The Week That Was in ASEAN@Smartkarma - Indonesia's Deficit, Slowing Staples, and Bangkok Bank

ASEAN Insight Provider

Jessica Irene

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

MYOR is the worst performing staples company YTD. As revenue growth slipped to the lowest in years, share prices continue to drop to a 2-year low level. We saw a 4% and 5% YoY growth on 9M19 domestic and export sales respectively. Two key reasons for the slower growth are: 1) fierce competition on the coffee segment, and 2) slowing demand from China. The recent conversation with the management also revealed that one of MYOR's main export market China is facing some serious slowdown due to the trade war with the US. MYOR's export to China for the same area is declining by 20% YoY in 9M19. MYOR's export sales growth dropped to 3% in 9M19, the slowest over the past decade and the first single digit growth since 2005.The packaged beverage division, which is comprised of the instant cereal and coffee, also reported flattish growth in 9M19 given fierce competition in the coffee industry. The latest entrant in the market is Caffino, a new instant coffee brand that claims to be the first to use real milk and coffee in its formula.As its pricing power is limited, and revenue growth potential looks gloomy, the 26x PE valuation does not look cheap despite the 35% share price drop since peak.

MYOR is the worst performing staples company YTD. As revenue growth slipped to the lowest in years, share prices continue to drop to a 2-year low level. We saw a 4% and 5% YoY growth on 9M19 domestic and export sales respectively. Two key reasons for the slower growth are: 1) fierce competition on the coffee segment, and 2) slowing demand from China. The recent conversation with the management also revealed that one of MYOR's main export market China is facing some serious slowdown due to the trade war with the US. MYOR's export to China for the same area is declining by 20% YoY in 9M19. MYOR's export sales growth dropped to 3% in 9M19, the slowest over the past decade and the first single digit growth since 2005.The packaged beverage division, which is comprised of the instant cereal and coffee, also reported flattish growth in 9M19 given fierce competition in the coffee industry. The latest entrant in the market is Caffino, a new instant coffee brand that claims to be the first to use real milk and coffee in its formula.As its pricing power is limited, and revenue growth potential looks gloomy, the 26x PE valuation does not look cheap despite the 35% share price drop since peak. 

Mayora Indah

Mayora Indah (MYOR IJ): Slowest In Years