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

<div class="content-highlight">
<p>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.</p>
<p>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><strong>This week you can also find some of our top picks in ASEAN below the fold. </strong></p>
</div><h2>Macro Insights</h2><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/crossasean-strategy-life-after-gojek-and-the-land-of-digital-banking" target="_blank" data-smartkarma-citation="insights:37570" rel="noopener">CrossASEAN Strategy - Life After Gojek and the Land of Digital Banking,</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> comments on the completion of the latest funding round by Gojek and looks to how local Indonesian banks are progressing with their own digital banking initiatives.</p></div><p>In <a href="https://www.smartkarma.com/insights/start-of-systematic-screening-provides-hope-but-widodo-has-yet-to-cordon-java" target="_blank" data-smartkarma-citation="insights:37867" rel="noopener">Start of Systematic Screening Provides Hope, but Widodo Has Yet to Cordon Java,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/kevin-o-rourke" target="_blank" data-smartkarma-citation="accounts:2060" rel="noopener">Kevin O’Rourke</a> comments on the key political and economic developments over the past week in Indonesia. </p><h2>Equity Bottom-Up Insights</h2><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/semen-indonesia-persero-tbk-smgr-ij-fortress-mentality" target="_blank" data-smartkarma-citation="insights:37823" rel="noopener">Semen Indonesia Persero Tbk (SMGR IJ) - Fortress Mentality,</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 Indonesia's largest cement producer following a call with management. </p></div><p>In <a href="https://www.smartkarma.com/insights/akr-corporindo-akra-ij-industrial-proxy-with-strong-credentials" target="_blank" data-smartkarma-citation="insights:37643" rel="noopener">AKR Corporindo (AKRA IJ) - Industrial Proxy with Strong Credentials,</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 leading chemical and fuel distributor, which has started to see increased contributions from its Surabaya Industrial Estate. </p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/singapore-air-s-massive-rights-issue" target="_blank" data-smartkarma-citation="insights:37857" rel="noopener">Singapore Air's Massive Rights Issue,</a> events specialist <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> comments on <a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">Singapore Airlines (SIA SP)'</a>s recently announced rights issue. </p></div><p>In <a href="https://www.smartkarma.com/insights/elec-eltek-a-exit-delisting-offer" target="_blank" data-smartkarma-citation="insights:37796" rel="noopener">Elec &amp; Eltek: An Exit/Delisting Offer?,</a><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> comments on this HK and Singapore listed Printed Circuit Board maker in light of a pending announcement. </p><p>In <a href="https://www.smartkarma.com/insights/btw-warrants-expensive-a-month-ago-even-richer-now-so-better-to-bail" target="_blank" data-smartkarma-citation="insights:37830" rel="noopener">BTS Warrants - Expensive a Month Ago, Even Richer Now So Better to Bail,</a> events specialist <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> revisits BTS Warrants and suggests it is time to sell. </p><p>In <a href="https://www.smartkarma.com/insights/investor-pressures-likely-overrated-in-grab-gojek-merger-talks" target="_blank" data-smartkarma-citation="insights:37628" rel="noopener">Investor Pressures Likely Overrated In Grab-Gojek Merger Talks,</a><a href="https://www.smartkarma.com/profiles/valerie-law-cfa" target="_blank" data-smartkarma-citation="accounts:803" rel="noopener">Valerie Law, CFA</a> discusses these rather unlikely merger talks. The Grab-Gojek merger has been widely discussed. In this report, she presents a few arguments as to why it is unlikely to happen in the near-term. This report is rated 'bearish' based on the low probability of a merger.</p><p>In <a href="https://www.smartkarma.com/insights/gojek-gets-additional-funding-indonesia-food-authority-disapproves-of-rumoured-merger-deal-with-grab" target="_blank" data-smartkarma-citation="insights:37727" rel="noopener">Gojek Gets Additional Funding-Indonesia Food Authority Disapproves of Rumoured Merger Deal with Grab,</a><a href="https://www.smartkarma.com/profiles/aqila-ali" target="_blank" data-smartkarma-citation="accounts:1652" rel="noopener">Aqila Ali</a> also discusses the potential for a Grab-Gojek merger. </p><p>In <a href="https://www.smartkarma.com/insights/keppel-corp-tactical-buy-level-with-macro-heavy-cycle" target="_blank" data-smartkarma-citation="insights:37721" rel="noopener">Keppel Corp Tactical Buy Level with Macro Heavy Cycle,</a> technical analysis specialist <a href="https://www.smartkarma.com/profiles/thomas-schroeder" target="_blank" data-smartkarma-citation="accounts:381" rel="noopener">Thomas Schroeder</a> works his magic on <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp Ltd (KEP SP).</a></p><p>In <a href="https://www.smartkarma.com/insights/advanc-the-best-mobile-operator-in-thailand" target="_blank" data-smartkarma-citation="insights:37751" rel="noopener">ADVANC: The Best Mobile Operator in Thailand</a> our friend <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> initiate coverage of <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> with a BUY rating, based on a target price of Bt236.5, which is derived from a DCF methodology (WACC of 10.7% and terminal growth of 2%). </p><p>In <a href="https://www.smartkarma.com/insights/shr-world-class-resorts-at-a-deeply-discounted-price" target="_blank" data-smartkarma-citation="insights:37797" rel="noopener">SHR: World Class Resorts at a Deeply Discounted Price,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> initiate coverage of <a href="https://www.smartkarma.com/entities/s-hotels-resorts-pcl" target="_blank" data-smartkarma-citation="entities:28924:1" rel="noopener">S Hotels &amp; Resorts PCL (SHR TB)</a> with a BUY rating and a 2020E target price of Bt2.60.</p><p>In <a href="https://www.smartkarma.com/insights/bgc-stable-yield-play" target="_blank" data-smartkarma-citation="insights:37861" rel="noopener">BGC: Stable Yield Play,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> initiate coverage of <a href="https://www.smartkarma.com/entities/bg-container-glass-pcl" target="_blank" data-smartkarma-citation="entities:28453:1" rel="noopener">BG Container Glass PCL (BGC TB)</a> with a BUY rating, based on a target price of Bt11.0.</p><h2>Sector and Thematic Insights</h2><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/potential-trade-ideas-asia-pacific-companies-that-may-access-capital-markets" target="_blank" data-smartkarma-citation="insights:37862" rel="noopener">Potential Trade Ideas - Asia-Pacific Companies that May Access Capital Markets,</a><a href="https://www.smartkarma.com/profiles/zhen-zhou-toh" target="_blank" data-smartkarma-citation="accounts:673" rel="noopener">Zhen Zhou, Toh</a> screens the Asia Pacific region for companies that may need to raise new capital as they brush with debt covenants as a result of the current COVID-19 crisis.</p></div><h2>Credit Insights</h2><p>In <a href="https://www.smartkarma.com/insights/first-pacific-earnings-flash-fy-2019-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:37803" rel="noopener">First Pacific - Earnings Flash - FY 2019 Results,</a> our friends at credit specialists <a href="https://www.smartkarma.com/companies/lucror-analytics" target="_blank" data-smartkarma-citation="companies:1350" rel="noopener">Lucror Analytics</a> report back on <a href="https://www.smartkarma.com/entities/first-pacific-co-ltd" target="_blank" data-smartkarma-citation="entities:173:1" rel="noopener">First Pacific Co (142 HK)</a> post its recent results.</p><div><p><strong><em>At CrossASEAN Research we strive to produce unbiased and differentiated on the ground Insights on companies, economies and stock markets across South East Asia exclusive to Smartkarma.</em></strong></p></div><div><p><strong><em>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. </em></strong></p></div><div><p><strong><em>We offer bespoke work, company visits and tailor-made trips across South East Asia to our clients through Premium Services on Smartkarma. Please feel free to show your appreciation for any of our insights you find useful using the like button. It makes a difference!</em></strong></p></div>


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.This week you can also find some of our top picks in ASEAN below the fold. 
Macro InsightsIn CrossASEAN Strategy - Life After Gojek and the Land of Digital Banking, CrossASEAN Insight Provider Angus Mackintosh comments on the completion of the latest funding round by Gojek and looks to how local Indonesian banks are progressing with their own digital banking initiatives.In Start of Systematic Screening Provides Hope, but Widodo Has Yet to Cordon Java, CrossASEAN Insight Provider Kevin O’Rourke comments on the key political and economic developments over the past week in Indonesia. Equity Bottom-Up InsightsIn Semen Indonesia Persero Tbk (SMGR IJ) - Fortress Mentality, CrossASEAN Insight Provider Angus Mackintosh revisits Indonesia's largest cement producer following a call with management. In AKR Corporindo (AKRA IJ) - Industrial Proxy with Strong Credentials,Angus Mackintosh revisits Indonesia's leading chemical and fuel distributor, which has started to see increased contributions from its Surabaya Industrial Estate. In Singapore Air's Massive Rights Issue, events specialist David Blennerhassett comments on Singapore Airlines (SIA SP)'s recently announced rights issue. In Elec &amp; Eltek: An Exit/Delisting Offer?,David Blennerhassett comments on this HK and Singapore listed Printed Circuit Board maker in light of a pending announcement. In BTS Warrants - Expensive a Month Ago, Even Richer Now So Better to Bail, events specialist Travis Lundy revisits BTS Warrants and suggests it is time to sell. In Investor Pressures Likely Overrated In Grab-Gojek Merger Talks,Valerie Law, CFA discusses these rather unlikely merger talks. The Grab-Gojek merger has been widely discussed. In this report, she presents a few arguments as to why it is unlikely to happen in the near-term. This report is rated 'bearish' based on the low probability of a merger.In Gojek Gets Additional Funding-Indonesia Food Authority Disapproves of Rumoured Merger Deal with Grab,Aqila Ali also discusses the potential for a Grab-Gojek merger. In Keppel Corp Tactical Buy Level with Macro Heavy Cycle, technical analysis specialist Thomas Schroeder works his magic on Keppel Corp Ltd (KEP SP).In ADVANC: The Best Mobile Operator in Thailand our friend Country Group initiate coverage of Advanced Info Service (ADVANC TB) with a BUY rating, based on a target price of Bt236.5, which is derived from a DCF methodology (WACC of 10.7% and terminal growth of 2%). In SHR: World Class Resorts at a Deeply Discounted Price,Country Group initiate coverage of S Hotels &amp; Resorts PCL (SHR TB) with a BUY rating and a 2020E target price of Bt2.60.In BGC: Stable Yield Play,Country Group initiate coverage of BG Container Glass PCL (BGC TB) with a BUY rating, based on a target price of Bt11.0.Sector and Thematic InsightsIn Potential Trade Ideas - Asia-Pacific Companies that May Access Capital Markets,Zhen Zhou, Toh screens the Asia Pacific region for companies that may need to raise new capital as they brush with debt covenants as a result of the current COVID-19 crisis.Credit InsightsIn First Pacific - Earnings Flash - FY 2019 Results, our friends at credit specialists Lucror Analytics report back on First Pacific Co (142 HK) post its recent results.At CrossASEAN Research we strive to produce unbiased and differentiated on the ground Insights on companies, economies and stock markets across South East Asia exclusive to Smartkarma.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 offer bespoke work, company visits and tailor-made trips across South East Asia to our clients through Premium Services on Smartkarma. Please feel free to show your appreciation for any of our insights you find useful using the like button. It makes a difference!

The Week That Was in ASEAN@Smartkarma - Gojek Riding High, Indonesian Cement, and SIA

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

BTS Group Holdings PCL / Equity Bottom-Up

<p>The <a href="https://www.smartkarma.com/entities/bts-group-holdings-pcl-080483c3-7599-4c1c-8f5d-e9737c713b67" target="_blank" data-smartkarma-citation="entities:28858:1" rel="noopener">BTS Group Holdings PCL (BTS-W5 TB)</a> warrants on <a href="https://www.smartkarma.com/entities/bts-group-holdings-pcl" target="_blank" data-smartkarma-citation="entities:15943:1" rel="noopener">BTS Group Holdings (BTS TB)</a> were listed, and there were no buy opportunities. </p>
<p>Instead, there were selling opportunities. And if you did not sell them then, you should think about doing so now.</p>
<p>The warrants are trading at an implied volatility exceeding that seen in the aftermath of the Thai floods in 2011, the demonstrations in 2013 and beyond, and any other time save the buy of BTSC in May 2010 which saw trading volumes rise 25-fold for a period of six months or more. </p>
<p>The company has changed dramatically since then. </p>
<p>Thailand has also become the latest country to implement a broad lockdown. Thailand’s Prime Minister Prayuth Chan-Ocha said two days ago a state of emergency will be declared for a month. Borders will be closed to foreigners starting today the 26 March; social gatherings are banned, domestic travel has been limited, and only essential shops remain open. From my sources, activity has already been considerably dampened. We can expect damage to BTS revenues. That damage will impact the share price's ability to rebound to record new highs within the next 10 months so the warrants seem like an asset which will wither (if you are a vol trader, you know what you are getting into and different parameters apply).</p>
<p>More below.</p>

The BTS Group Holdings PCL (BTS-W5 TB) warrants on BTS Group Holdings (BTS TB) were listed, and there were no buy opportunities. 
Instead, there were selling opportunities. And if you did not sell them then, you should think about doing so now.
The warrants are trading at an implied volatility exceeding that seen in the aftermath of the Thai floods in 2011, the demonstrations in 2013 and beyond, and any other time save the buy of BTSC in May 2010 which saw trading volumes rise 25-fold for a period of six months or more. 
The company has changed dramatically since then. 
Thailand has also become the latest country to implement a broad lockdown. Thailand’s Prime Minister Prayuth Chan-Ocha said two days ago a state of emergency will be declared for a month. Borders will be closed to foreigners starting today the 26 March; social gatherings are banned, domestic travel has been limited, and only essential shops remain open. From my sources, activity has already been considerably dampened. We can expect damage to BTS revenues. That damage will impact the share price's ability to rebound to record new highs within the next 10 months so the warrants seem like an asset which will wither (if you are a vol trader, you know what you are getting into and different parameters apply).
More below.

BTS Warrants - Expensive a Month Ago, Even Richer Now So Better to Bail

Event-Driven

<p>As discussed in <a href="https://www.smartkarma.com/insights/bts-group-w5-warrants-coming" target="_blank" data-smartkarma-citation="insights:35275" rel="noopener">BTS Group W5 Warrants Coming</a> published in mid-December, the W5 warrants would start trading sometime in the new year of 2020. The discussion point on the insight a week later noted that the first day of trading would be 17 February. </p>
<p>Helpfully, because you know the strike, you had a 14-month option at the time - not a 12-month option. The shares reacted. The rights went ex- on the 13th of December (the big red candle dropping from the high in mid-December), and for whatever reason, the stock actually rose on the open before falling almost 10% that week. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/117/855/original/Screenshot%202020-02-14%20at%203.07.06%20PM.png?1581664074" class="editor-image img-responsive" data-smartkarma-image-id="117855"></figure>
<div style="text-align: left;" class="content-caption">source: tradingview.com, Quiddity</div>
<p>Since then, economic figures and forecasts have been non-salutary, and the onset of the novel-coronavirus-2019 has sharply curtailed Chinese outbound tourism, which has dampened the outlook further. The <a href="http://bts.listedcompany.com/newsroom/140120201727500391E.pdf" target="_blank" rel="noopener">interim dividend</a> for the Apr-Sep 2019 fiscal half went ex- on 28 January, and Q3 earnings released Friday. </p>
<p>The important part isn't all that though. The important part is the BTS W5 warrants. </p>
<p>More below.</p>

As discussed in BTS Group W5 Warrants Coming published in mid-December, the W5 warrants would start trading sometime in the new year of 2020. The discussion point on the insight a week later noted that the first day of trading would be 17 February. 
Helpfully, because you know the strike, you had a 14-month option at the time - not a 12-month option. The shares reacted. The rights went ex- on the 13th of December (the big red candle dropping from the high in mid-December), and for whatever reason, the stock actually rose on the open before falling almost 10% that week. 

source: tradingview.com, Quiddity
Since then, economic figures and forecasts have been non-salutary, and the onset of the novel-coronavirus-2019 has sharply curtailed Chinese outbound tourism, which has dampened the outlook further. The interim dividend for the Apr-Sep 2019 fiscal half went ex- on 28 January, and Q3 earnings released Friday. 
The important part isn't all that though. The important part is the BTS W5 warrants. 
More below.

Thailand

TERMS TO BE FIXED. DATES ARE INDICATIVE. FIRST EXERCISE DATE ON THE LAST BUSINES S DAY OF THE FIRST    QUARTER FROM ISSUANCE DATE.

BTS Group Holdings PCL (BTS-W5 TB)

The Week That Was in ASEAN@Smartkarma - Gojek Riding High, Indonesian Cement, and SIA

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

Angus Mackintosh

BTS Warrants - Expensive a Month Ago, Even Richer Now So Better to Bail

The BTS Group Holdings PCL (BTS-W5 TB) warrants on BTS Group Holdings (BTS TB) were listed, and there were no buy opportunities. Instead, there...

Travis Lundy

BTS Group W5 Warrants Trading Imminent

As discussed in BTS Group W5 Warrants Coming published in mid-December, the W5 warrants would start trading sometime in the new year of 2020. The...

Travis Lundy