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

<ul>
<li>Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.</li>
<li>Discounts to airlines offered by <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> will not hurt earnings much, although if extended for &gt;12 months,  AOT earnings could lag their peers.</li>
<li>Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against <a href="https://www.smartkarma.com/entities/malaysia-airports-holdings-bhd" target="_blank" data-smartkarma-citation="entities:117:1" rel="noopener">Malaysia Airports Holdings (MAHB MK)</a> and buy for the short term.</li>
</ul>


Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for &gt;12 months,  AOT earnings could lag their peers.
Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.


Airport of Thailand (AOT): Near Term Gain

<ul>
<li>
<a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.</li>
<li>AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while <a href="https://www.smartkarma.com/entities/malaysia-airports-holdings-bhd" target="_blank" data-smartkarma-citation="entities:117:1" rel="noopener">Malaysia Airports Holdings (MAHB MK)</a> kept them under control.</li>
<li>Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.</li>
</ul>



Airports of Thailand (AOT TB) 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.
AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while Malaysia Airports Holdings (MAHB MK) kept them under control.
Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.


<ul>
<li>Visa-Free travel for Chinese tourists is certainly a boost for the <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> .</li>
<li>Compared to 2019 operational numbers, the 2023 number is still very low despite the large YoY gain thanks to the low base in 2022. </li>
<li>The valuation is still high as the share price has run ahead of its fundamentals.</li>
</ul>


Visa-Free travel for Chinese tourists is certainly a boost for the Airports of Thailand (AOT TB) .
Compared to 2019 operational numbers, the 2023 number is still very low despite the large YoY gain thanks to the low base in 2022. 
The valuation is still high as the share price has run ahead of its fundamentals.


Airport of Thailand (AOT): Not the Right Time

<ul>
<li>The Thai government plans to scrap pre-travel COVID-19 to boost tourism, and visitors will only be tested on arrival in Thailand - expect to have more tourists in Thailand.</li>
<li>Q4 2021 revenue started to bounce higher YoY although still 50% of pre-COVID level but shows some promise. </li>
<li>
<a href="https://www.smartkarma.com/entities/platinum-group-pcl" target="_blank" data-smartkarma-citation="entities:27170:1" rel="noopener">Platinum Group PCL (PLAT TB)</a>  share price went up by 24%within a year, with a 0.7x PBR to 1.02x PBR. Still early but why wait longer? </li>
</ul>


The Thai government plans to scrap pre-travel COVID-19 to boost tourism, and visitors will only be tested on arrival in Thailand - expect to have more tourists in Thailand.
Q4 2021 revenue started to bounce higher YoY although still 50% of pre-COVID level but shows some promise. 

Platinum Group PCL (PLAT TB)  share price went up by 24%within a year, with a 0.7x PBR to 1.02x PBR. Still early but why wait longer? 


Platinum (PLAT): The Shoppers Coming Back

Founder of Antler Capital

Stanley Tsai, CFA

BOC Aviation | BOCAVI <a href="https://www.smartkarma.com/entities/boc-aviation" target="_blank" data-smartkarma-citation="entities:22689:1" rel="noopener">(2588 HK)</a> 
As a follow-up on <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>'s Smartkarma Original <a href="https://www.smartkarma.com/insights/asia-pac-airports-ups-but-mostly-downs" target="_blank" data-smartkarma-citation="insights:51855" rel="noopener">Asia-Pac Airports: Ups, But Mostly Downs</a>, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation | BOCAVI (2588 HK) 
As a follow-up on David Blennerhassett's Smartkarma Original Asia-Pac Airports: Ups, But Mostly Downs, we take a look at BOCAVI, which, in our view, is a compelling alternative to APAC airport operators and airlines as a post-Covid trade.
BOCAVI is a highly geared play on the resumption of air travel. The stock has gone through periods of significant out/underperformance against the APAC airports and airlines and may continue to give investors high beta in either direction. The geographical exposure is broad, but there is a heavy skew towards short-haul flights, which will see the earliest acceleration in passenger traffic.
Management's countercyclical capex expansion increasingly looks like a shrewd bet. At its core, BOCAVI is in the capital management business. Strong liquidity and BOC's explicit backing have allowed the lessor to grow its purchase-and-leaseback portfolio through the depths of the pandemic. While airlines are still hemorrhaging cash, over 99% of BOCAVI's aircraft remain cash-generating.  
We expect the firm's undiscounted committed revenues to top USD20bn in 2021. By year-end, the value of the portfolio will have doubled since 2014. We estimate the present value of this cashflow stream to be HKD72.80/share. We are essentially getting free growth optionality. 
We are buyers at book value. The stock is trading at 8x P/E and 1.1x P/B on a 12M forward basis. BOCAVI is reasonably liquid, with a market cap of USD6bn and average daily turnover of USD3.5mn. Besides the obvious risk of protracted lockdowns globally, a well-functioning USD bond market and BOC's funding support are critical to our investment case.
Attachment: BOCAVI Financial Summary

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

Thailand

Airports of Thailand Public Company Ltd. operates the Bangkok International Airport (Don Muang) and the New Bangkok International Airport (Suvarnabhumi).. The Company also operates provincial airports in Chiang Mai, Chiang Rai, Hat Yai, and Phuket.

Airports of Thailand (AOT TB)

Airport of Thailand (AOT): Near Term Gain

AOT looks interesting right now, as there have been a few initiatives by both the management and the local authority to win tourism market share in...

Henry Soediarko

AOT Vs MAHB: Part Deux

AOT recent results were not encouraging, especially the labor expenses to revenue ratio that has shot up, depleting its net margin. In the...

Henry Soediarko

Airport of Thailand (AOT): Not the Right Time

As the Thai government issues a visa-free policy for Chinese tourists, it is expected that AOT will benefit but its share price has run ahead of...

Henry Soediarko

Platinum (PLAT): The Shoppers Coming Back

The revenue has bounced in Q4 2021 YoY but still, at 50% level to pre COVID era coincides with the travel restriction easing. It shows that...

Henry Soediarko

BOC Aviation (2588 HK): The Stars Don't Look Bigger, but They Do Look Brighter

As downstream players continue to hemorrhage cash, over 99% of BOCAVI’s aircraft are still cash-generating. Valuation is undemanding for a high...

Stanley Tsai, CFA