Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

Far East Hospitality Trust / Equity Bottom-Up

<ul>
<li>Not all hospitality REITs in Singapore are beneficiaries of the rebound in tourism in Singapore. </li>
<li>Genting, OUE Commercial REIT, and Fraser Hospitality Trust are not exactly beneficiaries to the current tourism rebound. </li>
<li>Only Far East Hospitality Trust has a 100% exposure in hotels in Singapore while CDL Hospitality Trust has 41% of the total contribution from Singapore. </li>
</ul>


Not all hospitality REITs in Singapore are beneficiaries of the rebound in tourism in Singapore. 
Genting, OUE Commercial REIT, and Fraser Hospitality Trust are not exactly beneficiaries to the current tourism rebound. 
Only Far East Hospitality Trust has a 100% exposure in hotels in Singapore while CDL Hospitality Trust has 41% of the total contribution from Singapore. 


Southeast Asia Tourism: Who Are the Beneficiaries

Research from Asian Century Stocks, Asian Century Stocks

Michael Fritzell

Research from Asian Century Stocks

Providing financial journalism in the Asia-Pacific

Asian Century Stocks

Asian Century Stocks is a newsletter providing financial journalism for companies and stocks in the Asia-Pacific. 
The Asian Century Stocks logotype “百” stands for “one hundred” or a “century”. The economic centre of gravity is moving towards Asia. Yet most global investors are missing out.

Thematic (Sector/Industry)

<p>Jefferies strategist Chris Wood made an interesting comment in his 4Q21 Asia Maxima report. He expressed a bullish view on Singaporean residential property developers, quoting a 40% discount to book and rapidly improving fundamentals. Here is a short report on the sector to figure out whether his bullishness is warranted or not.</p>
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<p>Supply &amp; demand for residential property is not necessarily out of sync. The 2009-2013 period was a bubble and should not be seen as a baseline.</p>
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<p>The retail, office and hospitality segments have suffered over the past two years due to cross-border travel restrictions, working from home during the pandemic and the threat from e-commerce. But several of these factors are one-off in nature.</p>
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<p>I see value in City Developments, given high-quality assets, excellent execution and an upside of almost +60% using reasonable assumptions.</p>
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<p>I’m also bullish on small-cap Bukit Sembawang, which sit on a valuable land bank and has won awards as one of the best property developers in Singapore.</p>
</li>
</ul>

Jefferies strategist Chris Wood made an interesting comment in his 4Q21 Asia Maxima report. He expressed a bullish view on Singaporean residential property developers, quoting a 40% discount to book and rapidly improving fundamentals. Here is a short report on the sector to figure out whether his bullishness is warranted or not.


Supply &amp; demand for residential property is not necessarily out of sync. The 2009-2013 period was a bubble and should not be seen as a baseline.


The retail, office and hospitality segments have suffered over the past two years due to cross-border travel restrictions, working from home during the pandemic and the threat from e-commerce. But several of these factors are one-off in nature.


I see value in City Developments, given high-quality assets, excellent execution and an upside of almost +60% using reasonable assumptions.


I’m also bullish on small-cap Bukit Sembawang, which sit on a valuable land bank and has won awards as one of the best property developers in Singapore.



Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This week in StubWorld ...</p>
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<p>Following Yue Xiu's privatization Offer for <a href="https://www.smartkarma.com/entities/chong-hing-bank-ltd" target="_blank" data-smartkarma-citation="entities:344:1" rel="noopener">Chong Hing Bank (1111 HK)</a>, Hong Kong's remaining  "family"-owned banks, such as <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a> (BEA), are back in focus. <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> is trading cheap to its historical NAV discount range, and the 14.94% holding in BEA accounts for 15% of its NAV.</p>
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<p>Preceding my comments on Guoco are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Following Yue Xiu's privatization Offer for Chong Hing Bank (1111 HK), Hong Kong's remaining  "family"-owned banks, such as Bank of East Asia (23 HK) (BEA), are back in focus. Guoco Group Ltd (53 HK) is trading cheap to its historical NAV discount range, and the 14.94% holding in BEA accounts for 15% of its NAV.



Preceding my comments on Guoco are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Guoco/BEA Into Focus Post Chong Hing Bank Bid

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<p>Back on the 15 January, <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>. The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The Offer carried an acceptance condition of 90%, including Guoco's stake, which could be reduced to 50%. </p>
<p>It was a lacklustre Offer. The IFA agreed in the <a href="https://links.sgx.com/FileOpen/Revised_Offeree_Circular.ashx?App=Announcement&amp;FileID=648639" target="_blank" rel="noopener">Circular</a>, and said the Offer was not fair; but still opined it was reasonable. The Securities Investors Association (Singapore) (SIAS) <a href="https://sias.org.sg/latest-updates/letter-to-guocoleisure-holdings-limited-appeal-on-behalf-of-minority-shareholders-of-gl-limited/" target="_blank" rel="noopener">chimed in</a>, saying it thought the Offer was low-balled.</p>
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<p>Historically, Guoco have had a tendency to be frugal in their privatisation Offers. In its 2005 attempt to take GLL private back in 2005, it <em>did</em> bump its Offer to $1.25/share from S$1.20.</p>
<h3>The New News</h3>
<p>Guoco has now <a href="https://links.sgx.com/FileOpen/Dealings%20Disclosure%20and%20Revision%20of%20Offer%20Price%20Announcement.ashx?App=Announcement&amp;FileID=651983" target="_blank" rel="noopener">bumped the Offer</a> by 14.3% to S$0.80/share. The Offer consideration is final and the Offer declared unconditional in all respects.</p>
<p>Guoco has 83.4% in the bag, including its own 72.96% stake. The revised Offer terms fall outside the fair value range from the IFA, but there's probably enough here to test the 90% acceptance level, and afford Guoco the right to compulsory acquire shares. </p>
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<p>As always, more below the fold.</p>
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Back on the 15 January, Guoco Group Ltd (53 HK) made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP). The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The Offer carried an acceptance condition of 90%, including Guoco's stake, which could be reduced to 50%. 
It was a lacklustre Offer. The IFA agreed in the Circular, and said the Offer was not fair; but still opined it was reasonable. The Securities Investors Association (Singapore) (SIAS) chimed in, saying it thought the Offer was low-balled.

Historically, Guoco have had a tendency to be frugal in their privatisation Offers. In its 2005 attempt to take GLL private back in 2005, it did bump its Offer to $1.25/share from S$1.20.
The New News
Guoco has now bumped the Offer by 14.3% to S$0.80/share. The Offer consideration is final and the Offer declared unconditional in all respects.
Guoco has 83.4% in the bag, including its own 72.96% stake. The revised Offer terms fall outside the fair value range from the IFA, but there's probably enough here to test the 90% acceptance level, and afford Guoco the right to compulsory acquire shares. 

As always, more below the fold.














GL Limited: Guoco Bumps & Declares Offer Unconditional

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<p>On the 15 January, <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> made a <a href="https://links.sgx.com/FileOpen/Offer%20Announcement.ashx?App=Announcement&amp;FileID=645181" target="_blank" rel="noopener">voluntary conditional cash Offer</a> for 70.84%-held <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a>. The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
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<p>This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the <a href="https://links.sgx.com/FileOpen/Revised_Offeree_Circular.ashx?App=Announcement&amp;FileID=648639" target="_blank" rel="noopener">Circular</a>, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. </p>
<p>The <a href="https://sias.org.sg/" target="_blank" data-ved="2ahUKEwjTwoy_vo7vAhXyxosBHROlAVsQFjAAegQIEhAD" rel="noopener"></a>Securities Investors Association (Singapore) (SIAS) has <a href="https://sias.org.sg/latest-updates/letter-to-guocoleisure-holdings-limited-appeal-on-behalf-of-minority-shareholders-of-gl-limited/" target="_blank" rel="noopener">joined the fray</a>, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?</p>
<p>Shares have closed at or through terms every day since the Offer was announced.</p>
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<p>As always, more below the fold.</p>
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On the 15 January, Guoco Group Ltd (53 HK) made a voluntary conditional cash Offer for 70.84%-held GL Ltd (GLL SP). The Offer Price of S$0.70/share was a 25% premium to last close and 0.73x P/NAV. The acceptance condition is 90%, including Guoco's stake, although Guoco reserves the right to reduce this to 50%. Save for the acceptance condition, the Offer is unconditional in all other respects.


This was an underwhelming Offer from the outset, pitching GLL at a level below the COVID drop-off in Feb/March last year. In the Circular, the IFA agreed and said the Offer was not fair; but hedged its opinion, calling it reasonable. 
The Securities Investors Association (Singapore) (SIAS) has joined the fray, and is also less than enthusiastic with the Offer terms. But how much clout does SIAS have in Singaporean deals?
Shares have closed at or through terms every day since the Offer was announced.


As always, more below the fold.











SIAS Questions GL Limited's Offer: More Bark Than Bite

Singapore

GuocoLand Limited is a regional property company with operations in Singapore, China, Malaysia and Vietnam. Headquartered in Singapore, the principal business activities of GuocoLand and its subsidiaries (“the Group”) are property development, property investment, hotel operations and property management.

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GuocoLand (GUOL SP)

Southeast Asia Tourism: Who Are the Beneficiaries

the real beneficiaries of the Singapore rebound in tourism (ex-China) are limited to a few names only. Far East Hospitality Trust and CDL...

Henry Soediarko

Singapore Residential Property

Jefferies strategist Chris Wood made an interesting comment in his 4Q21 Asia Maxima report. He expressed a bullish view on Singaporean residential...

Asian Century Stocks

StubWorld: Guoco/BEA Into Focus Post Chong Hing Bank Bid

Following the privatization Offer for Chong Hing, Bank of East Asia is back in focus. Guoco is trading cheap to its historical NAV discount range,...

David Blennerhassett

GL Limited: Guoco Bumps & Declares Offer Unconditional

This will trade tight to, if not to terms. This is a done deal. If this trades a spread or two below terms, get involved. I still like Guoco here,...

David Blennerhassett

SIAS Questions GL Limited's Offer: More Bark Than Bite

The SIAS raises many valid points. GLL looks cheap and why it trades through terms. I like Guoco here, as it trades around a one-year discount to...

David Blennerhassett

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