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

Cross Asset Strategy

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Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The <a href="https://www.smartkarma.com/insights/singapore-sti-macro-bear-pressure-mounting-with-tactical-relief-from-2-400" target="_blank" data-smartkarma-citation="insights:42932" rel="noopener">Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400</a> Insight is improperly attributed to Thomas Monaco. That Insight was published by <a href="https://www.smartkarma.com/profiles/thomas-schroeder" target="_blank" data-smartkarma-citation="accounts:381" rel="noopener">Thomas Schroeder</a>.
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The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma.</a>
</div>
<h3>Equity Bottom-Up Insights</h3>
In <a href="https://www.smartkarma.com/insights/kalbe-farma-klbf-ij-a-nutritional-spin-off" target="_blank" data-smartkarma-citation="insights:42533" rel="noopener">Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits South East Asia's largest pharmaceutical company in light of news that the company is considering spinning off its Nutritionals division to raise around US$500m. 
In <a href="https://www.smartkarma.com/insights/link-net-tbk-pt-link-ij-summer-migration-at-last" target="_blank" data-smartkarma-citation="insights:42829" rel="noopener">Link Net Tbk Pt (LINK IJ) - Summer Migration at Last,</a> <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits Indonesia's highest quality high-speed broadband provider following a call with managment, which focused on its recent results, as well as the decision to build its own pole infrastructure to carry its fibre.  
In <a href="https://www.smartkarma.com/insights/singtel-make-the-call" target="_blank" data-smartkarma-citation="insights:42900" rel="noopener">SingTel: Make The Call,</a> <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> zeros in on Singapore's leading telecom provider and finds deep value appearing in the stock.
In <a href="https://www.smartkarma.com/insights/scg-packaging-ipo-initiation-shrink-wrapping" target="_blank" data-smartkarma-citation="insights:42967" rel="noopener">SCG Packaging IPO Initiation: Shrink Wrapping,</a> <a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> takes a first look at the upcoming spin-off from <a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" data-smartkarma-citation="entities:2589:1" rel="noopener">Siam Cement (SCC TB)</a> and IPO of SCG Packaging, which will get a lot of investor focus given ist size and share in of the packaging market in SE Asia. 
In <a href="https://www.smartkarma.com/insights/sembcorp-last-chance-before" target="_blank" data-smartkarma-citation="insights:42886" rel="noopener">Sembcorp - Last Chance Before...</a> <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> looks at the enormously dilutive rights issue and de-merger of Semcorp Marine. 
 In <a href="https://www.smartkarma.com/insights/singapore-sti-macro-bear-pressure-mounting-with-tactical-relief-from-2-400" target="_blank" data-smartkarma-citation="insights:42932" rel="noopener">Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400,</a> technical analysis specialist <a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> works his technical magic on the <a href="https://www.smartkarma.com/entities/ftse-straits-times-index-sti" target="_blank" data-smartkarma-citation="entities:22902:1" rel="noopener">FTSE Straits Times Index (STI) (STI INDEX).</a>
In <a href="https://www.smartkarma.com/insights/ratch-3q20-earnings-to-improve-from-overseas-performance" target="_blank" data-smartkarma-citation="insights:42789" rel="noopener">RATCH: 3Q20 Earnings to Improve from Overseas Performance</a>, our friend at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> report back on <a href="https://www.smartkarma.com/entities/ratch-group-pcl" target="_blank" data-smartkarma-citation="entities:15338:1" rel="noopener">Ratchaburi Electric (RATCH TB)</a> post its more recent analyst meeting, which left a positive impression.  
In <a href="https://www.smartkarma.com/insights/b-work-good-dividend-yield-makes-an-attractive-investment" target="_blank" data-smartkarma-citation="insights:42782" rel="noopener">B-WORK: Good Dividend Yield Makes an Attractive Investment,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> revisits <a href="https://www.smartkarma.com/entities/bualuang-office-leasehold-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:26187:1" rel="noopener">Bualuang Office Leasehold Real Estate Investment Trust (B-WORK TB)</a> and takes a positive view. 
In <a href="https://www.smartkarma.com/insights/rbf-the-excessive-outperformance-may-come-to-a-halt" target="_blank" data-smartkarma-citation="insights:42788" rel="noopener">RBF: The Excessive Outperformance May Come to a Halt,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/r-b-food-supply-pcl" target="_blank" data-smartkarma-citation="entities:28949:1" rel="noopener">R&amp;B Food Supply PCL (RBF TB)</a> to HOLD from SELL based on raising his target price of THB9.25 from THB8.70, implying a downside of 9% from the current price. 
In <a href="https://www.smartkarma.com/insights/sti-acquisition-benefits-are-not-fully-priced-in-strong-buy" target="_blank" data-smartkarma-citation="insights:42785" rel="noopener">STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> revisits <a href="https://www.smartkarma.com/entities/stonehenge-inter-pcl" target="_blank" data-smartkarma-citation="entities:27353:1" rel="noopener">Stonehenge Inter (STI TB)</a> with a BUY recommendation based on his target of THB10.10, implying an upside of 31% from the current share price. 
In <a href="https://www.smartkarma.com/insights/dod-strong-performance-deserves-a-re-rating" target="_blank" data-smartkarma-citation="insights:42676" rel="noopener">DOD: Strong Performance Deserves a Re-Rating,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/dod-biotech-pcl" target="_blank" data-smartkarma-citation="entities:26179:1" rel="noopener">DOD Biotech PCL (DOD TB)</a> to BUY from HOLD based on raising his target price to Bt10.70 from Bt7.55, implying an upside of 26% from the current price. 
In <a href="https://www.smartkarma.com/insights/vranda-the-calm-before-challenging-times" target="_blank" data-smartkarma-citation="insights:42781" rel="noopener">VRANDA: The Calm Before Challenging Times,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> has a SELL recommendation on <a href="https://www.smartkarma.com/entities/veranda-resort-pcl" target="_blank" data-smartkarma-citation="entities:29176:1" rel="noopener">Veranda Resort PCL (VRANDA TB)</a> based on a target price of THB4.30, implying a downside of 26% from the current share price. 
In <a href="https://www.smartkarma.com/insights/ace-results-are-not-stunning-stay-on-hold" target="_blank" data-smartkarma-citation="insights:42784" rel="noopener">ACE: Results Are Not Stunning, Stay on HOLD,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> upgrades his recommendation on <a href="https://www.smartkarma.com/entities/absolute-clean-energy-pcl" target="_blank" data-smartkarma-citation="entities:29155:1" rel="noopener">Absolute Clean Energy PCL (ACE TB)</a> to HOLD from SELL based on raising his target price to THB3.49 from THB2.64, implying an upside of 8% from the current price. 
In <a href="https://www.smartkarma.com/insights/spa-weak-demand-continues-to-pressure-2h20-earnings" target="_blank" data-smartkarma-citation="insights:42813" rel="noopener">SPA: Weak Demand Continues to Pressure 2H20 Earnings,</a> <a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr. Andrew Stotz, CFA</a> downgrades <a href="https://www.smartkarma.com/entities/siam-wellness-group-pcl" target="_blank" data-smartkarma-citation="entities:3765:1" rel="noopener">Siam Wellness Group (SPA TB)</a> from BUY to HOLD rating and cut his target price by 31% to THB6.6 to factor in weakening earnings momentum in 2H20. 
In <a href="https://www.smartkarma.com/insights/gunkul-new-60mw-power-plant-to-drive-2h20-earnings" target="_blank" data-smartkarma-citation="insights:42820" rel="noopener">GUNKUL: New 60MW Power Plant to Drive 2H20 Earnings,</a> <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> maintain a BUY rating on <a href="https://www.smartkarma.com/entities/gunkul-engineering-pcl" target="_blank" data-smartkarma-citation="entities:15272:1" rel="noopener">Gunkul Engineering (GUNKUL TB)</a> with a target price of THB3.24 derived using DCF method (WACC 7.8% and TG 1%) implying 11.4x FY20E PER or 0.5x relative PER to Thai utility sector. 
<h3>Sector and Thematic Insights</h3>
In <a href="https://www.smartkarma.com/insights/telecom-review-sept-2020-ais-and-asiasoft-get-aggressive-on-gaming" target="_blank" data-smartkarma-citation="insights:41022" rel="noopener">Telecom Review (Sept 2020): AIS and AsiaSoft Get Aggressive on Gaming,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> takes a look at gaming, specifically related to <a href="https://www.smartkarma.com/entities/advanced-info-service-pcl" target="_blank" data-smartkarma-citation="entities:947:1" rel="noopener">Advanced Info Service (ADVANC TB)</a> and <a href="https://www.smartkarma.com/entities/asiasoft-corp-pcl" target="_blank" data-smartkarma-citation="entities:5429:1" rel="noopener">Asiasoft Corp (AS TB)</a> in Thailand.


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400 Insight is improperly attributed to Thomas Monaco. That Insight was published by Thomas Schroeder.



The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma.

Equity Bottom-Up Insights
In Kalbe Farma (KLBF IJ) - A Nutritional Spin-Off?, CrossASEAN Insight Provider Angus Mackintosh revisits South East Asia's largest pharmaceutical company in light of news that the company is considering spinning off its Nutritionals division to raise around US$500m. 
In Link Net Tbk Pt (LINK IJ) - Summer Migration at Last, Angus Mackintosh revisits Indonesia's highest quality high-speed broadband provider following a call with managment, which focused on its recent results, as well as the decision to build its own pole infrastructure to carry its fibre.  
In SingTel: Make The Call, David Blennerhassett zeros in on Singapore's leading telecom provider and finds deep value appearing in the stock.
In SCG Packaging IPO Initiation: Shrink Wrapping, Arun George takes a first look at the upcoming spin-off from Siam Cement (SCC TB) and IPO of SCG Packaging, which will get a lot of investor focus given ist size and share in of the packaging market in SE Asia. 
In Sembcorp - Last Chance Before... Travis Lundy looks at the enormously dilutive rights issue and de-merger of Semcorp Marine. 
 In Singapore STI Macro Bear Pressure Mounting with Tactical Relief from 2,400, technical analysis specialist Thomas J. Monaco works his technical magic on the FTSE Straits Times Index (STI) (STI INDEX).
In RATCH: 3Q20 Earnings to Improve from Overseas Performance, our friend at Country Group report back on Ratchaburi Electric (RATCH TB) post its more recent analyst meeting, which left a positive impression.  
In B-WORK: Good Dividend Yield Makes an Attractive Investment, Dr. Andrew Stotz, CFA revisits Bualuang Office Leasehold Real Estate Investment Trust (B-WORK TB) and takes a positive view. 
In RBF: The Excessive Outperformance May Come to a Halt, Dr. Andrew Stotz, CFA upgrades his recommendation on R&amp;B Food Supply PCL (RBF TB) to HOLD from SELL based on raising his target price of THB9.25 from THB8.70, implying a downside of 9% from the current price. 
In STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY, Dr. Andrew Stotz, CFA revisits Stonehenge Inter (STI TB) with a BUY recommendation based on his target of THB10.10, implying an upside of 31% from the current share price. 
In DOD: Strong Performance Deserves a Re-Rating, Dr. Andrew Stotz, CFA upgrades his recommendation on DOD Biotech PCL (DOD TB) to BUY from HOLD based on raising his target price to Bt10.70 from Bt7.55, implying an upside of 26% from the current price. 
In VRANDA: The Calm Before Challenging Times, Dr. Andrew Stotz, CFA has a SELL recommendation on Veranda Resort PCL (VRANDA TB) based on a target price of THB4.30, implying a downside of 26% from the current share price. 
In ACE: Results Are Not Stunning, Stay on HOLD, Dr. Andrew Stotz, CFA upgrades his recommendation on Absolute Clean Energy PCL (ACE TB) to HOLD from SELL based on raising his target price to THB3.49 from THB2.64, implying an upside of 8% from the current price. 
In SPA: Weak Demand Continues to Pressure 2H20 Earnings, Dr. Andrew Stotz, CFA downgrades Siam Wellness Group (SPA TB) from BUY to HOLD rating and cut his target price by 31% to THB6.6 to factor in weakening earnings momentum in 2H20. 
In GUNKUL: New 60MW Power Plant to Drive 2H20 Earnings, Country Group maintain a BUY rating on Gunkul Engineering (GUNKUL TB) with a target price of THB3.24 derived using DCF method (WACC 7.8% and TG 1%) implying 11.4x FY20E PER or 0.5x relative PER to Thai utility sector. 
Sector and Thematic Insights
In Telecom Review (Sept 2020): AIS and AsiaSoft Get Aggressive on Gaming, our Thai guru Athaporn Arayasantiparb, CFA takes a look at gaming, specifically related to Advanced Info Service (ADVANC TB) and Asiasoft Corp (AS TB) in Thailand. 

The Week that Was in ASEAN@Smartkama - Kalbe Spin-Off, SingTel's Deep Value, and Thailand's Gamers

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

We upgrade our recommendation on ACE to HOLD from SELL based on raising our target price to Bt3.49 from Bt2.64, implying an upside of 8% from the current price. We think ACE deserves to trade at a premium to the Thai sector due to its pronounced growth prospects, we use a target 2020E PE of 29.4x.
Investment thesis:
<ul>
<li>Power producer with high growth potential, but already priced in</li>
<li>Long-term contracts and supply control drive high profitability</li>
<li>Government driven demand can pose a risk</li>
</ul>
Interim: ACE has delivered good 2Q20 results and follows up on its continuous expansion plan, justifying high growth prospects. We revise our forecast upward to account for the strong results.
Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

We upgrade our recommendation on ACE to HOLD from SELL based on raising our target price to Bt3.49 from Bt2.64, implying an upside of 8% from the current price. We think ACE deserves to trade at a premium to the Thai sector due to its pronounced growth prospects, we use a target 2020E PE of 29.4x.
Investment thesis:

Power producer with high growth potential, but already priced in
Long-term contracts and supply control drive high profitability
Government driven demand can pose a risk

Interim: ACE has delivered good 2Q20 results and follows up on its continuous expansion plan, justifying high growth prospects. We revise our forecast upward to account for the strong results.
Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

ACE: Results Are Not Stunning, Stay on HOLD

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Event-Driven

Uawithya has requested shareholder approval to divest three of its renewable power subsidiaries at bargain basement prices. One of the worst investments in our portfolio (down over 60%), these are some of the deal's key points:<ul>
<li>
Business. The founding family has long sold out the current group, the Leenbanjong family. Management argues that since they lack expertise in renewables, they should divest them and refocus on the original business in telecom towers and industrial products trading while also reducing debt.</li>
<li>
The Deal. UWC will sell three subsidiaries (UKB, UAB, and SBM) to ACE for less than Bt200m and well as shareholder loans from UWC for Bt150m, netting a loss of Bt520m.</li>
<li>
The independent advice. Capital Advantage values the three businesses at Bt449m. At that price, the impairment would only be Bt116m, and some Bt360m of debts could be paid down.</li>
<li>
Our Take. While we agree that with the divestment conceptually if management is no longer confident of their own expertise, we think they should do a better job on pricing, so we rejected the deal in hopes that they would hold out for a better price from ACE.</li>
</ul>

Uawithya has requested shareholder approval to divest three of its renewable power subsidiaries at bargain basement prices. One of the worst investments in our portfolio (down over 60%), these are some of the deal's key points:

Business. The founding family has long sold out the current group, the Leenbanjong family. Management argues that since they lack expertise in renewables, they should divest them and refocus on the original business in telecom towers and industrial products trading while also reducing debt.

The Deal. UWC will sell three subsidiaries (UKB, UAB, and SBM) to ACE for less than Bt200m and well as shareholder loans from UWC for Bt150m, netting a loss of Bt520m.

The independent advice. Capital Advantage values the three businesses at Bt449m. At that price, the impairment would only be Bt116m, and some Bt360m of debts could be paid down.

Our Take. While we agree that with the divestment conceptually if management is no longer confident of their own expertise, we think they should do a better job on pricing, so we rejected the deal in hopes that they would hold out for a better price from ACE.


Mechanics and Details of the Uawithya Subsidiaries Divestment

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This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma.</a>
</div><h2>Macro Insights</h2>In <a href="https://www.smartkarma.com/insights/forgive-us-our-debts-external-debt-complacency-was-the-old-normal" target="_blank" data-smartkarma-citation="insights:39053" rel="noopener">Forgive Us Our Debts?: External Debt Complacency Was the ‘old Normal’</a>, <a href="https://www.smartkarma.com/profiles/dr-jim-walker" target="_blank" data-smartkarma-citation="accounts:1628" rel="noopener">Dr Jim Walker</a> explores Asia's debt situation and suggests Asian economies are about to have a debt rethink akin to the Asian Crisis. In <a href="https://www.smartkarma.com/insights/singapore-export-headwinds" target="_blank" data-smartkarma-citation="insights:40698" rel="noopener">Singapore: Export Headwinds,</a><a href="https://www.smartkarma.com/profiles/sharmila-whelan" target="_blank" data-smartkarma-citation="accounts:1728" rel="noopener">Sharmila Whelan</a> revisits Singapore's economy and sees challenges ahead as exports come under pressure. <h2>Equity Bottom-Up Insights</h2>In <a href="https://www.smartkarma.com/insights/berli-jucker-bjc-tb-calm-after-the-storm" target="_blank" data-smartkarma-citation="insights:40638" rel="noopener">Berli Jucker (BJC TB) - Calm After the Storm,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits this Thai consumer player as Thailand comes out of the COVID-19 restrictions. In <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-tencent-buying-iflix-a-sign" target="_blank" data-smartkarma-citation="insights:40709" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Tencent Buying IFlix a Sign?,</a><a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> revisits one of Indonesia's leading media companies in light of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>'s recent acquisition of iFlix and sees some read-across for its own OTT player Vidio.com. In <a href="https://www.smartkarma.com/insights/link-net-tbk-pt-link-ij-1q2020-big-on-subscribers-but-at-a-higher-cost" target="_blank" data-smartkarma-citation="insights:40586" rel="noopener">Link Net Tbk Pt (LINK IJ) - 1Q2020 Big on Subscribers but at a Higher Cost,</a><a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> reports back on <a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net Tbk Pt (LINK IJ)</a> post its recent 1Q2020 results, which saw the company report a rapid increase in new subscribers but with some cost increases at the same time.In <a href="https://www.smartkarma.com/insights/osotspa-placement-resilient-business-but-founding-family-is-selling" target="_blank" data-smartkarma-citation="insights:40727" rel="noopener">Osotspa Placement - Resilient Business but Founding Family Is Selling,</a><a href="https://www.smartkarma.com/profiles/zhen-zhou-toh" target="_blank" data-smartkarma-citation="accounts:673" rel="noopener">Zhen Zhou, Toh</a> takes a look at <a href="https://www.smartkarma.com/entities/osotspa-public-company-limited" target="_blank" data-smartkarma-citation="entities:27004:1" rel="noopener">Osotspa Public Company Limited (OSP TB)</a> in light of a recently announced share sale.In <a href="https://www.smartkarma.com/insights/aot-still-a-valid-proxy-for-tourism" target="_blank" data-smartkarma-citation="insights:40587" rel="noopener">AOT: Still a Valid Proxy for Tourism?,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits Thailand's airport operator as the country has lowered some COVID-19 related restrictions. In <a href="https://www.smartkarma.com/insights/minor-and-tac-consumer-navigate-the-pandemic" target="_blank" data-smartkarma-citation="insights:40652" rel="noopener">MINOR and TAC Consumer Navigate the Pandemic,</a> our Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> looks at how both <a href="https://www.smartkarma.com/entities/minor-international-pcl" target="_blank" data-smartkarma-citation="entities:2154:1" rel="noopener">Minor International (MINT TB)</a> and TAC Consumer are coping with COVID-19. In <a href="https://www.smartkarma.com/insights/sri-trang-gloves-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:40656" rel="noopener">Sri Trang Gloves IPO: Valuation Insights,</a><a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> takes a close look at the upcoming IPO of this Thai rubber glove producer. In <a href="https://www.smartkarma.com/insights/sri-trang-gloves-ipo-one-to-keep-an-eye-for-ve-effect-of-covid-19" target="_blank" data-smartkarma-citation="insights:40590" rel="noopener">Sri Trang Gloves IPO - One to Keep an Eye for +ve Effect of COVID-19,</a><a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> takes a look at this upcoming Thai Rubber glove IPO.In <a href="https://www.smartkarma.com/insights/mint-placement-known-asset-more-data-centres-less-sme-exposure-heading-in-the-right-direction" target="_blank" data-smartkarma-citation="insights:40611" rel="noopener">MINT Placement - Known Asset, More Data Centres, Less SME Exposure -&gt; Heading in the Right Direction,</a><a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a> revisits <a href="https://www.smartkarma.com/entities/mapletree-industrial-trust" target="_blank" data-smartkarma-citation="entities:40:1" rel="noopener">Mapletree Industrial Trust (MINT SP)</a> after the announcement of a capital raising. In <a href="https://www.smartkarma.com/insights/mapletree-industrial-trust-placement-reasonable-for-exposure-to-us-data-centres" target="_blank" data-smartkarma-citation="insights:40621" rel="noopener">Mapletree Industrial Trust Placement: Reasonable for Exposure to US Data Centres,</a><a href="https://www.smartkarma.com/profiles/arun-george" target="_blank" data-smartkarma-citation="accounts:1680" rel="noopener">Arun George</a> also takes a look at <a href="https://www.smartkarma.com/entities/mapletree-industrial-trust" target="_blank" data-smartkarma-citation="entities:40:1" rel="noopener">Mapletree Industrial Trust (MINT SP)</a> post the news of a placement of new units. In <a href="https://www.smartkarma.com/insights/ilm-leader-in-home-furnishing-has-more-to-give" target="_blank" data-smartkarma-citation="insights:40723" rel="noopener">ILM: Leader in Home Furnishing Has More to Give,</a><a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr Andrew Stotz, CFA</a> initiates coverage on ILM with a BUY recommendation based on a target price of Bt15.20, implying an upside of 13% from the current price. In <a href="https://www.smartkarma.com/insights/ace-great-growth-opportunities-but-the-stock-is-overpriced" target="_blank" data-smartkarma-citation="insights:40724" rel="noopener">ACE: Great Growth Opportunities, but the Stock Is Overpriced,</a><a href="https://www.smartkarma.com/profiles/dr-andrew-stotz-cfa" target="_blank" data-smartkarma-citation="accounts:756" rel="noopener">Dr Andrew Stotz, CFA</a> initiates coverage on <a href="https://www.smartkarma.com/entities/absolute-clean-energy-pcl" target="_blank" data-smartkarma-citation="entities:29155:1" rel="noopener">Absolute Clean Energy PCL (ACE TB)</a> with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. <h2>Sector and Thematic Insights</h2>In <a href="https://www.smartkarma.com/insights/snippets-41-new-thai-coons-of-2020-mexican-oil" target="_blank" data-smartkarma-citation="insights:39083" rel="noopener">Snippets #41: New Thai-Coons of 2020, Mexican Oil,</a><a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> highlights five interesting news/developments in Thailand with relevance to the stock market.<h2>Credit Insights</h2>In <a href="https://www.smartkarma.com/insights/neptune-orient-lines-cost-control-confidence" target="_blank" data-smartkarma-citation="insights:40610" rel="noopener">Neptune Orient Lines: Cost Control Confidence,</a> Credit Specialist <a href="https://www.smartkarma.com/profiles/warut-promboon" target="_blank" data-smartkarma-citation="accounts:1226" rel="noopener">Warut Promboon</a> revisits <a href="https://www.smartkarma.com/entities/neptune-orient-lines-ltd" target="_blank" data-smartkarma-citation="entities:415:1" rel="noopener">Neptune Orient Lines (NOL SP)</a> bonds in light of recent results from its parent company.


This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.
Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week's relevant discussions in ASEAN@Smartkarma.
Macro InsightsIn Forgive Us Our Debts?: External Debt Complacency Was the ‘old Normal’, Dr Jim Walker explores Asia's debt situation and suggests Asian economies are about to have a debt rethink akin to the Asian Crisis. In Singapore: Export Headwinds,Sharmila Whelan revisits Singapore's economy and sees challenges ahead as exports come under pressure. Equity Bottom-Up InsightsIn Berli Jucker (BJC TB) - Calm After the Storm, CrossASEAN Insight Provider Angus Mackintosh revisits this Thai consumer player as Thailand comes out of the COVID-19 restrictions. In PT Surya Citra Media Tbk (SCMA IJ) - Tencent Buying IFlix a Sign?,Angus Mackintosh revisits one of Indonesia's leading media companies in light of Tencent Holdings (700 HK)'s recent acquisition of iFlix and sees some read-across for its own OTT player Vidio.com. In Link Net Tbk Pt (LINK IJ) - 1Q2020 Big on Subscribers but at a Higher Cost,Angus Mackintosh reports back on Link Net Tbk Pt (LINK IJ) post its recent 1Q2020 results, which saw the company report a rapid increase in new subscribers but with some cost increases at the same time.In Osotspa Placement - Resilient Business but Founding Family Is Selling,Zhen Zhou, Toh takes a look at Osotspa Public Company Limited (OSP TB) in light of a recently announced share sale.In AOT: Still a Valid Proxy for Tourism?, CrossASEAN Insight Provider Henry Soediarko revisits Thailand's airport operator as the country has lowered some COVID-19 related restrictions. In MINOR and TAC Consumer Navigate the Pandemic, our Thai guru Athaporn Arayasantiparb, CFA looks at how both Minor International (MINT TB) and TAC Consumer are coping with COVID-19. In Sri Trang Gloves IPO: Valuation Insights,Arun George takes a close look at the upcoming IPO of this Thai rubber glove producer. In Sri Trang Gloves IPO - One to Keep an Eye for +ve Effect of COVID-19,Sumeet Singh takes a look at this upcoming Thai Rubber glove IPO.In MINT Placement - Known Asset, More Data Centres, Less SME Exposure -&gt; Heading in the Right Direction,Sumeet Singh revisits Mapletree Industrial Trust (MINT SP) after the announcement of a capital raising. In Mapletree Industrial Trust Placement: Reasonable for Exposure to US Data Centres,Arun George also takes a look at Mapletree Industrial Trust (MINT SP) post the news of a placement of new units. In ILM: Leader in Home Furnishing Has More to Give,Dr Andrew Stotz, CFA initiates coverage on ILM with a BUY recommendation based on a target price of Bt15.20, implying an upside of 13% from the current price. In ACE: Great Growth Opportunities, but the Stock Is Overpriced,Dr Andrew Stotz, CFA initiates coverage on Absolute Clean Energy PCL (ACE TB) with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. Sector and Thematic InsightsIn Snippets #41: New Thai-Coons of 2020, Mexican Oil,Athaporn Arayasantiparb, CFA highlights five interesting news/developments in Thailand with relevance to the stock market.Credit InsightsIn Neptune Orient Lines: Cost Control Confidence, Credit Specialist Warut Promboon revisits Neptune Orient Lines (NOL SP) bonds in light of recent results from its parent company. 

The Week that Was in ASEAN@Smartkarma - Debt Concerns, Thai Consumers, and Rubber Gloves

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.Investment thesis:<ul>
<li>Power producer with high growth potential, but already priced in</li>
<li>Long-term contracts and supply control drive high profitability</li>
<li>Government driven demand can pose a risk</li>
</ul>Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We derive the target price from a de-rating to a 25% premium to the sector PE ratio, meaning a 2020E 29.4x PE.Investment thesis:
Power producer with high growth potential, but already priced in
Long-term contracts and supply control drive high profitability
Government driven demand can pose a risk
Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.

ACE: Great Growth Opportunities, but the Stock Is Overpriced

Thailand

Absolute Clean Energy Company Limited operates biomass power plants. The Company focuses on clean energy from left-over residual materials, as well as provides electricity and steam generating and distributing services. Absolute Clean Energy serves customers worldwide.

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Absolute Clean Energy (ACE TB)

The Week that Was in ASEAN@Smartkama - Kalbe Spin-Off, SingTel's Deep Value, and Thailand's Gamers

The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable insights from across South...

Angus Mackintosh

ACE: Results Are Not Stunning, Stay on HOLD

Good 2Q20 results and follows up on its continuous expansion plans. We revise our forecast to account for the strong results.

A. Stotz Investment Research

Mechanics and Details of the Uawithya Subsidiaries Divestment

Uawithya has requested shareholder approval to divest three of its renewable power subsidiaries at bargain basement prices. One of the worst...

Athaporn Arayasantiparb, CFA

The Week that Was in ASEAN@Smartkarma - Debt Concerns, Thai Consumers, and Rubber Gloves

This past week's offering of Insights across ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive and actionable...

Angus Mackintosh

ACE: Great Growth Opportunities, but the Stock Is Overpriced

We initiate coverage on ACE with a SELL recommendation based on a target price of Bt2.64, implying a downside of 36% from the current price. We...

A. Stotz Investment Research

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