ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

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

Equity Bottom-Up

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<p>We attended an analyst call with <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ),</a> which revealed more colour behind the company's results, as well as further pointers to its longer-term strategy, especially in relation to its digital strategy both for its existing as well as new business direction.</p>
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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> registered a strong performance in 1H2021, driven by the recovering economy, government stimulus, and higher commodity prices. </p>
<p><a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> had a strong first half of the year with Komatsu sales growth of +60% YoY to 1,360 with additional strong growth in parts and service revenues</p>
<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> recently released its car sales numbers for August, which revealed a rapid recovery in numbers after a dip in July due to Emergency PPKM measures.</p>
<p>We would expect continuing strong momentum behind car sales given the extension of the cut in luxury tax due to the recent wave of COVID-19 measures until December.</p>
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<p>In the 2W space, Astra Honda saw around an -8% decline in motorcycle sales in July but continues to expect towards the end of the year.</p>
<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> continues to work on the digitalization of all its various businesses and management identifies distinct themes in its digitalisation efforts both internally and externally.</p>
<p>The company is also looking at developing its EV (electric vehicle) capabilities and will develop this EV strategy over the next 12-18 months building the local portion of the value chain.</p>
<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> is also very focused on its ESG efforts across its very broad array of businesses both through reporting and sustainability efforts.</p>
<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> continues to be one of our top recovery picks, with recent car sales numbers suggesting a strong recovery is looming, with a fair tailwind from luxury tax omission. It should also continue to benefit from higher commodity prices through <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> and we see the potential for further investments to come in the new economy.</p>


We attended an analyst call with Astra International (ASII IJ), which revealed more colour behind the company's results, as well as further pointers to its longer-term strategy, especially in relation to its digital strategy both for its existing as well as new business direction.

Astra International (ASII IJ) registered a strong performance in 1H2021, driven by the recovering economy, government stimulus, and higher commodity prices. 
United Tractors (UNTR IJ) had a strong first half of the year with Komatsu sales growth of +60% YoY to 1,360 with additional strong growth in parts and service revenues
Astra International (ASII IJ) recently released its car sales numbers for August, which revealed a rapid recovery in numbers after a dip in July due to Emergency PPKM measures.
We would expect continuing strong momentum behind car sales given the extension of the cut in luxury tax due to the recent wave of COVID-19 measures until December.



In the 2W space, Astra Honda saw around an -8% decline in motorcycle sales in July but continues to expect towards the end of the year.
Astra International (ASII IJ) continues to work on the digitalization of all its various businesses and management identifies distinct themes in its digitalisation efforts both internally and externally.
The company is also looking at developing its EV (electric vehicle) capabilities and will develop this EV strategy over the next 12-18 months building the local portion of the value chain.
Astra International (ASII IJ) is also very focused on its ESG efforts across its very broad array of businesses both through reporting and sustainability efforts.
Astra International (ASII IJ) continues to be one of our top recovery picks, with recent car sales numbers suggesting a strong recovery is looming, with a fair tailwind from luxury tax omission. It should also continue to benefit from higher commodity prices through United Tractors (UNTR IJ) and we see the potential for further investments to come in the new economy.

Astra International (ASII IJ) - Future Clarity Through Digital Means

<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> announced its 1H2021 results with sales increasing by +20% YoY and headline net profit decreasing by -22% YoY but removing the impact of the <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> sale last year, net profit increased by an impressive +61% YoY.</p>
<p>The better numbers were driven by a strong improvement in the auto business, with car sales up +50% YoY and motorcycle sales +29% YoY.</p>
<p>The group was also a beneficiary of higher commodity prices in 1H2021, which boosted the performance of its heavy equipment and mining business under <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> and its agribusiness under <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a>, which saw net profit +14% YoY and +66% YoY respectively.  </p>
<p>The group consumer finance business saw a +13% increase in the amounts financed with an increase of +2% in net profit growth. Car finance saw a +2% increase and motorcycle finance a +3% YoY increase in net profit, while heavy equipment finance saw a +46% increase in the amounts financed by a -20% decrease in contribution due to a reduced loan portfolio. </p>
<p><a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ) </a>saw a +13% increase in net income with a +60% increase in Komatsu heavy equipment sales and helped by higher coal prices. <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a>saw a boost from higher crude palm oil prices, which rose +29% in 1H2021.</p>
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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> remains relatively cautious on the outlook given the current wave of COVID-19 cases but the company is well-positioned to weather any delay in an economic recovery but also to take advantage of any potential opportunities, given its rock-solid balance sheet. <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> is trading on 10.6x FY2021E PER and 9.1x FY2022E PER versus its 5-year average forward PER of 14.2x, making it attractive from a valuation perspective. It remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy equipment, and commodities.</p>
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Astra International (ASII IJ) announced its 1H2021 results with sales increasing by +20% YoY and headline net profit decreasing by -22% YoY but removing the impact of the Bank Permata (BNLI IJ) sale last year, net profit increased by an impressive +61% YoY.
The better numbers were driven by a strong improvement in the auto business, with car sales up +50% YoY and motorcycle sales +29% YoY.
The group was also a beneficiary of higher commodity prices in 1H2021, which boosted the performance of its heavy equipment and mining business under United Tractors (UNTR IJ) and its agribusiness under Astra Agro Lestari (AALI IJ), which saw net profit +14% YoY and +66% YoY respectively.  
The group consumer finance business saw a +13% increase in the amounts financed with an increase of +2% in net profit growth. Car finance saw a +2% increase and motorcycle finance a +3% YoY increase in net profit, while heavy equipment finance saw a +46% increase in the amounts financed by a -20% decrease in contribution due to a reduced loan portfolio. 
United Tractors (UNTR IJ) saw a +13% increase in net income with a +60% increase in Komatsu heavy equipment sales and helped by higher coal prices. Astra Agro Lestari (AALI IJ)saw a boost from higher crude palm oil prices, which rose +29% in 1H2021.

Astra International (ASII IJ) remains relatively cautious on the outlook given the current wave of COVID-19 cases but the company is well-positioned to weather any delay in an economic recovery but also to take advantage of any potential opportunities, given its rock-solid balance sheet. Astra International (ASII IJ) is trading on 10.6x FY2021E PER and 9.1x FY2022E PER versus its 5-year average forward PER of 14.2x, making it attractive from a valuation perspective. It remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy equipment, and commodities.


Astra International (ASII IJ) - Leaning into the Recovery

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/kuala-lumpur-kepong-bhd" target="_blank" data-smartkarma-citation="entities:17039:1" rel="noopener">Kuala Lumpur Kepong (KLK MK)</a> made an offer to acquire <a href="https://www.smartkarma.com/entities/ijm-corp-bhd" target="_blank" data-smartkarma-citation="entities:16784:1" rel="noopener">Ijm Corp Bhd (IJM MK)</a>/IJMC’s entire stake in <a href="https://www.smartkarma.com/entities/ijm-plantations-bhd" target="_blank" data-smartkarma-citation="entities:12967:1" rel="noopener">Ijm Plantations (IJMP MK)</a>/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).</p><p>IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. </p><p>IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  </p><div class="content-highlight"><p>A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  </p></div>

Kuala Lumpur Kepong (KLK MK) made an offer to acquire Ijm Corp Bhd (IJM MK)/IJMC’s entire stake in Ijm Plantations (IJMP MK)/IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. The offer price is a 26% premium to the unaffected price of RM2.46 per share (prior to the trading halt on 8 June).IJMC is IJMP’s largest shareholder and owns 494.9 million shares, representing 56.2% of outstanding shares. The proposed acquisition implies a cost of RM1.53 billion ($371.7 million). KLK’s offer is subject to IJMC’s acceptance and execution of the definitive agreement (SPA) on or before 5.00 p.m. on 11 June 2021 or such a mutually extended date, failing which the offer will lapse. IJMC has stated that is agreeable to finalise the terms with KLK to meet the offer deadline. IJMP is listed on the Main Markets of Bursa Malaysia. In Malaysia, the threshold for triggering a mandatory general offer (MGO) is the offeror and concert parties owning 33% or more of the voting shares. If the SPA becomes unconditional, KLK will be required to extend a mandatory general offer to acquire all the remaining IJMP shares for a cash offer price of RM3.10 per share, subject to potential dividend adjustments.  A key condition precedent for the SPA is approval by both IJMC and KLK shareholders at their respective EGMs. We think that the deal should gain EGM approval as it is attractive to both IJMC and KLK shareholders. Overall, at the last close price, the downside risk is low (trading close to break price) with a good probability of upside (SPA becoming unconditional).  

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<p> The benchmark palm oil contract on the Malaysia Bursa closed at a record high of RM4,524/mt at the mid-day close the 12 May. The previous high was in March 2008. That gain in palm oil has moved in tandem with a rally in the vegetable oil complex, which has eked out the sharpest increase of all the agricultural commodities in the past year.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/206/666/original/image_83464541291621222454246.png?1621222454" class="editor-image img-responsive" data-smartkarma-image-id="206666"></figure>
<div style="text-align: left;" class="content-caption">Source: <a href="http://www.fao.org/faostat/en/#data/QD/metadata" target="_blank" rel="noopener">FAO</a>
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<div style="text-align: left;" class="content-caption">Components of the vegetable oils price index: soybean oil, Dutch , fob ex-mill; sun oil, EU, fob NW Eur. port; rape oil, Dutch, fob ex-mill; groundnut oil, any origin, cif Rotterdam; cotton oil, US, PBSY, fob Gulf; coconut oil, Phil./Indo., cif Rotterdam; palmkernel oil, Mal./Indo., cif Rotterdam; palm oil crude, cif NW Eur. port; linseed oil, any origin, ex-tank, Rotterdam; castor oil, ex-tank Rotterdam.</div>
<p>The gain in palm oil prices is largely underpinned by concerns over slower-than-expected production growth in the key exporting countries (Malaysia and Indonesia), hampered by labour shortages, in conjunction with strong global import purchases.</p>
<p>Yet while palm oil has enjoyed a meteoric price rise, the performance of listed palm oil plays has bifurcated. </p>
<p>Is this rally sustainable and why are markets not moving more in sync?  Or is ESG becoming a more pressing issue? </p>
<p>More below the fold. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/206/657/original/image?1621220074" class="editor-image img-responsive" data-smartkarma-image-id="206657"></figure>

 The benchmark palm oil contract on the Malaysia Bursa closed at a record high of RM4,524/mt at the mid-day close the 12 May. The previous high was in March 2008. That gain in palm oil has moved in tandem with a rally in the vegetable oil complex, which has eked out the sharpest increase of all the agricultural commodities in the past year.

Source: FAO

Components of the vegetable oils price index: soybean oil, Dutch , fob ex-mill; sun oil, EU, fob NW Eur. port; rape oil, Dutch, fob ex-mill; groundnut oil, any origin, cif Rotterdam; cotton oil, US, PBSY, fob Gulf; coconut oil, Phil./Indo., cif Rotterdam; palmkernel oil, Mal./Indo., cif Rotterdam; palm oil crude, cif NW Eur. port; linseed oil, any origin, ex-tank, Rotterdam; castor oil, ex-tank Rotterdam.
The gain in palm oil prices is largely underpinned by concerns over slower-than-expected production growth in the key exporting countries (Malaysia and Indonesia), hampered by labour shortages, in conjunction with strong global import purchases.
Yet while palm oil has enjoyed a meteoric price rise, the performance of listed palm oil plays has bifurcated. 
Is this rally sustainable and why are markets not moving more in sync?  Or is ESG becoming a more pressing issue? 
More below the fold. 


Powering Palm Oil: Record Prices Amid Vegetable Oil Complex Rally

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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> released a reassuring set of 1Q2021 results this week, which were lower than last year but also reflect the company's resilience and represent some cause for optimism coupled with some interesting acquisitions in the digital space.</p>
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<p>The company saw its headline sales fall -4% YoY in 1Q2021 while net income fell by -22% YoY to IDR3,728bn. These numbers are against a high base last year since the pandemic only started to impact Indonesia in March 2020.</p>
<p>Car sales in 1Q2021 were down -24% YoY and motorcycle sales were down -17% YoY but there was a strong recovery in March of +70% MoM as luxury tax was cut.</p>
<p>Subsidiary <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> saw higher Komatsu heavy equipment sales but this was partially offset by lower mining contracting volumes.</p>
<p>The company's plantation business under <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a>saw a negative impact from lower crude palm oil prices. </p>
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<section class="figure">The above numbers were achieved with the backdrop of an increasingly strong balance sheet and funding position, with net cash increasing to IDR15.9tn as at the end of 1Q2021.</section>
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<section class="figure">Management suggested that if trading performance continues to improve in the remainder of the year then both capital expenditure and working capital could increase.</section>
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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>'s heavy equipment, mining, construction, and energy division saw a +3% increase in net profit to IDR1.1tn, with 59.5%-owned <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> benefiting from higher Komatsu heavy equipment sales and better gold and coal prices </p>
<p>In a move signaling a growing focus on building its digital pillar, <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>'s digital arm Astra Digital Internasional was the lead in the series C funding for Halodoc, one of Indonesia's largest health-tech start-ups. It also made an investment in groceries player Sayurbox.</p>
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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> trades on 12.3x FY21E PER and 10.3x FY22E PER versus its 5-year average forward PER, which stands at 14x making it look very attractive at these levels.</p>
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</section>


Astra International (ASII IJ) released a reassuring set of 1Q2021 results this week, which were lower than last year but also reflect the company's resilience and represent some cause for optimism coupled with some interesting acquisitions in the digital space.

The company saw its headline sales fall -4% YoY in 1Q2021 while net income fell by -22% YoY to IDR3,728bn. These numbers are against a high base last year since the pandemic only started to impact Indonesia in March 2020.
Car sales in 1Q2021 were down -24% YoY and motorcycle sales were down -17% YoY but there was a strong recovery in March of +70% MoM as luxury tax was cut.
Subsidiary United Tractors (UNTR IJ) saw higher Komatsu heavy equipment sales but this was partially offset by lower mining contracting volumes.
The company's plantation business under Astra Agro Lestari (AALI IJ)saw a negative impact from lower crude palm oil prices. 



The above numbers were achieved with the backdrop of an increasingly strong balance sheet and funding position, with net cash increasing to IDR15.9tn as at the end of 1Q2021.








Management suggested that if trading performance continues to improve in the remainder of the year then both capital expenditure and working capital could increase.








Astra International (ASII IJ)'s heavy equipment, mining, construction, and energy division saw a +3% increase in net profit to IDR1.1tn, with 59.5%-owned United Tractors (UNTR IJ) benefiting from higher Komatsu heavy equipment sales and better gold and coal prices 
In a move signaling a growing focus on building its digital pillar, Astra International (ASII IJ)'s digital arm Astra Digital Internasional was the lead in the series C funding for Halodoc, one of Indonesia's largest health-tech start-ups. It also made an investment in groceries player Sayurbox.


Astra International (ASII IJ) trades on 12.3x FY21E PER and 10.3x FY22E PER versus its 5-year average forward PER, which stands at 14x making it look very attractive at these levels.



Astra International (ASII IJ) - Digitally Remastered in a Cyclical Recovery

Indonesia

PT Astra Agro Lestari Tbk is a leading Indonesian agribusiness company primarily engaged in oil palm cultivation and the production of crude palm oil (CPO) and palm kernel oil. The company manages extensive plantations across Sumatra, Kalimantan, and Sulawesi, and operates palm oil mills and refineries to produce various derivatives. It sells its palm-based raw materials to industrial buyers globally. The company was established in 1988 and is headquartered in Jakarta, Indonesia.

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Astra Agro Lestari (AALI IJ)

Astra International (ASII IJ) - Future Clarity Through Digital Means

Astra International continues to be one of our top Indonesia recovery picks, with recent car sales numbers suggesting a strong recovery is looming...

Angus Mackintosh

Astra International (ASII IJ) - Leaning into the Recovery

Astra Internations remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy...

Angus Mackintosh

IJM Plantations’ Potential MGO from Kuala Lumpur Kepong

KLK MK made an offer to acquire IJMC’s entire stake in IJMP for RM3.10 per share in cash, subject to potential dividend adjustments. If the SPA...

Arun George

Powering Palm Oil: Record Prices Amid Vegetable Oil Complex Rally

The gain in palm oil prices is largely underpinned by concerns over slower-than-expected production growth, in conjunction with strong global...

David Blennerhassett

Astra International (ASII IJ) - Digitally Remastered in a Cyclical Recovery

Astra remains a top pick to play the economic recovery in Indonesia through autos, motorbikes, financial services, and heavy equipment with...

Angus Mackintosh

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