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>The past 1 month's share price appreciation combined with the uncertainty of the Straits of Hormuz reopening casts doubt. </li>
<li>The recent JV announcement between <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> and <a href="https://www.smartkarma.com/entities/air-china-limited-class-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China (753 HK)</a> will improve SIA's margin structurally. </li>
<li>Air India's crisis is not over and drags SIA share price lower but most of it has been priced in while the Air China's JV has not been priced in. </li>
</ul>


The past 1 month's share price appreciation combined with the uncertainty of the Straits of Hormuz reopening casts doubt. 
The recent JV announcement between Singapore Airlines (SIA SP) and Air China (753 HK) will improve SIA's margin structurally. 
Air India's crisis is not over and drags SIA share price lower but most of it has been priced in while the Air China's JV has not been priced in. 


Singapore Air (SIA): Capturing China Rebound

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Strong top-line growth in Q126, but also margin compression due to rising OpEx</li>
<li>For Q2, Trip.com guided slower revenue growth and concomitant margin impacts</li>
<li>An antitrust investigation into Trip.com appears to be undermining growth trajectory</li>
</ul>


Strong top-line growth in Q126, but also margin compression due to rising OpEx
For Q2, Trip.com guided slower revenue growth and concomitant margin impacts
An antitrust investigation into Trip.com appears to be undermining growth trajectory


Trip.com Q126 Results | Strong Top-Line, Lower Margins | Ongoing Investigation To Hit Growth in Q226

Thematic (Sector/Industry)

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<div>During COVID-19, tech stocks have led the markets supported by demand expansion, strong balance sheets filled with cash, and innovative products. At the end of the cycle, there should be a rotation towards cyclical and value stocks but this time around is policy-induced recovery and during the COVID-19 crisis, tech stocks have led the recovery ahead of the cyclical. The question is whether this will carry on and large tech names to continue leading market recovery while cyclical drag their feet?</div>
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<div>The regulator in China has given dominant tech names a slap in the wrist with the anti-trust law that proposes to democratize the payment systems that will inevitably break up the monopolies and these companies will lose their customers' stickiness. </div>
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<div>In light of the <strong>antitrust</strong> law and the real economic recovery in China, investors should start to underweight technology stocks in China such as Tencent, Alibaba, Meituan, and start to overweight travel and tourism stocks such as <a href="https://www.smartkarma.com/entities/air-china-ltd-a" target="_blank" data-smartkarma-citation="entities:1080:1" rel="noopener">Air China Ltd (A) (601111 CH)</a> , <a href="https://www.smartkarma.com/entities/travelsky-technology-ltd-h" target="_blank" data-smartkarma-citation="entities:19829:1" rel="noopener">Travelsky Technology Ltd H (696 HK)</a> , <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> and also Industrials such as <a href="https://www.smartkarma.com/entities/zoomlion-heavy-industry-h" target="_blank" data-smartkarma-citation="entities:7817:1" rel="noopener">Zoomlion Heavy Industry H (1157 HK)</a> and <a href="https://www.smartkarma.com/entities/sany-heavy-equipment-intl" target="_blank" data-smartkarma-citation="entities:11104:1" rel="noopener">Sany Heavy Equipment Intl (631 HK)</a>expecting that construction works can resume at full capacity anytime soon. </div>
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<div>Globally, dominant tech stocks (FANGS) such as <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> , <a href="https://www.smartkarma.com/entities/apple-inc" target="_blank" data-smartkarma-citation="entities:666:1" rel="noopener">Apple Inc (AAPL US)</a> , <a href="https://www.smartkarma.com/entities/netflix-inc" target="_blank" data-smartkarma-citation="entities:20451:1" rel="noopener">Netflix Inc (NFLX US)</a> and <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet Inc Cl C (GOOG US)</a> should start to be underweight due to the potential punitive measures from the House if Democrats win. Investors should start to overweight industrial stocks such as <a href="https://www.smartkarma.com/entities/caterpillar-inc" target="_blank" data-smartkarma-citation="entities:697:1" rel="noopener">Caterpillar Inc (CAT US)</a> and staples such as <a href="https://www.smartkarma.com/entities/procter-gamble-co" target="_blank" data-smartkarma-citation="entities:978:1" rel="noopener">Procter &amp; Gamble Co (PG US)</a> and <a href="https://www.smartkarma.com/entities/nestle-sa-020546b9-e58a-465b-a5ac-98e84143bf4c" target="_blank" data-smartkarma-citation="entities:27908:1" rel="noopener">Nestle SA (NESN SW)</a> . </div>
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<div>Investors should also consider start building positions in blue-chip with moat names such as <a href="https://www.smartkarma.com/entities/visa-inc-class-a-shares" target="_blank" data-smartkarma-citation="entities:8707:1" rel="noopener">Visa Inc Class A Shares (V US)</a> and <a href="https://www.smartkarma.com/entities/travelers-cos-inc" target="_blank" data-smartkarma-citation="entities:10300:1" rel="noopener">Travelers Cos (TRV US)</a> as they provide stability and proxy to America's economic recovery. </div>


During COVID-19, tech stocks have led the markets supported by demand expansion, strong balance sheets filled with cash, and innovative products. At the end of the cycle, there should be a rotation towards cyclical and value stocks but this time around is policy-induced recovery and during the COVID-19 crisis, tech stocks have led the recovery ahead of the cyclical. The question is whether this will carry on and large tech names to continue leading market recovery while cyclical drag their feet?


The regulator in China has given dominant tech names a slap in the wrist with the anti-trust law that proposes to democratize the payment systems that will inevitably break up the monopolies and these companies will lose their customers' stickiness. 



In light of the antitrust law and the real economic recovery in China, investors should start to underweight technology stocks in China such as Tencent, Alibaba, Meituan, and start to overweight travel and tourism stocks such as Air China Ltd (A) (601111 CH) , Travelsky Technology Ltd H (696 HK) , Cathay Pacific Airways (293 HK) and also Industrials such as Zoomlion Heavy Industry H (1157 HK) and Sany Heavy Equipment Intl (631 HK)expecting that construction works can resume at full capacity anytime soon. 

Globally, dominant tech stocks (FANGS) such as Facebook Inc A (FB US) , Apple Inc (AAPL US) , Netflix Inc (NFLX US) and Alphabet Inc Cl C (GOOG US) should start to be underweight due to the potential punitive measures from the House if Democrats win. Investors should start to overweight industrial stocks such as Caterpillar Inc (CAT US) and staples such as Procter &amp; Gamble Co (PG US) and Nestle SA (NESN SW) . 

Investors should also consider start building positions in blue-chip with moat names such as Visa Inc Class A Shares (V US) and Travelers Cos (TRV US) as they provide stability and proxy to America's economic recovery. 

<p>Less than a year since the news hit that the Chinese outbreak spread to the world, <a href="https://www.smartkarma.com/entities/pfizer-inc" target="_blank" data-smartkarma-citation="entities:1131:1" rel="noopener">Pfizer Inc (PFE US)</a> has announced its vaccine with more than <strong>90%</strong> effective in preventing Covid-19 among those without evidence of prior infection. Similar to <a href="https://www.smartkarma.com/insights/china-outbreak-theme-winners-and-losers" target="_blank" data-smartkarma-citation="insights:35971" rel="noopener">China Outbreak Theme: Winners and Losers</a> , this insight will discuss the potential winners and losers from the announcement of the vaccine. </p><p>Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. </p><p>Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. </p>

Less than a year since the news hit that the Chinese outbreak spread to the world, Pfizer Inc (PFE US) has announced its vaccine with more than 90% effective in preventing Covid-19 among those without evidence of prior infection. Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine. Travel-related names such as airlines, airport operators, tour operators, the duty-free operators are the clear beneficiaries of this news while auto dealership will also benefit from the potential lower unemployment later on. Instant noodle makers, pc makers that benefit from the work-from-home rush, as well as glove makers will no longer enjoy the same growth rate in 1H, and in the case of the glove makers, both ASP and volumes may see a decline. 

<p>Updated with air departure and hotel information on October 30, our Chinese travel tracker dashboard shows a couple of interesting data points this week:</p><ol>
<li>The pace of flight departure growth slowed at the four Mainland Chinese airports we track, while airports <em>outside</em> Mainland China showed solid improvement. This is the opposite of what we've seen in most periods since we launched this product in April 2020.</li>
<li>Average hotel room rates quoted by <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a> firmed dramatically, but we worry about a single data point that had an outsized impact on weighted average rates. Even putting this odd figure aside, however, hotel rates improved slightly versus a month ago.</li>
</ol>

Updated with air departure and hotel information on October 30, our Chinese travel tracker dashboard shows a couple of interesting data points this week:
The pace of flight departure growth slowed at the four Mainland Chinese airports we track, while airports outside Mainland China showed solid improvement. This is the opposite of what we've seen in most periods since we launched this product in April 2020.
Average hotel room rates quoted by Trip.com (TCOM US) firmed dramatically, but we worry about a single data point that had an outsized impact on weighted average rates. Even putting this odd figure aside, however, hotel rates improved slightly versus a month ago.


TRACKING TRAFFIC's Travel Tracker Dashboard (October 30): Air Traffic Ex-Mainland China Firms

Hong Kong

Cathay Pacific is a premium travel lifestyle brand offering scheduled passenger and cargo air transportation, along with low-cost travel and various lifestyle products and services. The airline connects Hong Kong, mainland China, and the world through its hub at Hong Kong International Airport. It was founded in Hong Kong in 1946.

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Cathay Pacific (293 HK)

Singapore Air (SIA): Capturing China Rebound

Singapore Airlines' JV with Air China is expected to boost margins structurally, despite Air India's ongoing crisis impacting SIA's stock price.

Henry Soediarko

Trip.com Q126 Results | Strong Top-Line, Lower Margins | Ongoing Investigation To Hit Growth in Q226

Q126 saw strong revenue growth and some margin erosion. More importantly, weak Q226 guidance appears to highlight the heavy impact an ongoing...

Tracking Traffic

Tech Sell-Off: Stop or Carry On?

In light of the anti-trust law in China, real economic recovery, higher corporate tax rates in the US, and breakup of dominant tech firms,...

Henry Soediarko

Pfizer Vaccine: Winners and Losers

Similar to China Outbreak Theme: Winners and Losers , this insight will discuss the potential winners and losers from the announcement of the vaccine.

Henry Soediarko

TRACKING TRAFFIC's Travel Tracker Dashboard (October 30): Air Traffic Ex-Mainland China Firms

Air traffic and hotel room rate data from October 30 show an improvement in activity outside Mainland China (albeit from a low base) and improved...

Tracking Traffic

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