Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Was on the buyside for 15 years, most recently at a medium-sized boutique asset management firm. I grew up in Europe, went to university in the US and have been living in Singapore for the last 7 years which has given me a broad scope on the world and investing in general.

Consider myself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large cap that has gone temporarily out of favor might also pique my interest. 

My style of investing could be categorized as more of value investor, rather than growth at any cost. Learning from Charlie Munger on the importance of quality of a company has been of tremendous value over the years.I like businesses with real earnings, cash flows, dividends, book value and insider ownership.

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

British American Tobacco (M) / Equity Bottom-Up

<p>Smoking is bad for you. Drinking alcohol is bad for you. Eating sugar is bad for you. Eating processed meat is bad for you. Fast food is bad for you. We can go on. The crucial additional words which are needed in each sentence above is "<em>too much</em>". Doing anything in large quantities is likely not a wise decision. We do, however, believe in free choice and pointing out potential overreactions in public equity markets.</p>
<p>By writing about <a href="https://www.smartkarma.com/entities/british-american-tobacco-m-berhad" target="_blank" rel="noopener" data-smartkarma-citation="entities:10677:1">British American Tobacco (M) (ROTH MK)</a> we are <strong>not</strong> advocating smoking, but are looking at a company that sells nicotine delivery devices in Malaysia and generates billions in tax revenues for the Malaysian state. The company has been listed since 1961 and is currently available at its cheapest level (in absolute terms) since 1993. Its share price is lower than the 2008 GFC or 1997 Asian Financial Crisis.</p>
<figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/117/613/original/bat%20malaysia%20share%20price%20since%201980s.png?1581559415" data-smartkarma-image-id="117613"></figure>
<div class="content-caption">source: Refinitiv</div>
<div class="content-highlight">
<p>The company over the past 20 years traded at a median P/E multiple of 18.3 and a median dividend yield of 6.2% Currently, shares are trading more than 2 sd below those averages with a P/E below 9.7 and a dividend yield over 11%.</p>
<p>BAT Malaysia has issues (mainly illegal imports), and doubts about its GLO product, but those are already discounted in the stock. Financial estimates for FY19, FY20, and FY21 are showing continued declines in profitability are already the expected consensus. Should Malaysia get serious about tackling rampant illicit cigarette imports, which cost taxpayers 6 billion MYR/year in lost revenue, the stock rebound could be violent.</p>
</div>
<p>Short-term pressure on <a href="https://www.smartkarma.com/entities/british-american-tobacco-m-berhad" target="_blank" rel="noopener" data-smartkarma-citation="entities:10677:1">British American Tobacco (M) (ROTH MK) share price</a> is likely to remain as the company has been <a href="https://app2.msci.com/eqb/gimi/stdindex/MSCI_Feb20_STPublicList.pdf" target="_blank" rel="noopener">deleted</a> from the MSCI Malaysia index (and consequently from the MSCI EM index). Kudos to <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" rel="noopener" data-smartkarma-citation="accounts:4091">Brian Freitas</a> for pointing this out.</p>
<p>BAT Malaysia is releasing FY19 results on 20/2/20 and we believe risk/reward is attractive. BAT Malaysia has a market cap of 850M USD (3.5 B MYR) and ADTV of 2.6M USD (11.3M MYR).</p>

Smoking is bad for you. Drinking alcohol is bad for you. Eating sugar is bad for you. Eating processed meat is bad for you. Fast food is bad for you. We can go on. The crucial additional words which are needed in each sentence above is "too much". Doing anything in large quantities is likely not a wise decision. We do, however, believe in free choice and pointing out potential overreactions in public equity markets.
By writing about British American Tobacco (M) (ROTH MK) we are not advocating smoking, but are looking at a company that sells nicotine delivery devices in Malaysia and generates billions in tax revenues for the Malaysian state. The company has been listed since 1961 and is currently available at its cheapest level (in absolute terms) since 1993. Its share price is lower than the 2008 GFC or 1997 Asian Financial Crisis.

source: Refinitiv

The company over the past 20 years traded at a median P/E multiple of 18.3 and a median dividend yield of 6.2% Currently, shares are trading more than 2 sd below those averages with a P/E below 9.7 and a dividend yield over 11%.
BAT Malaysia has issues (mainly illegal imports), and doubts about its GLO product, but those are already discounted in the stock. Financial estimates for FY19, FY20, and FY21 are showing continued declines in profitability are already the expected consensus. Should Malaysia get serious about tackling rampant illicit cigarette imports, which cost taxpayers 6 billion MYR/year in lost revenue, the stock rebound could be violent.

Short-term pressure on British American Tobacco (M) (ROTH MK) share price is likely to remain as the company has been deleted from the MSCI Malaysia index (and consequently from the MSCI EM index). Kudos to Brian Freitas for pointing this out.
BAT Malaysia is releasing FY19 results on 20/2/20 and we believe risk/reward is attractive. BAT Malaysia has a market cap of 850M USD (3.5 B MYR) and ADTV of 2.6M USD (11.3M MYR).

BAT Malaysia: Trading Lower than 1997 Asian Financial Crisis, Cheapest in 27 Years, Div Yield at 11%