Singapore

• Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
• In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results. 
• The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion. 

• The SPH REIT (SPHREIT SP) “option” has performed admirably so far, up 4.2% in a month, and now it is time to look elsewhere. 
• SPH REIT has outperformed its Retail S-REIT peers and is now near the top of its undisturbed 3-year range. 
• And there are potential large flow events on the horizon which would benefit the Peers more than SPH REIT.

• LVS is now entirely a balance sheet play in that its cash position vs. run rate assures good liquidity through the lingering covid crisis.
• Maturities of its debt pose no problems for refis until ’24,’25–and even minimal then.
• Recurring sporadic covid outbreaks and Beijing policies impede GGR recovery. We are moving LVS from BUY to HOLD to reflect the value of its sustainability rather than growth.

• Grab continues to innovate and adapt to more challenging times, with a needle focus on moving toward profitability with ongoing efforts to reduce incentives and rationalise non-core businesses.
• The launch of GrabMaps is interesting in that it has the potential to generate new revenue streams, create substantial cost savings, and enable targeted advertising adding to the enterprise segment.
• Grab (GRAB US)  has cash liquidity of US$8.2bn, which makes it look cheap relative to its market cap of only US$8.9bn and it is trading on 2.0x FY2023E EV/Sales. 

• Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion (vs US$2 billion previously), according to press reports. 
• In 1HFY2022, the group revenue returned to growth due to Vietnam. The easing of restrictions in Thailand should boost volumes in 2HFY2022.  
• Creditably despite rising raw material costs, the margins remained steady helped by forward buying contracts. However, the unwinding of the forward contracts will likely lead to margin pressures in FY2023.

For our next Corporate Webinar, we are glad to welcome Golden Agri Resources (GGR SP) Director, Investor Relations, Richard Fung. In the upcoming Webinar, Richard will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 5 July 2022, 17:00 SGT.

• The number of visitors arriving in Singapore went up by almost 8x YoY and rail and bus ridership already hit 78% of the pre-pandemic level.
• Won a bid to provide public transport in Darwin, Australia for the next 6 years, transporting approximately 5.7 million passengers annually (similar to Singapore’s population). 
• As COE > SGD 100,000, the incentive to own a car in Singapore is even less and is a positive for public transport operators like Comfortdelgro Corp (CD SP) .

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• On the ECM front, Thai Life Insurance (124744Z TB) and aCommerce Group (ACOM TB) are premarketing US$1bn and US$200m IPOs. Tianqi Lithium has passed the HKEx listing hearing for US$1-1.5bn raise.
• On the Event-Driven front, developments at Link Administration (LNK AU), Frasers Hospitality Trust (FHT SP), Link Net (LINK IJ), Resapp Health (RAP AU), Beijing Enterprises Urban Resources (3718 HK). 

• Grab is Southeast Asia’s dominant on-demand platform for ride-hailing and deliveries. It is also one of the top mobile wallet/fintech player in the region.

• Amidst the dramatic turn in macro and capital markets conditions, incentives spending in the industry seems to be coming down fast and across the board as management teams’ focus shifts to profitability.

• While share prices of tech companies have been severely punished, the downturn may also be a positive turning point to catalyze more rational industry behavior moving forward.

• Frasers Hospitality (FHT SP)‘s Offer comes at an all-time high price, exceeding the end-2019 price on a dividend-adjusted basis.  This should be done, but it is worth thinking about how.
• There is clearly an intentional miscommunication and bad faith posturing by Toyo Construction (1890 JP). 
• Link Admin (LNK AU) has to exit PEXA to appease ACCC. But how badly do D&D want PEXA? Will they walk? Time to look at Link fundamentally.

• There has been a recent press commentary about Sea Ltd laying off staff, which although unpleasant reflects management’s decisive and pragmatic decision-making style which is no bad thing.
• It is unclear how many staff are being laid off and where but it seems that Indonesia is not impacted in a big way and core markets continue to perform.
• We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and Sea Ltd (SE US) is batting above its peers.

• The Circular, containing the IFA opinion and the directors’ recommendation, was despatched after close yesterday. The IFA says fair and the directors recommend shareholders accept the Offer.
• However … directors holding 29.26% of shares out do not intend to accept the Offer. The intention of an additional 10.9% held by Ong family members is not known.
• No word on Hong Leong Investment as to their 5.1% stake. The IFA notes the revised Offer terms are a 20.8% discount to the revalued NAV of S$0.5052/share

• Sea Ltd (SE US)’s share price fell 7.42% yesterday after a report broke out about mass layoffs across Shopee’s international operations.
• We think Shopee has a fundamentally flawed business model and tinkering here and there won’t be enough to make Shopee a world-class business.
• With Free Fire falling fast and Shopee starved of funds, we fear that there could be another leg down for Sea Ltd shares in the short term.

• Various recent media reports have indicated that Singtel aims to sell 2-4% of its stake in Bharti Airtel. Singtel has officially dismissed the reports as media speculation.
• There have been subsequent reports in the Indian media about the founder, Sunil Mittal, looking to raise around US$2bn in debt, to finance an increase in his stake in Airtel.
• In this note, we talk about the possible deal and its implications.

• Thomson Medical Group Limited (TMG SP) is a dual play on the re-opening of both Singapore and Malaysia. The company has a 70% stake in Tmc Life Sciences (TMCL MK). 
• The company is seeing strong recovery across all its business segments and is cautiously optimistic of its business prospects in the current financial year.
• The recent pullback in the shares provides a good entry point for long-term investors.  

• The IFA considers the S$0.40 per share offer for Hwa Hong Corp (HWAH SP) to be fair and reasonable. Consequently, the recommending directors recommend that shareholders accept the offer.  
• The offer which closes on 28 June continues to be subject to a 50%+ minimum acceptance condition. The offeror including valid acceptances represents 24.86% of outstanding shares.
• Ong directors/families (29.26% stake) will not accept the offer hoping for an increasingly unlikely superior proposal. The shares are trading tight to terms (1.3% gross spread).

• This morning, Frasers Hospitality Trust (FHT SP) announced a Scheme Implementation Deed was signed for the S-REIT’s privatisation by its current sponsors TCC Group Investments Limited and Frasers Property Limited.
• The S$500mm borrowing mooted suggested S$0.69/unit; Scheme Consideration is S$0.70/unit in cash against the latest commissioned Adjusted NAV estimate of S$0.6519 (vs last NAV of S$0.6534/unit).
• The deal comes at an all-time high price, slightly exceeding the end-2019 price on a dividend-adjusted basis.  This should be done, but it is worth thinking about how.

• Frasers Hospitality Trust (FHT SP) announced a privatisation proposal from Frasers Property Limited at S$0.70 cash per share + permitted distributions (estimated 1.2961 cents).  
• The offer is the culmination of a strategic review announced on 8 April. The offer price is attractive in comparison to historical multiples, precedent transactions and historical unit prices.
• At the last close and for the September end effective date, the gross and annualised spread to the total offer price of S$0.713 per unit is 3.3% and 11.1%, respectively. 

• It’s not clear why it would be better for Frasers Hospitality (FHT SP)‘s assets to be unlisted rather than listed, so this is purely financial not strategic given the ownership. 
• Atlas Arteria (ALX AU) boasts low risk, stable yielding, toll road assets.  That’s an attractive proposition for cash-up IFM, which now has a 15% economic interest. 
• If DTAC TB / TRUE TB‘s merger goes through, the top two players control ~96% of the market. Even the generally complicit Thai regulator might be reluctant to grant approval.