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

Nexter's share price has moved in tandem with <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> to develop autonomous vehicles although it was denied by the companies yesterday. 
The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, it is time to sell to lock in some profit.

Nexter's share price has moved in tandem with Geely Auto (175 HK) in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with Baidu (BIDU US) to develop autonomous vehicles although it was denied by the companies yesterday. 
The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, it is time to sell to lock in some profit. 

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Ford Deal Vanishes: Ford Motor Company (F.US) [Ford] and Mahindra &amp; Mahindra (MM.IN) [M&amp;M] entered into a definitive agreement to establish a joint venture (JV) in October 2019 to develop, market, and distribute Ford-branded vehicles in India and other emerging markets. Unfortunately for M&amp;M, Ford has decided to end the relationship on December 31, 2021 - prior to it even getting off the ground; and   *Ssangyong Bankruptcy Likely Cause Of JV Collapse: Purchased by M&amp;M in 2011, the 74.7%-owned SsangYong Motor Company (003620.KS) [Ssangyong] in South Korea filed an application for commencement of the rehabilitation procedure with the Seoul Bankruptcy Court. The agreement between M&amp;M and Ford appears to have legally expired in October yet the actual decision to terminate precariously comes on the heals of the Ssangyong petition where M&amp;M is on the hook with a guarantee which likely will challenge it financially going forward.

*Ford Deal Vanishes: Ford Motor Company (F.US) [Ford] and Mahindra &amp; Mahindra (MM.IN) [M&amp;M] entered into a definitive agreement to establish a joint venture (JV) in October 2019 to develop, market, and distribute Ford-branded vehicles in India and other emerging markets. Unfortunately for M&amp;M, Ford has decided to end the relationship on December 31, 2021 - prior to it even getting off the ground; and   *Ssangyong Bankruptcy Likely Cause Of JV Collapse: Purchased by M&amp;M in 2011, the 74.7%-owned SsangYong Motor Company (003620.KS) [Ssangyong] in South Korea filed an application for commencement of the rehabilitation procedure with the Seoul Bankruptcy Court. The agreement between M&amp;M and Ford appears to have legally expired in October yet the actual decision to terminate precariously comes on the heals of the Ssangyong petition where M&amp;M is on the hook with a guarantee which likely will challenge it financially going forward.

Mahindra & Mahindra – Found On Road Dead

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

In December Root shares fell ~22% after insurtech unicorn reported its first quarterly earnings as a public company. As of Q3-20 GAAP net loss reached $85 million and GAAP revenue collapsed to $51 million due to changing of reinsurance structure starting July 2020. During the reported quarter ceded earned premium grew to ~$110 million, 354% YoY growth and was 71% as percentage of direct earned premium while net earned premium significantly fell to $45 million and dropped ~41% YoY. New reinsurance program caused a reduction in GAAP revenue versus prior quarters.In October 2020 Root completed its IPO and received net proceeds of $1.1 billion after deducting offering costs of ~$53 million. Car insurance company priced IPO above range at $27 per share. Now stock is trading around $15 a share and fell ~45% since IPO. We believe that worst-case scenario for Root stock may be priced in and shares have limited downside potential. Consensus estimates for 2021 revenue look pessimistic and assume YoY contraction in revenue. In our insight we will focus on key drivers and catalysts that may support shares and discuss why Root should establish partnership with automaker or EV manufacturer to grow its business and customer base going forward.

In December Root shares fell ~22% after insurtech unicorn reported its first quarterly earnings as a public company. As of Q3-20 GAAP net loss reached $85 million and GAAP revenue collapsed to $51 million due to changing of reinsurance structure starting July 2020. During the reported quarter ceded earned premium grew to ~$110 million, 354% YoY growth and was 71% as percentage of direct earned premium while net earned premium significantly fell to $45 million and dropped ~41% YoY. New reinsurance program caused a reduction in GAAP revenue versus prior quarters.In October 2020 Root completed its IPO and received net proceeds of $1.1 billion after deducting offering costs of ~$53 million. Car insurance company priced IPO above range at $27 per share. Now stock is trading around $15 a share and fell ~45% since IPO. We believe that worst-case scenario for Root stock may be priced in and shares have limited downside potential. Consensus estimates for 2021 revenue look pessimistic and assume YoY contraction in revenue. In our insight we will focus on key drivers and catalysts that may support shares and discuss why Root should establish partnership with automaker or EV manufacturer to grow its business and customer base going forward.

Root Stock Is Showing Signs Of Bottoming Out

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

Alpha-Centric ESG Research

Kyle Rudden

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):<ol>
<li>
COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).</li>
<li>
Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated <a href="https://www.hhs.gov/coronavirus/explaining-operation-warp-speed/index.html" target="_blank" rel="noopener">billions</a> to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.</li>
<li>
PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.</li>
</ol>

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):

COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).

Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated billions to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.

PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.


Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

United States

Ford Motor Company designs, manufactures, and services cars and trucks.  The Company also provides vehicle-related financing, leasing, and insurance through its subsidiary.

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Ford Motor Co (F US)

Nexteer (1316): Time to Book Some Profit

Nexter's share price has moved in tandem with Geely Auto in the past 6m, which has benefited from the rumor on the partnership with Baidu to...

Henry Soediarko

Mahindra & Mahindra – Found On Road Dead

MAHINDRA & MAHINDRA: Ford and M&M entered into a JV in 2019. Unfortunately Ford has decided to end the relationship. The Ssangyong bankruptcy and...

Thomas J. Monaco

Root Stock Is Showing Signs Of Bottoming Out

Our analysis suggests that Root shares show signs of bottoming out as worst-case scenario for Root stock may be priced in and investors should...

Andrei Zakharov

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Biden's recently-announced COVID-19 response plan suggests a number of investment themes. This Insight overviews the more significant of those...

Kyle Rudden

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