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

Equity Bottom-Up

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<p><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> has announced that it intends to seek approval for A stock split at its AGM on 14th December, the normal reason for which is to improve liquidity in the shares by making a company more accessible for retail investors. We see this as a potential precursor to further corporate actions along the line, involving some form of group restructuring, and this gives the company a more liquid currency to do this.</p>
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<p>This may involve some form of reorganization within the group, which holds its media assets under <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> but a number of other digital economy assets under <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" data-sk="tooltip_parent" rel="noopener">Emtek (EMTK IJ)</a> including a stake in e-commerce player Bukalapak and leading digital payments company Dana (a 50/50 JV with Ant Financial (<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>).</p>
<p><a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/microsoft-corp" data-sk="tooltip_parent" rel="noopener">Microsoft Corp (MSFT US)</a> has recently announced it will invest US$100m into Bukalapak, which is now valued at US$3bn.</p>
<p>Looking at the valuation of <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/sea-ltd" data-sk="tooltip_parent" rel="noopener">Sea Ltd (SE US),</a> which is trading on 13x EV/Sales, it is highly likely the <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" data-sk="tooltip_parent" rel="noopener">Emtek (EMTK IJ)</a> can command a higher valuation if it becomes more accessible, given there are no other ways to get listed exposure to Indonesia's booming e-commerce.</p>
<p><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> currently trades on 4.6x FY20E EV/Sales.  Investors are likely to pay a premium for access to a liquid <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>, with a strong mix of cash-generating media assets and high growth digital assets.  </p>
<p>We also continue to like <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-stringify-link="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ),</a> as Indonesia's top media player with an increasingly digital twist through <a href="http://vidio.com/" target="_blank" data-stringify-link="http://Vidio.com" data-sk="tooltip_parent" rel="noopener">Vidio.com</a>. Please see <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" target="_blank" data-stringify-link="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" data-sk="tooltip_parent" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin</a> for more details.</p>


Emtek (EMTK IJ) has announced that it intends to seek approval for A stock split at its AGM on 14th December, the normal reason for which is to improve liquidity in the shares by making a company more accessible for retail investors. We see this as a potential precursor to further corporate actions along the line, involving some form of group restructuring, and this gives the company a more liquid currency to do this.

This may involve some form of reorganization within the group, which holds its media assets under PT Surya Citra Media Tbk (SCMA IJ) but a number of other digital economy assets under Emtek (EMTK IJ) including a stake in e-commerce player Bukalapak and leading digital payments company Dana (a 50/50 JV with Ant Financial (Alibaba Group (BABA US)).
Microsoft Corp (MSFT US) has recently announced it will invest US$100m into Bukalapak, which is now valued at US$3bn.
Looking at the valuation of Sea Ltd (SE US), which is trading on 13x EV/Sales, it is highly likely the Emtek (EMTK IJ) can command a higher valuation if it becomes more accessible, given there are no other ways to get listed exposure to Indonesia's booming e-commerce.
Emtek (EMTK IJ) currently trades on 4.6x FY20E EV/Sales.  Investors are likely to pay a premium for access to a liquid Emtek (EMTK IJ), with a strong mix of cash-generating media assets and high growth digital assets.  
We also continue to like PT Surya Citra Media Tbk (SCMA IJ), as Indonesia's top media player with an increasingly digital twist through Vidio.com. Please see PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin for more details.

Emtek (EMTK IJ) - Arise a New Champion of Indonesia Tech?

Cross Asset Strategy

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<p><em><strong>Corrigenda: There is an error in this Insight. Please note the correction.</strong></em></p>
<p><em><strong>Correction: The Insight <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation</a> was improperly attributed to Thomas Monaco. It was published by <a href="https://www.smartkarma.com/profiles/paul-hollingworth" target="_blank" data-smartkarma-citation="accounts:2554" rel="noopener">Paul Hollingworth</a>.</strong></em></p>
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<p>The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> 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.</p>
<p>We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  </p>
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<p><strong><a href="https://www.smartkarma.com/insights/smartkarma-corporate-webinar-indo-banks-the-worst-is-over" target="_blank" data-smartkarma-citation="insights:44882" rel="noopener">Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over</a></strong>-<strong> 10th November at 4 pm.</strong></p>
<p>For our next Corporate Webinar, we welcome <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri Persero (BMRI IJ)</a>'s Group Head of Investor Relations, <a href="https://www.smartkarma.com/profiles/yohan-setio" target="_blank" rel="noopener">Yohan Setio</a>, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a>.</p>
<h2>Indonesia's Recovery and the Next Digital Darling</h2>
<p>This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> as core ways to play this recovery. </p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is <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> which is the major shareholder of <a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.</p>
<p><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> has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. </p>
<h3>Macro Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-2-top-10-stock-picks" target="_blank" data-smartkarma-citation="insights:40851" rel="noopener">Thai Strategy 2021 (Part 2): Top 10 Stock Picks,</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> lays out his top stock picks in Thailand for next year.</p>
<p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-3-sector-outlooks" target="_blank" data-smartkarma-citation="insights:40864" rel="noopener">Thai Strategy 2021 (Part 3): Sector Outlooks,</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> provides us with his sector strategy in Thailand for the coming year. </p>
<h3>Equity Bottom Up</h3>
<p>In an Indonesian Insight,<a href="https://www.smartkarma.com/insights/astra-international-asii-ij-an-auto-recovery-story-with-a-golden-digital-twist" target="_blank" rel="noopener"> Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist</a>, CrossASEAN Insight provider<a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener"> Angus Mackintosh</a> returns to look at<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" rel="noopener"> Astra International (ASII IJ)</a> after a conversation with management. </p>
<p>In <a href="https://www.smartkarma.com/insights/pt-surya-citra-media-tbk-scma-ij-let-the-games-begin" target="_blank" data-smartkarma-citation="insights:44914" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin,</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 one of Indonesia's leading media companies, which has an increasingly digital twist.</p>
<p>In <a href="https://www.smartkarma.com/insights/aem-holdings-optimistic-on-fy21-fair-value-remains-at-5-sgd-41-upside" target="_blank" data-smartkarma-citation="insights:44915" rel="noopener">AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside),</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a> revisits <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> after an impressive set of results and remains positive.</p>
<p>In <a href="https://www.smartkarma.com/insights/bjbr-positive-fundamental-momentum-at-a-decent-valuation" target="_blank" data-smartkarma-citation="insights:44897" rel="noopener">BJBR: Positive Fundamental Momentum at a Decent Valuation,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> writes on this smaller Indonesian lender with a positive slant.</p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-still-not-a-great-eastern" target="_blank" data-smartkarma-citation="insights:44901" rel="noopener">Oversea Chinese Banking Corp – Still Not A Great Eastern,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> looked in detail at <a href="https://www.smartkarma.com/entities/great-eastern-holdings-ltd" target="_blank" data-smartkarma-citation="entities:13993:1" rel="noopener">Great Eastern Holdings (GE SP)</a> numbers ahead of <a href="https://www.smartkarma.com/entities/oversea-chinese-banking-corp" target="_blank" data-smartkarma-citation="entities:114:1" rel="noopener">Oversea Chinese Banking Corp. (OCBC SP)</a> results. </p>
<p>In <a href="https://www.smartkarma.com/insights/oversea-chinese-banking-corp-solid" target="_blank" data-smartkarma-citation="insights:45061" rel="noopener">Oversea Chinese Banking Corp. – Solid,</a><a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" data-smartkarma-citation="accounts:1716" rel="noopener">Thomas J. Monaco</a> revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. </p>
<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener"></a>In<a href="https://www.smartkarma.com/insights/dbs-group-holdings-not-trending-the-right-way-yet" target="_blank" rel="noopener"> DBS Group Holdings – Not Trending The Right Way Yet</a>,<a href="https://www.smartkarma.com/profiles/thomas-j-monaco" target="_blank" rel="noopener"> Thomas J. Monaco</a> reports back<a href="https://www.smartkarma.com/entities/dbs-group-holdings-ltd" target="_blank" rel="noopener"> DBS Group Holdings (DBS SP)</a>'s post its recent 3Q2020 results with a chequered view.</p>
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<p>In this Thai Insight,<a href="https://www.smartkarma.com/insights/hmpro-expect-government-stimulus-scheme-drive-4q20-recover-qoq" target="_blank" rel="noopener"> HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> circle back to Thailand's leading home improvements player <a href="https://www.smartkarma.com/entities/home-product-center-pcl" target="_blank" data-smartkarma-citation="entities:9906:1" rel="noopener">Home Product Center (HMPRO TB)</a>. </p>
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<p>In<a href="https://www.smartkarma.com/insights/synex-solid-earnings-growth-outlook-but-largely-priced-in" target="_blank" rel="noopener"> SYNEX: Solid Earnings Growth Outlook but Largely Priced In</a>,<a href="https://www.smartkarma.com/companies/country-group" target="_blank" rel="noopener"> Country Group</a> provides a view on<a href="https://www.smartkarma.com/entities/synnex-thailand-pcl" target="_blank" rel="noopener"> Synnex Thailand (SYNEX TB),</a> following the recent run-up in the share price. </p>
<p>In this Thai Insight, <a href="https://www.smartkarma.com/insights/scc-strong-3q20-thanks-to-petrochemical-spread" target="_blank" rel="noopener">SCC: Strong 3Q20 Thanks to Petrochemical Spread</a>, our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> return to look at<a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" rel="noopener"> Siam Cement (SCC TB)</a> post 3Q2020 results. </p>
<p>In <a href="https://www.smartkarma.com/insights/mc-prominent-denim-brand-with-new-growth-momentum" target="_blank" data-smartkarma-citation="insights:45077" rel="noopener">MC: Prominent Denim Brand with New Growth Momentum,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a>initiate on this leading Thai denim apparel player. They initiate coverage of <a href="https://www.smartkarma.com/entities/mc-group-pcl" target="_blank" data-smartkarma-citation="entities:17093:1" rel="noopener">MC Group Pcl (MC TB)</a> with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.</p>
<h3>Credit Insights</h3>
<p>In <a href="https://www.smartkarma.com/insights/lippo-karawaci-earnings-flash-q3-fy-2020-results-lucror-analytics" target="_blank" rel="noopener">Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results</a>, credit specialist<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> looks at<a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" rel="noopener"> Lippo Karawaci (LPKR IJ)'s</a> after its recent results, which continued to be robust in Q32020. </p>
<p>In <a href="https://www.smartkarma.com/insights/chandra-asri-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44814" rel="noopener">Chandra Asri - Earnings Flash - 9M FY 2020 Results</a> credit specialist <a href="https://www.smartkarma.com/profiles/leonard-law-cfa" target="_blank" data-smartkarma-citation="accounts:7106" rel="noopener">Leonard Law, CFA</a> circles back to this leading chemicals player post 3Q2020 results.</p>


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: The Insight BJBR: Positive Fundamental Momentum at a Decent Valuation was improperly attributed to Thomas Monaco. It was published by Paul Hollingworth.



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.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  

Smartkarma Corporate Webinar | Indo Banks: The Worst Is Over- 10th November at 4 pm.
For our next Corporate Webinar, we welcome Bank Mandiri Persero (BMRI IJ)'s Group Head of Investor Relations, Yohan Setio, who will share some company updates and sit down for a fireside chat with Smartkarma Insight Provider Angus Mackintosh.
Indonesia's Recovery and the Next Digital Darling
This week below the fold we look at Indonesia's recent economic numbers which saw the country slide into recession, its first since the Asian Crisis but find it encouraging that the economy is moving onto a recovery track. We see selective banks and Astra International (ASII IJ) as core ways to play this recovery. 
Sea Ltd (SE US) is SoutEast Asia's largest Market Cap stock, and there are very few if any alternatives to get exposure to the region's e-commerce boom, certainly in the listed universe. One potential future candidate is Emtek (EMTK IJ), which is the major shareholder of PT Surya Citra Media Tbk (SCMA IJ) but it also has stakes in Bukalapak and Dana, the number three digital payments player in Indonesia and a JV with Ant Financial.
Emtek (EMTK IJ) has announced that it will seek approval for a stock split in December but this may not be the end of the story. Any restructuring which brings all of its digital assets under one roof and improves liquidity would certainly help the company attract more institutional investors and secure a higher valuation. 
Macro Insights
In Thai Strategy 2021 (Part 2): Top 10 Stock Picks, our Thai guru Athaporn Arayasantiparb, CFA lays out his top stock picks in Thailand for next year.
In Thai Strategy 2021 (Part 3): Sector Outlooks, our Thai guru Athaporn Arayasantiparb, CFA provides us with his sector strategy in Thailand for the coming year. 
Equity Bottom Up
In an Indonesian Insight, Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist, CrossASEAN Insight provider Angus Mackintosh returns to look at Astra International (ASII IJ) after a conversation with management. 
In PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin, CrossASEAN Insight Provider Angus Mackintosh revisits one of Indonesia's leading media companies, which has an increasingly digital twist.
In AEM Holdings: Optimistic on FY21; Fair Value Remains at 5 SGD (41% Upside), CrossASEAN Insight Provider Nicolas Van Broekhoven revisits AEM Holdings (AEM SP) after an impressive set of results and remains positive.
In BJBR: Positive Fundamental Momentum at a Decent Valuation,Thomas J. Monaco writes on this smaller Indonesian lender with a positive slant.
In Oversea Chinese Banking Corp – Still Not A Great Eastern,Thomas J. Monaco looked in detail at Great Eastern Holdings (GE SP) numbers ahead of Oversea Chinese Banking Corp. (OCBC SP) results. 
In Oversea Chinese Banking Corp. – Solid,Thomas J. Monaco revisits this Singapore lender with a positive view post its recent 3Q2020 numbers. 
In DBS Group Holdings – Not Trending The Right Way Yet, Thomas J. Monaco reports back DBS Group Holdings (DBS SP)'s post its recent 3Q2020 results with a chequered view.



In this Thai Insight, HMPRO: Expect Government Stimulus Scheme Drive 4Q20 Recover QoQ, our friends at Country Group circle back to Thailand's leading home improvements player Home Product Center (HMPRO TB). 



In SYNEX: Solid Earnings Growth Outlook but Largely Priced In, Country Group provides a view on Synnex Thailand (SYNEX TB), following the recent run-up in the share price. 
In this Thai Insight, SCC: Strong 3Q20 Thanks to Petrochemical Spread, our friends at Country Group return to look at Siam Cement (SCC TB) post 3Q2020 results. 
In MC: Prominent Denim Brand with New Growth Momentum, our friends at Country Groupinitiate on this leading Thai denim apparel player. They initiate coverage of MC Group Pcl (MC TB) with a BUY rating and a target price of Bt12.0, derived from 18.5x FY21E PER, which is +1SD above its 5-year trading average but slightly lower than its global apparel peers.
Credit Insights
In Lippo Karawaci - Earnings Flash - Q3 FY 2020 Results, credit specialist Trung Nguyen looks at Lippo Karawaci (LPKR IJ)'s after its recent results, which continued to be robust in Q32020. 
In Chandra Asri - Earnings Flash - 9M FY 2020 Results credit specialist Leonard Law, CFA circles back to this leading chemicals player post 3Q2020 results.

The Week that Was in ASEAN@Smartkarma - Indonesia's Recovery and the Next Digital Darling

PT Surya Citra Media Tbk / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> published a very respectable set of results this week, with positive signs of recovery on TV advertising and strong growth in its digital efforts through Vidio.com.</p>
<p>A major highlight was a marked improvement in margins, as the company saw significantly reduced programming costs over the period due to an increased reliance on re-runs. </p>
<p>FMCG customers have come back in 3Q2020 and will also underpin growth in 4Q2020 but the resumption of profitable sponsored programming, often interactive, from e-commerce players will help to further lift growth in advertising.</p>
<p>Vidio.com is firing on all cylinders, with 950,000 paying subscribers and 60m monthly active users (MAUs), with the draw of SCMA's rich content offering drawing in customers. </p>
<p><a href="https://www.smartkarma.com/entities/surya-citra-media-pt-tbk" target="_blank" data-smartkarma-citation="entities:14739:1" rel="noopener">PT Surya Citra Media Tbk (SCMA IJ)</a> remains a high-quality way to play the recovery in the advertising market, with a significant recovery already underway. This is underpinned by both FMCG customers as well as e-commerce companies, which have big marketing budgets. Vidio.com goes from strength to strength and looks increasingly able to stand alone without bringing in a strategic investor. The company still looks attractive on an FY21E PER of 17.8x versus its 5-year average of 19.1x, especially given its increasing digital exposure through Vidio.com.</p>

PT Surya Citra Media Tbk (SCMA IJ) published a very respectable set of results this week, with positive signs of recovery on TV advertising and strong growth in its digital efforts through Vidio.com.
A major highlight was a marked improvement in margins, as the company saw significantly reduced programming costs over the period due to an increased reliance on re-runs. 
FMCG customers have come back in 3Q2020 and will also underpin growth in 4Q2020 but the resumption of profitable sponsored programming, often interactive, from e-commerce players will help to further lift growth in advertising.
Vidio.com is firing on all cylinders, with 950,000 paying subscribers and 60m monthly active users (MAUs), with the draw of SCMA's rich content offering drawing in customers. 
PT Surya Citra Media Tbk (SCMA IJ) remains a high-quality way to play the recovery in the advertising market, with a significant recovery already underway. This is underpinned by both FMCG customers as well as e-commerce companies, which have big marketing budgets. Vidio.com goes from strength to strength and looks increasingly able to stand alone without bringing in a strategic investor. The company still looks attractive on an FY21E PER of 17.8x versus its 5-year average of 19.1x, especially given its increasing digital exposure through Vidio.com.

PT Surya Citra Media Tbk (SCMA IJ) - Let the Games Begin

<p>Leading South-East Asia gaming and e-commerce player <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> continues to rise to new highs as analysts revise up target prices to around the US$135 mark. The reports come on the back of continued positive momentum for both its gaming and e-commerce businesses in 2020, as consumers in SE Asia have rapidly shifted their shopping and entertainment preferences online due to the impact of COVID-19. Recent feedback from industry sources, including competitors, suggest that the company continues to lead the charge in terms of gaining market share.</p>
<p>Its ability to generate significant cash from its gaming business which can be redirected to bankroll the cash burn in e-commerce put the company at a significant advantage to its competitors such as <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> and <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a> in terms of funding.</p>
<p>The company also took the lead on free delivery last year, especially in Indonesia, as well as the increasing trend for "live-streaming" events to promote products. It is also the most popular site with women and younger consumers (attracted by gaming).</p>
<p>Despite its stratospheric rise, this is a dangerous stock to short, even though it continues to make losses and is unlikely to make a profit until 2022, given it is the market leader and the only listed proxy for the vibrant growth in the SE Asian gaming and e-commerce market.</p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> trades on a premium to global comparables from the most basic EV/Sales basis on 6.6x FY21E but it is also forecast to register much higher rates of growth, given it operates in higher-growth markets. It is also at an earlier stage of development on the road to probability, which also goes some way to justifying the higher multiples. Measures such as falling EBITDA losses per order in e-commerce, as well as higher monetisation rates are positive signs along the road to profitability. </p>

Leading South-East Asia gaming and e-commerce player Sea Ltd (SE US) continues to rise to new highs as analysts revise up target prices to around the US$135 mark. The reports come on the back of continued positive momentum for both its gaming and e-commerce businesses in 2020, as consumers in SE Asia have rapidly shifted their shopping and entertainment preferences online due to the impact of COVID-19. Recent feedback from industry sources, including competitors, suggest that the company continues to lead the charge in terms of gaining market share.
Its ability to generate significant cash from its gaming business which can be redirected to bankroll the cash burn in e-commerce put the company at a significant advantage to its competitors such as Tokopedia PT (1087142D IJ) and Lazada Group (LAZADA SP) in terms of funding.
The company also took the lead on free delivery last year, especially in Indonesia, as well as the increasing trend for "live-streaming" events to promote products. It is also the most popular site with women and younger consumers (attracted by gaming).
Despite its stratospheric rise, this is a dangerous stock to short, even though it continues to make losses and is unlikely to make a profit until 2022, given it is the market leader and the only listed proxy for the vibrant growth in the SE Asian gaming and e-commerce market.
Sea Ltd (SE US) trades on a premium to global comparables from the most basic EV/Sales basis on 6.6x FY21E but it is also forecast to register much higher rates of growth, given it operates in higher-growth markets. It is also at an earlier stage of development on the road to probability, which also goes some way to justifying the higher multiples. Measures such as falling EBITDA losses per order in e-commerce, as well as higher monetisation rates are positive signs along the road to profitability. 

Sea Ltd (SE US) - Gaming Its Way to the Top

<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></p>
</div><h2>Macro Insights</h2><p>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. </p><p>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. </p><h2>Equity Bottom-Up Insights</h2><p>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. </p><p>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. </p><p>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.</p><p>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.</p><p>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. </p><p>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. </p><p>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. </p><p>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.</p><p>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. </p><p>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. </p><p>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. </p><p>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. </p><h2>Sector and Thematic Insights</h2><p>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.</p><h2>Credit Insights</h2><p>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. </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.
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

Indonesia

PT Elang Mahkota Teknologi Tbk operates television, telecommunications and computer businesses.  The Company operates television channels; constructs and maintains telecommunications infrastructure; retails mobile telephones; provides satellite communications services; and offers Internet access.

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Emtek (EMTK IJ)

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SCMA remains a high-quality way to play the recovery in the advertising market, with an increasingly digital twist through Vidio.com

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Leading South-East Asia gaming and e-commerce player Sea Ltd (SE US) continues to rise to new highs as analysts revise up target prices to around...

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Angus Mackintosh

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