ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

In Equity Sales and Research for more than 25 years covering Asian markets. Possesses in-depth knowledge of a wide range of companies, economies, and markets in Asia. Over his career, he has specialised in HK/China and ASEAN markets at various different Investment Banks, most recently heading equities in Indonesia for Bank of America Merrill Lynch in Jakarta for more than three years. Whilst in Jakarta, he produced a well-read daily and weekly product on the Indonesian market, which included company visits, as well as political, economic and sector commentary. A former racing skier, who enjoys ultra-marathons and surfing in his spare time.

ASEAN Insight Provider

Chandra Asri (TPIA): Take Your Profit and Go!

The Week That Was in ASEAN@Smartkarma - Indocement, Indonesia Chemicals, and Thai Retail

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

<a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a> transformed itself from a plywood company to Indonesia's largest petrochemical company with the acquisition of a 48% stake <a href="https://www.smartkarma.com/entities/chandra-asri-petrochemical" target="_blank" data-smartkarma-citation="entities:2556:1" rel="noopener">Chandra Asri Petrochemical (TPIA IJ</a>) a few years ago. More recently it acquired a 66% stake in geothermal company Star Energy, which gives it a stable and growing recurrent earnings base, making earnings less cyclical.It now has a market capitalisation of over US$8.6bn and trades over US$7.5m a day. The company's high-quality assets and the addition of Star Energy plus ample liquidity in the stock have thrust the company into the Investor Limelight. It is already part of the MSCI Global Standard Index. <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a> transformed itself into Indonesia's largest petrochemical company with the acquisition of a 46% stake <a href="https://www.smartkarma.com/entities/chandra-asri-petrochemical" target="_blank" data-smartkarma-citation="entities:2556:1" rel="noopener">Chandra Asri Petrochemical (TPIA IJ</a>), with domestic market share (including imports) of 50%, 20% and 27% in olefin, polyethene, and polypropylene.The company's other recently acquired asset is 66% owned geothermal company Star Energy, which was acquired in 2018. Star Energy provides Barito with a stable recurrent source of revenue and profit which offsets the more cyclical nature of the chemical business. The company has also been much more active in promoting itself to institutional investors with the recent addition of a new investor relations team.Local investors in Indonesia are very active in the stock, which means higher volatility but institutional investors remain underweight. <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a> ’s largest shareholder is Prajogo Pangestu with a 71.13% stake. The stock trades on 49x FY20E and 48x FY21E PER forecast EPS growth of +17% and +2% respectively. It trades on an FY20E EV/EBITDA of 10.7x and FY21E EV/EBITDA of 10.8x, which looks more reasonable at a slight discount to global peers. The high multiples are somewhat justified by its leading strategic positions in chemicals and geothermal power but there is a large element based on the optionality of the sales of a stake in its second Naptha Cracker due for completion in 2025. We expect this to be announced in 1Q20, which may provide a further catalyst for stock performance.

Barito Pacific (BRPT IJ) transformed itself from a plywood company to Indonesia's largest petrochemical company with the acquisition of a 48% stake Chandra Asri Petrochemical (TPIA IJ) a few years ago. More recently it acquired a 66% stake in geothermal company Star Energy, which gives it a stable and growing recurrent earnings base, making earnings less cyclical.It now has a market capitalisation of over US$8.6bn and trades over US$7.5m a day. The company's high-quality assets and the addition of Star Energy plus ample liquidity in the stock have thrust the company into the Investor Limelight. It is already part of the MSCI Global Standard Index. Barito Pacific (BRPT IJ) transformed itself into Indonesia's largest petrochemical company with the acquisition of a 46% stake Chandra Asri Petrochemical (TPIA IJ), with domestic market share (including imports) of 50%, 20% and 27% in olefin, polyethene, and polypropylene.The company's other recently acquired asset is 66% owned geothermal company Star Energy, which was acquired in 2018. Star Energy provides Barito with a stable recurrent source of revenue and profit which offsets the more cyclical nature of the chemical business. The company has also been much more active in promoting itself to institutional investors with the recent addition of a new investor relations team.Local investors in Indonesia are very active in the stock, which means higher volatility but institutional investors remain underweight. Barito Pacific (BRPT IJ) ’s largest shareholder is Prajogo Pangestu with a 71.13% stake. The stock trades on 49x FY20E and 48x FY21E PER forecast EPS growth of +17% and +2% respectively. It trades on an FY20E EV/EBITDA of 10.7x and FY21E EV/EBITDA of 10.8x, which looks more reasonable at a slight discount to global peers. The high multiples are somewhat justified by its leading strategic positions in chemicals and geothermal power but there is a large element based on the optionality of the sales of a stake in its second Naptha Cracker due for completion in 2025. We expect this to be announced in 1Q20, which may provide a further catalyst for stock performance. 

Barito Pacific (BRPT IJ) - Into the Limelight