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

Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> just announced a strong set of 2Q2021 results in its results call this week, with GMV (Gross Merchandise Value) increasing by +62% YoY to a record high of US$3.9bn, whilst adjusted net sales reached a new quarterly high of US$550m, an increase of +92% YoY.</p>
<p>The company's revenue increased by +132% to US$180m, with adjusted EBITDA for 2Q2021 was (US$214m), down by US$8m YoY. </p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> booked a net loss of (US$815m) versus (US$718m) in 2Q2020 loss but of this number US$608m related to non-cash items related to interest accrued on the company convertible redeemable preference shares, stock-based compensation, depreciation, and amortisation. </p>
<p>Looking at a number of measures of profitability as % of GMV, Grab is moving in the right direction towards making a profit.</p>
<p>The company's delivery business continued to be a strong performer, with +68% YoY growth in adjusted net sales, whilst mobility was impacted by various lockdowns in the South-East Asia region but still performed very well versus last year. Take rates have improved for both deliveries and mobility segments.</p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> saw GMV per transacting user increase by +27% YoY in 2Q2021, with GrabFood's merchant base nearly doubling, and merchants using GrabPay nearly increasing three times. </p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> also highlighted the strong performance of GrabMart and its PayLater businesses in Singapore and Malaysia. It has also launched GrabSupermarket in three markets, which has seen a strong reception, according to management.</p>
<p>The company's financial services segment achieved another record quarter in terms of total payments, with a total payment volume of US$2.9bn in 2Q2021, a +66% increase from last year, although revenues remain quite small.</p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> announced a strategic alliance with <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a> in July, which has interests spanning technology. telecoms, media, and healthcare.  This gives grab access to e-commerce and SMEs through <a href="https://www.smartkarma.com/entities/bukalapak" target="_blank" data-smartkarma-citation="entities:33575:1" rel="noopener">Bukalapak (BUKA IJ)</a>. </p>
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<p>The company highlighted that it sees encouraging trends for the rest of the year, as vaccination rates pick up but also flagged a note of caution given recent movement restrictions in South-East Asia, especially in Vietnam where even food deliveries are restricted currently.</p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> remains optimistic about the prospects for recovery as the region recovers over the next year, and it should benefit from this given its strong regional footprint but its competitors have been building war chests for their own expansion, which points towards rising competitive pressures</p>
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<p>The company expects its merger with Altimeter Growth and listing to go ahead in 4Q2021 and has just filed its F4 prospectus today with the SEC in the US. </p>
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Grab just announced a strong set of 2Q2021 results in its results call this week, with GMV (Gross Merchandise Value) increasing by +62% YoY to a record high of US$3.9bn, whilst adjusted net sales reached a new quarterly high of US$550m, an increase of +92% YoY.
The company's revenue increased by +132% to US$180m, with adjusted EBITDA for 2Q2021 was (US$214m), down by US$8m YoY. 
Grab booked a net loss of (US$815m) versus (US$718m) in 2Q2020 loss but of this number US$608m related to non-cash items related to interest accrued on the company convertible redeemable preference shares, stock-based compensation, depreciation, and amortisation. 
Looking at a number of measures of profitability as % of GMV, Grab is moving in the right direction towards making a profit.
The company's delivery business continued to be a strong performer, with +68% YoY growth in adjusted net sales, whilst mobility was impacted by various lockdowns in the South-East Asia region but still performed very well versus last year. Take rates have improved for both deliveries and mobility segments.
Grab saw GMV per transacting user increase by +27% YoY in 2Q2021, with GrabFood's merchant base nearly doubling, and merchants using GrabPay nearly increasing three times. 
Grab also highlighted the strong performance of GrabMart and its PayLater businesses in Singapore and Malaysia. It has also launched GrabSupermarket in three markets, which has seen a strong reception, according to management.
The company's financial services segment achieved another record quarter in terms of total payments, with a total payment volume of US$2.9bn in 2Q2021, a +66% increase from last year, although revenues remain quite small.
Grab announced a strategic alliance with Emtek (EMTK IJ) in July, which has interests spanning technology. telecoms, media, and healthcare.  This gives grab access to e-commerce and SMEs through Bukalapak (BUKA IJ). 



The company highlighted that it sees encouraging trends for the rest of the year, as vaccination rates pick up but also flagged a note of caution given recent movement restrictions in South-East Asia, especially in Vietnam where even food deliveries are restricted currently.
Grab remains optimistic about the prospects for recovery as the region recovers over the next year, and it should benefit from this given its strong regional footprint but its competitors have been building war chests for their own expansion, which points towards rising competitive pressures


The company expects its merger with Altimeter Growth and listing to go ahead in 4Q2021 and has just filed its F4 prospectus today with the SEC in the US. 











Grab - Greater Mobility Toward Profitability

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<p>Japan-based food delivery company <a href="https://www.smartkarma.com/entities/demae-can-co-ltd" target="_blank" data-smartkarma-citation="entities:10524:1" rel="noopener">Demae-Can Co., Ltd. (2484 JP)</a> launched a follow-on equity offering after market-close today to raise capital for business expansion. </p><p>In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> and South-Korea based <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. </p><p>There is a really interesting event angle here which should pique the interest of investors. </p><p>More below.</p>

Japan-based food delivery company Demae-Can Co., Ltd. (2484 JP) launched a follow-on equity offering after market-close today to raise capital for business expansion. In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for Z Holdings (4689 JP) and South-Korea based Naver Corp (035420 KS). Based on today's closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. There is a really interesting event angle here which should pique the interest of investors. More below.

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>DoorDash’s had a fairly impressive 2Q21 after a solid 1Q21…the company even raised full year guidance by more than then the second quarter beat. However, they are guiding to deceleration in the backhalf of the year as reopenings pick up and normal seasonality sets in…. the question is when does that happen given how much the delta variant is preventing normalization.  We don’t usually short on valuation alone, you need a fundamental competitive flaw. We think DoorDash appears to be well run and is executing, buts its valuation is nonsensical at 12x forward sales vs. a peer group average of 4x. Grubhub and Postmates get acquired at 6x forward sales a year ago. With limited disclosures on international progress or non-food delivery or its Dashpass subscriber base, we don’t understand how investors can underwrite the valuation. We’d pair a Dash short with a Match long for COVID reopening.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

DoorDash’s had a fairly impressive 2Q21 after a solid 1Q21…the company even raised full year guidance by more than then the second quarter beat. However, they are guiding to deceleration in the backhalf of the year as reopenings pick up and normal seasonality sets in…. the question is when does that happen given how much the delta variant is preventing normalization.  We don’t usually short on valuation alone, you need a fundamental competitive flaw. We think DoorDash appears to be well run and is executing, buts its valuation is nonsensical at 12x forward sales vs. a peer group average of 4x. Grubhub and Postmates get acquired at 6x forward sales a year ago. With limited disclosures on international progress or non-food delivery or its Dashpass subscriber base, we don’t understand how investors can underwrite the valuation. We’d pair a Dash short with a Match long for COVID reopening.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

DoorDash 2Q21 Earnings: Awaiting Deceleration

Telco/Internet specialist

Kirk Boodry

Redex Research

<p>The last three quarters have largely been defined by the potential for Vision Fund portfolio companies to go public but a new theme is emerging as Softbank starts to take money off the table. There was much less discussion of liquidity events but more on asset sales including partial sales of <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> , <a href="https://www.smartkarma.com/entities/ke-holdings-inc" target="_blank" data-smartkarma-citation="entities:29213:1" rel="noopener">KE Holdings Inc (BEKE US)</a> , <a href="https://www.smartkarma.com/entities/doordash-inc" target="_blank" data-smartkarma-citation="entities:28881:1" rel="noopener">DoorDash Inc (DASH US)</a> , Guardant Health and Northstar public equities in the quarter. With a further sale of Uber shares this month, that theme probably picks up steam as the quarter goes on, particularly if <a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>  can hold its value into September when lockups expire.</p><p>Proceeds from these sales will be used to fund Vision Fund 2 commitments, which will get a further boost from Masa/management investing their own money alongside. That would seem to flag corporate governance concerns but as Masa already has an economic stake in Northstar and earlier plans for a management investment in VF1 passed board muster, this probably does not impact sentiment very much.</p><p>There is some modest dissonance in the results as Softbank said that it was not announcing a buyback because it was not selling assets like it did last year. Apparently that definition excludes investments like the ones above although Masa did tease that they thought about share buybacks every day because of the depth of the holding company discount. That could just be noise as there is no upside in ruling out buybacks entirely but there is precedent as management has been incentivized to act in the past when discounts reached extreme levels. That used to be around 50% (we are at c. 46% now) but last year’s 67%+ discount may have reset the bar on where shares are too cheap.</p>

The last three quarters have largely been defined by the potential for Vision Fund portfolio companies to go public but a new theme is emerging as Softbank starts to take money off the table. There was much less discussion of liquidity events but more on asset sales including partial sales of Uber (UBER US) , KE Holdings Inc (BEKE US) , DoorDash Inc (DASH US) , Guardant Health and Northstar public equities in the quarter. With a further sale of Uber shares this month, that theme probably picks up steam as the quarter goes on, particularly if Coupang (CPNG US)  can hold its value into September when lockups expire.Proceeds from these sales will be used to fund Vision Fund 2 commitments, which will get a further boost from Masa/management investing their own money alongside. That would seem to flag corporate governance concerns but as Masa already has an economic stake in Northstar and earlier plans for a management investment in VF1 passed board muster, this probably does not impact sentiment very much.There is some modest dissonance in the results as Softbank said that it was not announcing a buyback because it was not selling assets like it did last year. Apparently that definition excludes investments like the ones above although Masa did tease that they thought about share buybacks every day because of the depth of the holding company discount. That could just be noise as there is no upside in ruling out buybacks entirely but there is precedent as management has been incentivized to act in the past when discounts reached extreme levels. That used to be around 50% (we are at c. 46% now) but last year’s 67%+ discount may have reset the bar on where shares are too cheap.

Softbank Group - Q1 21 Results Reaction: A Slow Shift in Focus

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a> raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.</p></div><div>We have covered various aspects of the deal in our earlier notes  </div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps, </a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-food-delivery-revenue-was-probably-up-16x" target="_blank" rel="noopener">Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and</a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-peer-comparison-listed-and-domestic" target="_blank" rel="noopener">Zomato Pre-IPO - Peer Comparison - Listed and Domestic</a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-ipo-strong-4q21-has-a-very-long-runway" target="_blank" rel="noopener">Zomato IPO - Strong 4Q21, Has a Very Long Runway</a></li>
</ul></div><div><p>In this note, we will talk about the updates and the trading dynamics.</p></div>

Zomato (ZOM IN) raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.We have covered various aspects of the deal in our earlier notes  
Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps, 
Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and
Zomato Pre-IPO - Peer Comparison - Listed and Domestic
Zomato IPO - Strong 4Q21, Has a Very Long Runway
In this note, we will talk about the updates and the trading dynamics.

Zomato IPO Trading - Ample Demand for Unique Exposure

United States

DoorDash, Inc. provides restaurant food delivery services. The Company develops technology to connect customers with merchants through an on-demand food delivery application. DoorDash serves customers in the United States.

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DoorDash (DASH US)

Grab - Greater Mobility Toward Profitability

GRAB released a strong set of 2Q2021 results with rapid growth in both the delivery and mobility business, with financial services gaining momentum...

Angus Mackintosh

Demae-Can's Latest Offering Preserves The Potential for TOPIX Inclusion

Japan-based food delivery company Demae-Can announced a large equity offering to boost their marketing expenditure and defend their market share in...

Janaghan Jeyakumar, CFA

DoorDash 2Q21 Earnings: Awaiting Deceleration

DoorDash appears to be well run and is executing, buts its valuation is nonsensical at 12x forward sales vs. a peer group average of 4x. We’d pair...

Aaron Gabin

Softbank Group - Q1 21 Results Reaction: A Slow Shift in Focus

The messaging is changing at Softbank as the IPO flywheel (20+ liquidity events) gives way to investment sales and realized gains. There are no...

Kirk Boodry

Zomato IPO Trading - Ample Demand for Unique Exposure

Zomato (ZOM IN) raised US$1.3bn in its India IPO, making it the the largest listing in India from the technology sector.

Sumeet Singh

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