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

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

Thematic (Sector/Industry)

Please find below a short summary of this week's eclectic mix of equity bottom up and top down and thematic Insights across ASEAN@Smartkarma. This week I also include a piece by Thomas Schroeder on his reasons for favoring technical analysis in Asia, as well as a brief summary from a recent company visit to Link Net Tbk Pt (LINK IJ) late last week, which can be found in the detailed section of this insight. The company remains an attractive play on the low penetration rates of highspeed broadband and pay-TV across Indonesia.An Insight Provider's MantraIn a special insight, The Case for Technical Analysis in Asian Markets, technical Analysis Insight provider Thomas Schroeder lays out his case for Technical Analysis in Asian Markets. This week's insights across ASEANIn CPALL (CPALL TB): More than 10,000 7-Eleven Stores in Thailand, Dr. Andrew Stotz, CFA works his magic on 7-Eleven convenience store operator CP All PCL (CPALL TB) and suggests that it has high earnings quality, good price momentum, and earnings are on an upcycle trend relative to its sector. In Risks Arising from Ouster of Parliamentary Speaker Can Be Contained, Nicholas Chia notes that Golkar, the second largest political party in parliament and a key member of President Jokowi’s coalition, was thrown into disarray following the arrest of its chairman Setya Novanto by the anti-corruption agency, KPK. In Malaysia: General Elections Are Now the Focus, Manu Bhaskaran suggests that Malaysia PM Najib has clearly solidified his once-shaky position within the ruling party.In Credit Rating Upgrade on the Eve of TRAIN’s Passage, economic insight provider Jun Trinidad notes that a politically charged environment spawned primarily by alleged extrajudicial killings in President Duterte's war on illegal drugs did not deter a sovereign credit rating upgrade.In Surging Bank Loans Amid Excess Liquidity and Negative Real Rates, Jun Trinidad suggests that sustained bank withdrawals from the Central Bank's (BSP) overnight deposit facility (ODF) comprised the key liquidity shock that caused broad money (M3) expansion of nearly 15%YoY in Oct. In Thailand: Another Delay to Planned Elections May Inflame Protests, Manu Bhaskaran notes that the Thai people had been patient with the unusually long interregnum between the military coup and elections mainly because it coincided with the death of the beloved King Bhumibol Adulyadej.  The more the junta is seen as delaying elections, the greater the likelihood of a political backlash reigniting a period of instability.In Padini Holdings: Still Long Runway for Growth, Johannes Salim, CFA comments on Padini Holdings Berhad (PAD MK) following a company visit, which revealed that the company still has a long runway for DD growth rate. In Singapore Residential Property – Supply-Demand Imbalance in New Launch Market to Remain in 2018, insight provider Foo Sze Ming notes that Singapore residential property segment has demonstrated strong recovery in 2017. The majority of new supply will enter the market only in 2019 and expect supply-demand imbalance to remain in 2018.In JSMR (JSMR IJ): No. 1 Toll-Road Operator in Indonesia, Dr. Andrew Stotz, CFA   suggests that as the largest toll-road operator by market share of transactions and contractors in Indonesia, this state-owned enterprise (SOE) is particularly well placed to benefit from the nationwide mandated rollout of toll roads. In E-Toll Card for Better Indo Traffic, Henry Soediarko takes to the highways of Jakarta and assesses the implications of the introduction of E-toll cards for toll road transactions in Indonesia.In Valuation Impact Of The Uber Partnership, Lloyd Moffatt comments on the implications of the recent move by Comfortdelgro Corp Ltd (CD SP) covered recently by insight provider Valerie Law, CFA on the announced transaction between Comfortdelgro Corp Ltd (CD SP) and Uber Technologies. In IPO Stalker: TOA, More Expensive than a Modigliani, Athaporn Arayasantiparb, CFA comments on TOA Paint (Thailand) PCL (TOA TB) in a new series called IPO Stalker for company visits to recent IPOs, just to check out how they are doing.In INOX: Rerating on Business Shift to Greater Stability, Country Group initiate on coverage on Posco Thainox Pcl (INOX TB) with a BUY rating and a 2018E target price of Bt1.90, based on a PBV of 1.6x FY18E, which is the average of the Thai Materials sector.In AOT (AOT TB): Preparing for New Heights, Dr. Andrew Stotz, CFA comments on Airports Of Thailand Pcl (AOT TB) which benefits from growing foreign tourist arrivals to Thailand, which should boost the company's revenue. In Asean Growth – Investment Cycles and Lending Rates, Dr. Jim Walker notes that on 20th November Thailand released its third quarter 2017 GDP growth numbers. It was the cause of some celebration because it was the first time since early 2013 that the country had registered a YoY GDP growth rate above 4%. Predictably, and sadly, Thailand’s growth improvement had nothing to do with an investment upswing. In this insight, he takes this opportunity to compare and explain the investment cycles within Asean-4.In his insight, Vietnam: Stellar Performance Masks Underlying Risks, Manu Bhaskaran notes that Vietnam remains one of the top performers in Asia as 3Q17 growth, supported by domestic and external demand, was the strongest in the region. Nonetheless, non-performing loans remain a challenge. A failure to keep a lid on rising NPLs could well foster a financial crisis in the making with wide-spread, trickle-down ramifications for the economy.In Singapore Residential Property - What To Expect from the 1H 2018 Government Land Sales Programme?Foo Sze Ming notes that the Singapore Government just announced the Government Land Sales (GLS) Programme for the first half of 2018. Despite the recent collective sales fever and demand for development sites by developers, there was little reaction from the government in response to the situation.In Breakouts and Bull Turns in Asia, technical analysis insight provider Thomas Schroeder suggests that fresh bull signals are unfolding in Asian rotation plays with breakouts noted in the Japan banks index and Malaysia, to mention two. In Sector Capsule: Sports Nutrition in Indonesia, our friends at Euromonitor International Ltd. take a look at sports nutrition in Indonesia which saw an increase of 7% in current value terms in 2017.In INDF (INDF IJ): Agribusiness and Exports Should Support Growth, Dr. Andrew Stotz, CFA takes a close look at Indofood Sukses Makmur Tbk P (INDF IJ) and notes that better productivity and high Crude Palm Oil (CPO) prices boosted agribusiness sales by 18% YoY in 9M17. He maintains that the trend should remain robust backed by continuous planting, with some plantations to mature soon.  It trades on an attractive at 7.4% ROE/PB for FY18E versus the ASEAN sector at 4.6%. In Jerusalem Move Shows Readiness to Anger ‘Foes’, But In Indonesia Trump Is Jeopardizing Friendships, insight provider Kevin O’Rourke suggests that if Donald Trump persists with his policy to move the US Embassy to Jerusalem, the situation could become a dominant issue in domestic politics in Indonesia. In Oct Jobless Rate Edges Higher Although Within Historically Low Range, Jun Trinidad comments on the recently released employment numbers in the Philippines. In United Engineers – Pre-Conditional Voluntary Unconditional Cash Offer for WBL Corp, Foo Sze Ming comments on United Engineers Ltd (UEL)'s announcement of a pre-conditional voluntary unconditional cash offer to acquire all issued ordinary stocks of WBL Corporation that it does not own. In SIS...If Dell Could Start Over, Athaporn Arayasantiparb, CFA suggests that if Michael Dell had to start over in Thailand, he thinks it would be something similar to Sis Distribution Thailand Pc (SIS TB). In Indonesia’s Disruptive Parliament-Speaker Saga Finally Ending, political insight provider Kevin O’Rourke  notes that for more than a year, Indonesian politics have suffered the unseemly spectacle of egregious corruption allegations against Setya Novanto, the speaker of parliament and the chair of the second-largest party, Golkar (the ruling party of the Soeharto era).  After crude attacks on the independent Anti-Corruption Commission (KPK), witness intimidation and even the violent death in Los Angeles of a key prosecution witness, the case of the Rp6 trillion electronic identity card (e-KTP) project has reached a turning point. In WSKT (WSKT IJ): Massive Indonesian Toll-Road Pipeline, Dr. Andrew Stotz, CFA notes that this state-owned enterprise (SOE) is benefiting substantially from the rollout of toll roads nationwide, with18 toll road developments in the pipeline. In Bad Balance Sheets in Asia...Custom Products Group conducts a screen inspired by helping his son review for his first Accounting Final. He screened for names in Asia that have a less than strong balance sheet. The largest name to make the screen was Advanced Info Service Pcl (ADVANC TB) with a 460% debt to Equity ratio and a .42x current ratio. Other current liabilities are almost as big as total current assets.In their insight, Sector Briefing: Beer in Vietnam (Production, Imports and Exports + Competitive Landscape) - Part 2, our friends at Euromonitor International Ltd. look at the beer industry in Vietnam.In XL Axiata - Bundles of Data, Jakarta veteran Angus Mackintosh post a company visit suggests that XL Axiata Tbk PT (EXCL IJ) remains the best way to play the rapid rise in data usage in Indonesia. In the second insight in a new series, IPO Stalker: PORT, The Merchant of Venice (Of the East), Athaporn Arayasantiparb, CFA takes a look at recent IPO Sahathai Terminal PCL (PORT TB). This stock has already shot up almost 60% from its IPO price.In Chef’s Selection: November &amp; December Company Visits, Athaporn Arayasantiparb, CFA plucks out his top picks from company visits over the last two months. He picks MC Group Pcl (MC TB), Berli Jucker Public Co Ltd (BJC TB),  Bangchak Petroleum Pcl/The (BCP TB) and Sis Distribution Thailand Pc (SIS TB) as the best of the bunch.

The Week that Was in ASEAN@Smartkarma - Convenience Stores, Toll Roads And, Tourists