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>After the failed attempt to merge with <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and the decision to take the SPAC route to market in the US, <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> has now reportedly taken a 4% stake in local digital and media powerhouse, <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>. It seems unlikely that this is purely a strategic stake and points the way toward future collaboration potentially in a number of areas.</p>
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<p><a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> remains a very interesting locally listed alternative to play digital media, e-commerce, and digital payments under one roof, with aspirations to emulate the success of  <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>.<a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener"></a></p>
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<p>In another related and interesting turn, Bukalapak, which is Indonesia's 3rd largest e-commerce firm 35% owned by <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> has raised an undisclosed sum from BRI Ventures, the venture capital arm of <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia (BBRI IJ)</a>. </p>
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<p>Bukalapak claims that it now has around 13.5m MSMEs on its platform and over 100m users on its online to offline (O20) platform. </p>
<p>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> entity to be named "GoTo" will be a formidable competitor for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a>, a risk not highlighted enough in the seeming euphoria around the <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> SPAC listing.</p>
<p>Another significant risk to Grab comes from recently launched ShopeeFood in Indonesia, which will directly impact Grab's (and Gojek's) food delivery business in Indonesia.</p>
<p>From a SotP point of view for <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>, it is difficult to get much beyond a US$4bn valuation but there are those arguing that it should be valued along the same lines as <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>, which would suggest potential significant upside from here.</p>
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After the failed attempt to merge with Gojek and the decision to take the SPAC route to market in the US, Grab (0967655D SP) has now reportedly taken a 4% stake in local digital and media powerhouse, Emtek (EMTK IJ). It seems unlikely that this is purely a strategic stake and points the way toward future collaboration potentially in a number of areas.

Emtek (EMTK IJ) remains a very interesting locally listed alternative to play digital media, e-commerce, and digital payments under one roof, with aspirations to emulate the success of  Sea Ltd (SE US).

In another related and interesting turn, Bukalapak, which is Indonesia's 3rd largest e-commerce firm 35% owned by Emtek (EMTK IJ) has raised an undisclosed sum from BRI Ventures, the venture capital arm of Bank Rakyat Indonesia (BBRI IJ). 

Bukalapak claims that it now has around 13.5m MSMEs on its platform and over 100m users on its online to offline (O20) platform. 
The merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) entity to be named "GoTo" will be a formidable competitor for Grab, a risk not highlighted enough in the seeming euphoria around the Grab SPAC listing.
Another significant risk to Grab comes from recently launched ShopeeFood in Indonesia, which will directly impact Grab's (and Gojek's) food delivery business in Indonesia.
From a SotP point of view for Emtek (EMTK IJ), it is difficult to get much beyond a US$4bn valuation but there are those arguing that it should be valued along the same lines as Sea Ltd (SE US), which would suggest potential significant upside from here.









Emtek (EMTK IJ) - The Indonesian Digital Game of Thrones

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>  has been at the centre of a crackdown by Beijing since November 2020, when Chinese regulators halted the US$35bn IPO of Ant Group, the world’s largest financial technology company.</p><p>China’s competition regulator, the State Administration for Market Regulation (SAMR) formally approved the draft anti-monopoly law released in November 2020 to further tighten restrictions on the country’s tech giants.</p><p>The SAMR imposed a fine of RMB18.2bn on Alibaba for violating anti-monopoly rules and abusing its market dominant position on 10<sup>th</sup> April. After Alibaba, all eyes have turned on Tencent whether it could become the next target for increased supervision.</p><p>It was reported by several news media outlets that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> had met with China’s antitrust watchdog officials to discuss compliance at Tencent, indicating that it could soon become the target by Beijing.</p><p>Tencent announced last week that it will be merging its long-form video platform (Tencent Video) and short-video service (Weishi) into a new operation that will form part of the company’s Platform and Content Group (PCG) in order to compete with rival ByteDance. Tencent created its PCG unit in 2018 by combining its social networks, online media and mobile internet operations and launched Weishi as a stand-alone service in 2018.</p>

Alibaba Group (9988 HK)  has been at the centre of a crackdown by Beijing since November 2020, when Chinese regulators halted the US$35bn IPO of Ant Group, the world’s largest financial technology company.China’s competition regulator, the State Administration for Market Regulation (SAMR) formally approved the draft anti-monopoly law released in November 2020 to further tighten restrictions on the country’s tech giants.The SAMR imposed a fine of RMB18.2bn on Alibaba for violating anti-monopoly rules and abusing its market dominant position on 10th April. After Alibaba, all eyes have turned on Tencent whether it could become the next target for increased supervision.It was reported by several news media outlets that Tencent Holdings (700 HK) had met with China’s antitrust watchdog officials to discuss compliance at Tencent, indicating that it could soon become the target by Beijing.Tencent announced last week that it will be merging its long-form video platform (Tencent Video) and short-video service (Weishi) into a new operation that will form part of the company’s Platform and Content Group (PCG) in order to compete with rival ByteDance. Tencent created its PCG unit in 2018 by combining its social networks, online media and mobile internet operations and launched Weishi as a stand-alone service in 2018.

Tencent: Only Fintech Restructuring or Losing the Edge on WeChat User Data?

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

Futu Holdings Ltd / Equity Capital Markets

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<p><a href="https://www.smartkarma.com/entities/27858" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FHL US)</a> aims to raise around US$1.7bn to support its margin financing and other businesses.</p>
<p>We covered the previous placement which took place in Aug 2020 in:</p>
<p><a href="https://www.smartkarma.com/insights/futu-holdings-placement-riding-high-on-momentum" target="_blank" rel="noopener">Futu Holdings Placement - Riding High on Momentum</a></p>
</div><div><p>We also covered the company's IPO in 2019: </p></div><div><ul style="list-style-type: disc;">
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<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-great-metrics-but-in-a-commoditised-industry" target="_blank" rel="noopener">Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry</a>, </li>
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<a href="https://www.smartkarma.com/insights/futu-holdings-pre-ipo-fy18-updates-and-quick-thoughts-on-valuation" target="_blank" rel="noopener">Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation</a>,</li>
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<a href="https://www.smartkarma.com/insights/futu-holdings-ipo-given-the-team-execution-and-backers-might-be-worth-a-look-at-the-low-end" target="_blank" rel="noopener">Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End</a>, and</li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-quick-note-comparison-with-tiger-brokers-same-market-different-economics" target="_blank" rel="noopener">Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics</a></li>
<li><a href="https://www.smartkarma.com/insights/futu-holdings-ipo-trading-update-might-be-trading-a-little-too-high" target="_blank" rel="noopener">Futu Holdings IPO Trading Update - Might Be Trading a Little Too High</a></li>
</ul></div><div><p>In this note, we will talk about the deal dynamics.</p></div>


Futu Holdings Ltd (FHL US) aims to raise around US$1.7bn to support its margin financing and other businesses.
We covered the previous placement which took place in Aug 2020 in:
Futu Holdings Placement - Riding High on Momentum
We also covered the company's IPO in 2019: 

Futu Holdings Pre-IPO - Great Metrics but in a Commoditised Industry, 

Futu Holdings Pre-IPO - FY18 Updates And Quick Thoughts on Valuation,

Futu Holdings IPO - Given the Team, Execution, and Backers, Might Be Worth a Look at the Low-End, and
Futu Holdings IPO Quick Note - Comparison with Tiger Brokers - Same Market, Different Economics
Futu Holdings IPO Trading Update - Might Be Trading a Little Too High
In this note, we will talk about the deal dynamics.

Futu Holdings Placement - Very Strong Momentum but Previous Deal Did Nothing

Global TMT analyst with Asia ex-Japan focus.

Mitchell Kim

<p>On Monday, 12 April 2021, PBoC stated that Ant Group met with regulators and announced its business restructuring to comply with new regulations.  (See our report, <a href="https://www.smartkarma.com/insights/alibaba-baba-us-ant-group-pay-get-out-move-forward" target="_blank" data-smartkarma-citation="insights:50254" rel="noopener">Alibaba (BABA US): Ant Group - Pay, Get Out, Move Forward)</a> While the media and the global investment community focused on Ant Group because of the much-publicized canceled IPO in November 2020, we believe the potential valuation risk of Tencent <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> and its associate, Webank, was overlooked, in my view.</p><p>This report highlights three key thoughts:</p><ul>
<li>While Ant Group’s devaluation weighed down Alibaba’s shares, Tencent’s shares did not fully price in the adverse impact of the regulatory change.</li>
<li>Tencent’s shares could be overvalued by 20% as the market did not reflect the lower fintech value.</li>
<li>Even though Ant Group’s fintech business is larger (see our direct comparison chart), I argue that the impact on Tencent’s shares is bigger than it does for <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> because Tencent’s fintech business is wholly owned compared to Alibaba’s 33% stake in Ant Group. </li>
</ul><p>In this report, we also provide a detailed look at Tencent’s fintech business and WeBank’s financials based on WeBank’s 2019 annual report.</p>

On Monday, 12 April 2021, PBoC stated that Ant Group met with regulators and announced its business restructuring to comply with new regulations.  (See our report, Alibaba (BABA US): Ant Group - Pay, Get Out, Move Forward) While the media and the global investment community focused on Ant Group because of the much-publicized canceled IPO in November 2020, we believe the potential valuation risk of Tencent Tencent Holdings (700 HK) and its associate, Webank, was overlooked, in my view.This report highlights three key thoughts:
While Ant Group’s devaluation weighed down Alibaba’s shares, Tencent’s shares did not fully price in the adverse impact of the regulatory change.
Tencent’s shares could be overvalued by 20% as the market did not reflect the lower fintech value.
Even though Ant Group’s fintech business is larger (see our direct comparison chart), I argue that the impact on Tencent’s shares is bigger than it does for Alibaba Group (BABA US) because Tencent’s fintech business is wholly owned compared to Alibaba’s 33% stake in Ant Group. 
In this report, we also provide a detailed look at Tencent’s fintech business and WeBank’s financials based on WeBank’s 2019 annual report.

Tencent (700 HK): Fintech Risk Is Lurking

China and US Equity Analyst

Roger Xie

Thematic (Sector/Industry)

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<li>China digital Yuan has made a splash to expand its pioneer program to 10 cities since the initial launch in May 2020. So far, more than 750,000 early recipients have already spent digital Yuan and total transaction has exceed RMB 1 billion. China digital Yuan will likely form a disruptive payment system given its advantage over other app-based payments such as Alipay and WeChat. It is widely believed that China government will raise the amount of digital currency in the future and lower physical cash in circulation. </li>
<li>Compared with cryptocurrency, China digital Yuan has a couple of distinctions: 1) China Digital Currency/Electronic Payment (DC/EP) system will feature two-tier issuance, with the PBOC issuing digital currency for both commercial banks and customers; (2) controllable anonymity, with DC/EP wallets independent of bank accounts for smaller transactions; and (3) centralized processing instead of a distributed ledger.</li>
<li>Digital economy has accounted 36% in China and pandemic has accelerated its acceptance. The rising of China Digital Currency/Electronic Payment (DC/EP) system could be disruptive to financial system. We believe it will lead the changes in payment, risk control, user data and credit history etc. in financial system.  Not only tech giant such as <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK), </a>but Chinese banks need to renovate their infrastructure for digital transformation. </li>
</ul>


China digital Yuan has made a splash to expand its pioneer program to 10 cities since the initial launch in May 2020. So far, more than 750,000 early recipients have already spent digital Yuan and total transaction has exceed RMB 1 billion. China digital Yuan will likely form a disruptive payment system given its advantage over other app-based payments such as Alipay and WeChat. It is widely believed that China government will raise the amount of digital currency in the future and lower physical cash in circulation. 
Compared with cryptocurrency, China digital Yuan has a couple of distinctions: 1) China Digital Currency/Electronic Payment (DC/EP) system will feature two-tier issuance, with the PBOC issuing digital currency for both commercial banks and customers; (2) controllable anonymity, with DC/EP wallets independent of bank accounts for smaller transactions; and (3) centralized processing instead of a distributed ledger.
Digital economy has accounted 36% in China and pandemic has accelerated its acceptance. The rising of China Digital Currency/Electronic Payment (DC/EP) system could be disruptive to financial system. We believe it will lead the changes in payment, risk control, user data and credit history etc. in financial system.  Not only tech giant such as Alibaba Group (BABA US) and Tencent Holdings (700 HK), but Chinese banks need to renovate their infrastructure for digital transformation. 


China Digital Currency: Leading the Innovation in Financial System

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Emtek (EMTK IJ) - The Indonesian Digital Game of Thrones

EMTEK remains the largest locally listed proxy to play digital media, e-commerce, and digital payments in Indonesia. The news that Grab has taken a...

Angus Mackintosh

Tencent: Only Fintech Restructuring or Losing the Edge on WeChat User Data?

We believe the recent developments in the Chinese fintech regulatory landscape could have a material impact on the company’s earnings and growth...

Shifara Samsudeen, ACMA, CGMA

Futu Holdings Placement - Very Strong Momentum but Previous Deal Did Nothing

Futu Holdings Ltd (FHL US) aims to raise around US$1.7bn to support its margin financing and other businesses. In this note we will talk about the...

Sumeet Singh

Tencent (700 HK): Fintech Risk Is Lurking

BABA is down 19% since 9 Nov 2020 when the Ant Group IPO was canceled. Fintech business has an even greater impact on Tencent's value. Tencent is...

Mitchell Kim

China Digital Currency: Leading the Innovation in Financial System

The rising of China Digital Yuan system could be disruptive to financial system. We believe it will lead the changes in payment, risk control, user...

Roger Xie

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