkarma-citation="insights:40053" rel="noopener">Singapore REITs - New Rental Relief Framework for SMEs,</a><a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> revisits the Singapore REITs sector post the announcement of rental relief for SMEs by the Government. </p><p>In <a href="https://www.smartkarma.com/insights/sti-index-review-and-ironic-it-is" target="_blank" data-smartkarma-citation="insights:40037" rel="noopener">STI Index Review - And Ironic It Is!,</a><a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> comments the review of the <a href="https://www.smartkarma.com/entities/ftse-straits-times-index-sti" target="_blank" data-smartkarma-citation="entities:22902:1" rel="noopener">FTSE Straits Times Index (STI) (STI INDEX)</a> which took place last week. </p><p>In <a href="https://www.smartkarma.com/insights/klci-index-review-liquidity-play" target="_blank" data-smartkarma-citation="insights:40040" rel="noopener">KLCI Index Review - Liquidity Play,</a><a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> comments on the recent changes to the <a href="https://www.smartkarma.com/entities/kuala-lumpur-composite-index" target="_blank" data-smartkarma-citation="entities:22913:1" rel="noopener">Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX). </a></p><p>In <a href="https://www.smartkarma.com/insights/singapore-sti-laggard-play" target="_blank" data-smartkarma-citation="insights:39943" rel="noopener">Singapore STI Laggard Play,</a> technical analysis specialist <a href="https://www.smartkarma.com/profiles/thomas-schroeder" target="_blank" data-smartkarma-citation="accounts:381" rel="noopener">Thomas Schroeder</a> comments on Singapore's ST Index and sees it as an attractive laggard. </p><h2>Credit Insights</h2><p>In <a href="https://www.smartkarma.com/insights/olam-international-cocoa-against-covid" target="_blank" data-smartkarma-citation="insights:40059" rel="noopener">Olam International: Cocoa Against COVID,</a> Credit specialist <a href="https://www.smartkarma.com/profiles/warut-promboon" target="_blank" data-smartkarma-citation="accounts:1226" rel="noopener">Warut Promboon</a> initiates coverage on Singapore-based commodity player <a href="https://www.smartkarma.com/entities/olam-international-ltd" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam International (OLAM SP),</a> as management shifts to more value-added businesses and processes. </p><p>In <a href="https://www.smartkarma.com/insights/oue-ltd-bonds-not-joining-the-party" target="_blank" data-smartkarma-citation="insights:39999" rel="noopener">OUE Ltd. - Bonds Not Joining the Party,</a> Credit Specialist <a href="https://www.smartkarma.com/profiles/lakshmi-iyer-cfa" target="_blank" data-smartkarma-citation="accounts:9363" rel="noopener">Lakshmi Iyer, CFA</a> takes a look at this Singapore property company's 2023 bonds. </p><div><div id="ember56480"><section></section></div></div><div><div id="ember56622"><div id="ember56623"><div></div></div></div></div>


This past week's offering of Insights across 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.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma.
Macro InsightsIn Mid-Year Thai Strategy Review 2020: Focus on Recovery Plays, our Thai guru Athaporn Arayasantiparb, CFA lays out his thoughts and recommendations for 2H2020 in Thailand. Equity Bottom-Up  InsightsIn Telekomunikasi Indonesia (TLKM IJ) - Nurturing the New Economy, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia's largest telco and finds it making significant strides into the digital economy. In Valuetronics (VALUE SP): Cash Is an Important Asset + Expansion in Vietnam Continues, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits this electronics player and although valuations look cheap, it faces headwinds from its predominantly Chinese production together with a large market focus on the USA. In Comfort Delgro (CD): Back-To-Office (BTO), CrossASEAN Insight Provider Henry Soediarko circles back to this Singapore taxi operator in light of a lifting of the circuit breaker in the near future.In BDO Unibank – Is A Capital Raise Next?,Thomas J. Monaco zeros in on Philippine bank BDO Unibank Inc (BDO PM) after the announcement of a special loan loss provision. In Singapore Air - The Rights Distribution - Vol Is Your Friend,Travis Lundy revisits Singapore Airlines (SIA SP) post its rights issue. In Singapore Air - Aftermath of the Rights,Travis Lundy takes a step back and reviews the potential post-rights positioning for Singapore Airlines (SIA SP).In VGI: Most Solid Player in Media Sector, our friends at Country Group revisit VGI PCL (VGI TB) having attended the analyst meeting on 2nd June, where they came back with a neutral tone. In GULF: Fastest Growing Utility Player in Thailand,Country Group initiate coverage of Gulf Energy Development Public Company (GULF TB) with a BUY rating, based on a 2021E target price of Bt44.6, derived from a sum-of-the-parts (SOTP) methodology.In Singapore Press Reach for SGD1.18, technical analysis specialist Thomas Schroeder works his magic on Singapore Press Holdings (SPH SP) and takes a bearish view on the removal from the Index the company created.
Sector and Thematic InsightsIn Singapore REITs - New Rental Relief Framework for SMEs,Sumeet Singh revisits the Singapore REITs sector post the announcement of rental relief for SMEs by the Government. In STI Index Review - And Ironic It Is!,Brian Freitas comments the review of the FTSE Straits Times Index (STI) (STI INDEX) which took place last week. In KLCI Index Review - Liquidity Play,Brian Freitas comments on the recent changes to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX). In Singapore STI Laggard Play, technical analysis specialist Thomas Schroeder comments on Singapore's ST Index and sees it as an attractive laggard. Credit InsightsIn Olam International: Cocoa Against COVID, Credit specialist Warut Promboon initiates coverage on Singapore-based commodity player Olam International (OLAM SP), as management shifts to more value-added businesses and processes. In OUE Ltd. - Bonds Not Joining the Party, Credit Specialist Lakshmi Iyer, CFA takes a look at this Singapore property company's 2023 bonds. 

The Week that Was in ASEAN@Smartkarma - Thai Strategy, New Economy Telco, and Olam

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

<p style="text-align: justify;">We initiate our coverage of <a href="https://www.smartkarma.com/entities/olam-international-ltd" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam International (OLAM SP)</a> (Olam), a leading global food and agri-business with &gt;30 years of track record, headquartered in Singapore and majority-owned by the Singapore quasi-sovereign <a href="https://www.smartkarma.com/entities/temasek-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:28816:1" rel="noopener">Temasek Holdings Pte Ltd (TMSK SP)</a>. The group laid out its 6-year strategic plan in 2019 to streamline its operations to be more focused on growth food segments, in line with healthy living and staples that are recession-proof so as to achieve its target to be the most differentiated and valuable global food and agri-business by 2024. This has resulted in divestments of non-prioritized businesses and assets since 2019 and more will be seen this year.</p><p style="text-align: justify;">Olam’s core business has been relatively low-margin and often exposed to the volatilities inherent in the agricultural and commodity sectors. As such, management looks to shift to a more value-added ingredient business and to add significant investments in mid-stream and processing activities so as to have greater pricing power and greater customer loyalty. As such, we expect the Group to remain highly leveraged on its capex stemming from expansion plans. Nevertheless, net gearing fell to a more comfortable 0.3x last December, after adjusting for realisable marketable inventories, secured receivables, and cash. We believe the two new separate entities will go for separate listings (IPOs) to bring in fresh equity funds when market conditions improve. We expect free cashflows to remain positive this year and next, due to full-year contributions from new investments in 2019, and proceeds from its ongoing divestments.</p><p style="text-align: justify;"><span>Based on YTMs at t</span><span>ime of writing, we believe the maturing OLAMPSP 20s are fairly-valued and assign a <strong>NEUTRAL</strong> recommendation. The rest of OLAMSP USD complex (EXHIBIT 1) is attractive against the “B+” benchmark and we assign an <strong>OVERWEIGHT</strong> recommendation which is based on (1) Olam’s potential revenue growth from its cocoa, grain, and animal feeds, and (2) potential IPOs of the Group’s two key businesses which would de-lever the Group’s balance sheets. On the other hand, the OLAMSP SGD complex is unattractive versus its USD counterparts and we assign an <strong>UNDERWEIGHT</strong> recommendation.</span></p>

We initiate our coverage of Olam International (OLAM SP) (Olam), a leading global food and agri-business with &gt;30 years of track record, headquartered in Singapore and majority-owned by the Singapore quasi-sovereign Temasek Holdings Pte Ltd (TMSK SP). The group laid out its 6-year strategic plan in 2019 to streamline its operations to be more focused on growth food segments, in line with healthy living and staples that are recession-proof so as to achieve its target to be the most differentiated and valuable global food and agri-business by 2024. This has resulted in divestments of non-prioritized businesses and assets since 2019 and more will be seen this year.Olam’s core business has been relatively low-margin and often exposed to the volatilities inherent in the agricultural and commodity sectors. As such, management looks to shift to a more value-added ingredient business and to add significant investments in mid-stream and processing activities so as to have greater pricing power and greater customer loyalty. As such, we expect the Group to remain highly leveraged on its capex stemming from expansion plans. Nevertheless, net gearing fell to a more comfortable 0.3x last December, after adjusting for realisable marketable inventories, secured receivables, and cash. We believe the two new separate entities will go for separate listings (IPOs) to bring in fresh equity funds when market conditions improve. We expect free cashflows to remain positive this year and next, due to full-year contributions from new investments in 2019, and proceeds from its ongoing divestments.Based on YTMs at time of writing, we believe the maturing OLAMPSP 20s are fairly-valued and assign a NEUTRAL recommendation. The rest of OLAMSP USD complex (EXHIBIT 1) is attractive against the “B+” benchmark and we assign an OVERWEIGHT recommendation which is based on (1) Olam’s potential revenue growth from its cocoa, grain, and animal feeds, and (2) potential IPOs of the Group’s two key businesses which would de-lever the Group’s balance sheets. On the other hand, the OLAMSP SGD complex is unattractive versus its USD counterparts and we assign an UNDERWEIGHT recommendation.

Singapore

Temasek Holdings (Private) Limited operates as an investment company. The Company invests in financial services, telecommunications, media, technology, transportation, industrials, life sciences, consumer, real estate, energy and resources industries. Temasek Holdings serves customers worldwide.

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Temasek Holdings Pte Ltd (TMSK SP)

The Week that Was in ASEAN@Smartkarma - Thai Strategy, New Economy Telco, and Olam

This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable...

Angus Mackintosh

Olam International: Cocoa Against COVID

We initiate our coverage of Olam International (OLAM SP) (Olam), a leading global food and agri-business with >30 years of track record,...

Bondcritic

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