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

<p>Indonesia’s biggest milk company <a href="https://www.smartkarma.com/entities/ultrajaya-milk-industry-trading-company" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Industry &amp; Trading (ULTJ IJ)</a> recently announced its 3Q2020 results, which saw a resilient performance from its dairy business and less so from packet tea. We caught up with management to garner a bit more colour on the simmering recovery that is taking place. </p>
<p>In the dairy division white milk in larger packet sizes has been doing especially well, given the large portion of the population working and schooling from home. </p>
<p>Smaller packet flavoured milks and packet tea under the Teh Sosroh brand continue to be under pressure given these are often picked up on the move but we expect a decent recovery as the economy opens up. </p>
<p><a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> is likely to see a marginally slower growth performance this year but a continued rebound in earnings should be expected in 4Q2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. </p>
<p>The company has opened a new Tetrapak line for larger packets to satisfy the growing demand for family packs. It is also investing in two large-sized dairy farms to ensure local supply.</p>
<p>Next year the company will invest in a new production and distribution centre closer to Jakarta, which will diversify its operations geographically. It has successfully secured IDR3tn in medium-term notes to finance its expansion. </p>
<p>Valuations remain attractive with the company trading on 15.5x FY21E PER versus its peer group average of 26x forward PER. <a href="https://www.smartkarma.com/entities/ultrajaya-milk-ind-trading" target="_blank" data-smartkarma-citation="entities:13892:1" rel="noopener">Ultrajaya Milk Ind &amp; Trading (ULTJ IJ)</a> remains a core staple holding in Indonesia and one of our top long-term consumer picks. </p>

Indonesia’s biggest milk company Ultrajaya Milk Industry &amp; Trading (ULTJ IJ) recently announced its 3Q2020 results, which saw a resilient performance from its dairy business and less so from packet tea. We caught up with management to garner a bit more colour on the simmering recovery that is taking place. 
In the dairy division white milk in larger packet sizes has been doing especially well, given the large portion of the population working and schooling from home. 
Smaller packet flavoured milks and packet tea under the Teh Sosroh brand continue to be under pressure given these are often picked up on the move but we expect a decent recovery as the economy opens up. 
Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) is likely to see a marginally slower growth performance this year but a continued rebound in earnings should be expected in 4Q2020, driven by a move to a "new normal" in Indonesia and a gradual opening up of the economy. 
The company has opened a new Tetrapak line for larger packets to satisfy the growing demand for family packs. It is also investing in two large-sized dairy farms to ensure local supply.
Next year the company will invest in a new production and distribution centre closer to Jakarta, which will diversify its operations geographically. It has successfully secured IDR3tn in medium-term notes to finance its expansion. 
Valuations remain attractive with the company trading on 15.5x FY21E PER versus its peer group average of 26x forward PER. Ultrajaya Milk Ind &amp; Trading (ULTJ IJ) remains a core staple holding in Indonesia and one of our top long-term consumer picks. 

Ultrajaya Milk Industry & Trading (ULTJ IJ) - Simmering Recovery

Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> has confirmed that it has hired Morgan Stanley and Citigroup as advisers to help accelerate its plan to go public. The company has not yet decided which route to take to come to market, whether through a straightforward IPO or a SPAC listing, potentially through Richard Li and Peter Thiel's Bridgetown Holdings Ltd.</p>
<p>The company had previously stated that it would definitely seek a listing in its home market of Indonesia, with a potential dual listing in the US, although these statements were made pre-pandemic. </p>
<p>Valuations for <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> range from US$8-10bn, although after the last round of funding it was valued at US$7.5bn, making it Indonesia's second most valuation start-up after <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a>, which was last valued at US$10bn.</p>
<p>An IPO would help the company realize a higher valuation, providing a currency to drive future growth, given it would be an alternative to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US), </a>as the number 2 e-commerce player in Indonesia. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades at 13x FY21E EV/Sales currently and just raised more than US$2bn through a placement of new ADS's. We look at <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and its positioning in more detail below the fold. </p>

Tokopedia PT (1087142D IJ) has confirmed that it has hired Morgan Stanley and Citigroup as advisers to help accelerate its plan to go public. The company has not yet decided which route to take to come to market, whether through a straightforward IPO or a SPAC listing, potentially through Richard Li and Peter Thiel's Bridgetown Holdings Ltd.
The company had previously stated that it would definitely seek a listing in its home market of Indonesia, with a potential dual listing in the US, although these statements were made pre-pandemic. 
Valuations for Tokopedia PT (1087142D IJ) range from US$8-10bn, although after the last round of funding it was valued at US$7.5bn, making it Indonesia's second most valuation start-up after Gojek (1379371D IJ), which was last valued at US$10bn.
An IPO would help the company realize a higher valuation, providing a currency to drive future growth, given it would be an alternative to Sea Ltd (SE US), as the number 2 e-commerce player in Indonesia. Sea Ltd (SE US) trades at 13x FY21E EV/Sales currently and just raised more than US$2bn through a placement of new ADS's. We look at Tokopedia PT (1087142D IJ) and its positioning in more detail below the fold. 

Tokopedia PT (1087142D IJ) - From Private to Public by Hook or by Crook

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

Blue Moon Group Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> (BMG) raised around US$1.4bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. </p></div><div><p>We have covered various aspects of the deal, in our earlier insights:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-positives-dominant-market-share-strong-online-sales" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales</a></li>
<li>In <a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-negatives-flagging-offline-sales-not-really-a-primary-raising" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising</a>
</li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-no-1-but-no-exclusive-advantage-observation-on-the-ground" target="_blank" rel="noopener">Blue Moon: No. 1 but no exclusive advantage, observation on the ground.</a></li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-online-reviews-and-peer-comparison" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison</a></li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-initial-thoughts-on-valuation" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Initial Thoughts on Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-phip-updates-a-mixed-bag" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag</a></li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-valuation-updates" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Valuation Updates</a></li>
<li><a href="https://www.smartkarma.com/insights/blue-moon-group-ipo-not-a-clean-wash" target="_blank" rel="noopener">Blue Moon Group IPO - Not a Clean Wash</a></li>
</ul></div><div><p>In this insight, I'll talk about the subscription levels and provide a table with implied valuations.</p></div>

Blue Moon Group Holdings (BMG HK) (BMG) raised around US$1.4bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. We have covered various aspects of the deal, in our earlier insights:
Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales
In Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising

Blue Moon: No. 1 but no exclusive advantage, observation on the ground.
Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison
Blue Moon Group Pre-IPO - Initial Thoughts on Valuation
Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag
Blue Moon Group Pre-IPO - Valuation Updates
Blue Moon Group IPO - Not a Clean Wash
In this insight, I'll talk about the subscription levels and provide a table with implied valuations.

Blue Moon Group IPO Trading - Too Expensive for Our Liking but Retail Traders Seem to Like It

<div><p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> (BMG) aims to raise up to US$1.3bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. </p></div><div><p>BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19. </p></div><div><p> I have covered various aspects of the deal, in my earlier insights:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-positives-dominant-market-share-strong-online-sales" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales</a>, I spoke about the positive aspects of the deal.</li>
<li>In <a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-negatives-flagging-offline-sales-not-really-a-primary-raising" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising</a>, I spoke about the not so flattering aspects of the deal</li>
<li>While my colleague, <a href="https://www.smartkarma.com/profiles/ming-lu" target="_blank" data-smartkarma-citation="accounts:2496" rel="noopener">Ming Lu, </a>commented on the offline presence in <a href="https://www.smartkarma.com/insights/blue-moon-no-1-but-no-exclusive-advantage-observation-on-the-ground" target="_blank" rel="noopener">Blue Moon: No. 1 but no exclusive advantage, observation on the ground.</a>
</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-online-reviews-and-peer-comparison" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison</a>, I compared the company compares with some of its listed peers.</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-initial-thoughts-on-valuation" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Initial Thoughts on Valuation</a>, I took a first stab at valuations.</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-phip-updates-a-mixed-bag" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag</a>, I spoke about the updates from the PHIP filing</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-valuation-updates" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Valuation Updates</a>, I spoke about updates to my previous valuation</li>
</ul></div><div><p>In this insight, I'll run the deal through our ECM framework</p></div>

Blue Moon Group Holdings (BMG HK) (BMG) aims to raise up to US$1.3bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19.  I have covered various aspects of the deal, in my earlier insights:

Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales, I spoke about the positive aspects of the deal.
In Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising, I spoke about the not so flattering aspects of the deal
While my colleague, Ming Lu, commented on the offline presence in Blue Moon: No. 1 but no exclusive advantage, observation on the ground.


Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison, I compared the company compares with some of its listed peers.

Blue Moon Group Pre-IPO - Initial Thoughts on Valuation, I took a first stab at valuations.

Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag, I spoke about the updates from the PHIP filing

Blue Moon Group Pre-IPO - Valuation Updates, I spoke about updates to my previous valuation
In this insight, I'll run the deal through our ECM framework

<p><a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" data-smartkarma-citation="entities:3121:1" rel="noopener">Lippo Karawaci (LPKR IJ)</a> has not had an easy time of it over the past two years, with a complicated financial restructuring and rights issue but that is now behind the company, with a new high caliber management team driving its core property, and other businesses forward. </p>
<p>The company is now focused on three core pillars, which include its property development, investment property and hospitals business under <a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ),</a> and its fund management business, which covers its Singapore listed REITS in including <a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848:1" rel="noopener">First REIT (FIRT SP)</a> and <a href="https://www.smartkarma.com/entities/lippo-malls-indonesia-retail-trust" target="_blank" data-smartkarma-citation="entities:10946:1" rel="noopener">Lippo Malls Indonesia Retail Trust (LMRT SP).</a></p>
<p>The core property business is back in business, with the company already surpassing its FY20E marketing sales target of IDR2.5tn by October versus IDR1.9bn last year, and with a more aggressive target of IDR3.5tn for FY2021E, with quality of the earnings improving, with less raw land sales. </p>
<p><a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" data-smartkarma-citation="entities:3121:1" rel="noopener">Lippo Karawaci (LPKR IJ)</a> is also working on developing and selling its legacy high rise project. These have experienced some COVID-19 related delays but will start in 2021, with a finite cost to complete those projects.</p>
<p>The company's real estate management and hospital business has seen more COVID-19 impact with obvious pressure on rentals and revenues at <a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> down by -4%, only supported by increased exposure to COVID-19 testing, with patient volumes down -25%. for 9M2020.</p>
<p>The sale of the Puri Mall to <a href="https://www.smartkarma.com/entities/lippo-malls-indonesia-retail-trust" target="_blank" data-smartkarma-citation="entities:10946:1" rel="noopener">Lippo Malls Indonesia Retail Trust (LMRT SP)</a> will likely complete in January/February 2021 but activity with its REITs is likely to be limited, especially with <a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848:1" rel="noopener">First REIT (FIRT SP)</a> as <a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> has slowed expansion and is focused on sweating its assets and bringing them to maturity. </p>
<p><a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" data-smartkarma-citation="entities:3121:1" rel="noopener">Lippo Karawaci (LPKR IJ)</a> will likely book a loss in 2020 but should turn a profit in 2021. It is currently trading on 0.6x FY2020PBV and at an 83% discount to the company's NAV.  This is by no means challenging for a company going through a meaningful turnaround, with an improving and more visible earnings outlook, as well as a relatively healthy balance sheet.</p>

Lippo Karawaci (LPKR IJ) has not had an easy time of it over the past two years, with a complicated financial restructuring and rights issue but that is now behind the company, with a new high caliber management team driving its core property, and other businesses forward. 
The company is now focused on three core pillars, which include its property development, investment property and hospitals business under Siloam International Hospital (SILO IJ), and its fund management business, which covers its Singapore listed REITS in including First REIT (FIRT SP) and Lippo Malls Indonesia Retail Trust (LMRT SP).
The core property business is back in business, with the company already surpassing its FY20E marketing sales target of IDR2.5tn by October versus IDR1.9bn last year, and with a more aggressive target of IDR3.5tn for FY2021E, with quality of the earnings improving, with less raw land sales. 
Lippo Karawaci (LPKR IJ) is also working on developing and selling its legacy high rise project. These have experienced some COVID-19 related delays but will start in 2021, with a finite cost to complete those projects.
The company's real estate management and hospital business has seen more COVID-19 impact with obvious pressure on rentals and revenues at Siloam International Hospital (SILO IJ) down by -4%, only supported by increased exposure to COVID-19 testing, with patient volumes down -25%. for 9M2020.
The sale of the Puri Mall to Lippo Malls Indonesia Retail Trust (LMRT SP) will likely complete in January/February 2021 but activity with its REITs is likely to be limited, especially with First REIT (FIRT SP) as Siloam International Hospital (SILO IJ) has slowed expansion and is focused on sweating its assets and bringing them to maturity. 
Lippo Karawaci (LPKR IJ) will likely book a loss in 2020 but should turn a profit in 2021. It is currently trading on 0.6x FY2020PBV and at an 83% discount to the company's NAV.  This is by no means challenging for a company going through a meaningful turnaround, with an improving and more visible earnings outlook, as well as a relatively healthy balance sheet.

Lippo Karawaci (LPKR IJ) - Reasons to Be Cheerful

Indonesia

PT Unilever Indonesia Tbk manufactures soaps, detergents, margarine, oil and dairy based foods, tea based beverages, ice cream, and cosmetics.

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Unilever Indonesia (UNVR IJ)

Ultrajaya Milk Industry & Trading (ULTJ IJ) - Simmering Recovery

Ultrajaya Milk Ind & Trading (ULTJ IJ) is the leading dairy company in Indonesia, dominating the UHT market. It continues to expand capacity and...

Angus Mackintosh

Tokopedia PT (1087142D IJ) - From Private to Public by Hook or by Crook

Tokopedia has confirmed that it is looking to go public and has enlisted Investment Banks to speed the process. This will give investors an...

Angus Mackintosh

Blue Moon Group IPO Trading - Too Expensive for Our Liking but Retail Traders Seem to Like It

Blue Moon Group Holdings (BMG HK) (BMG) raised around US$1.4bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in...

Sumeet Singh

Blue Moon Group IPO - Not a Clean Wash

Blue Moon Group Holdings (BMG HK) (BMG) aims to raise up to US$1.3bn in its Hong Kong listing. The company is backed by Hillhouse who first...

Sumeet Singh

Lippo Karawaci (LPKR IJ) - Reasons to Be Cheerful

Lippo Karawaci (LPKR IJ) has been through a financial restructuring and rights issue that is now behind it, with a new high-caliber management team...

Angus Mackintosh

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