Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

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

Macroeconomics

Malaysia's Leader of the Opposition, Anwar Ibrahim, who was Deputy Prime Minister (and Finance Minister) during and immediately after the Asian Financial Crisis (1997-98), but then spent many years in prison on trumped-up charges of "sodomy" (which is illegal in Malaysia), has announced at a press conference on 23 September that he has the support of a majority of MPs, and hence has informed the King (Agong) that he is ready to form a government. The normal procedure would be a Vote of No-Confidence in the Dewan Rakyat (parliament), but the King had picked Muhyiddin as PM at the beginning of March 2020 based on a list of MPs, so Anwar is following the same route. The Sabah state election on Saturday (26th September) will be an important barometer of the national political tide. Sabah and Sarawak had traditionally constituted the "fixed deposit" for the erstwhile ruling coalition, Barisan Nasional (National Front). But in 2018, Sabah narrowly voted for a PH slate led by Warisan (Sabah Heritage Party), a new party established by Shafi Apdal, a former Vice President of UMNO who had resigned in 2015 over Najib's corruption. In this week's Sabah state election, Warisan and its PH (Pakatan Harapan) allies appear to have the upper-hand, with Warisan's "Sabah-nationalist" campaign gaining strong support -- especially at a time when the Philippines' House of Representatives had re-staked a historical claim to Sabah. If the Warisan-led PH coalition wins the state election in Sabah, it won't change the federal equation, but will strengthen PH's hand -- and likely lead to more defections to Anwar's side. A number of uncertainties remain: Mahathir hasn't declared support for Anwar, and he is close to Shafi Apdal, so there could be yet another twist if Mahathir again throws his hat into the prime ministerial ring. But if Anwar truly has statutory declarations from more than 112 MPs, then he will become Prime Minister. Anwar's government will be more inclusive of all the races and religions in Malaysia, but he has stressed that it will have a Malay-Muslim majority. Anwar is a more experienced figure with an international reputation, and has built Malaysia's first truly multi-racial party (PKR) in alliance with multi-racial (but Chinese-Malaysian-dominated) DAP. An Anwar government thus promises to be fundamentally different from all that came before -- holding out the prospect of transforming Malaysia into a more meritocratic and race-neutral nation, a massive long-term positive for the country and its economy. Substantially greater integrity and reduced corruption will be the main positive from an Anwar administration. But Penang and its electronic sector (including <a href="https://www.smartkarma.com/entities/inari-amertron-bhd" target="_blank" data-smartkarma-citation="entities:10265:1" rel="noopener">Inari Amertron (INRI MK)</a>, <a href="https://www.smartkarma.com/entities/malaysian-pacific-industries-berhad" target="_blank" data-smartkarma-citation="entities:18893:1" rel="noopener">Malaysian Pacific Industries (MPI MK)</a> and <a href="https://www.smartkarma.com/entities/globetronics-technology-bhd" target="_blank" data-smartkarma-citation="entities:10571:1" rel="noopener">Globetronics Technology (GTB MK)</a> ) will be beneficiaries, and the cash-rich Hong Leong group (closely associated with Anwar throughout his career) are likely to benefit too, likely investing much more in Malaysia (having invested mainly in Hong Kong, Singapore and the UK over the past two decades).

Malaysia's Leader of the Opposition, Anwar Ibrahim, who was Deputy Prime Minister (and Finance Minister) during and immediately after the Asian Financial Crisis (1997-98), but then spent many years in prison on trumped-up charges of "sodomy" (which is illegal in Malaysia), has announced at a press conference on 23 September that he has the support of a majority of MPs, and hence has informed the King (Agong) that he is ready to form a government. The normal procedure would be a Vote of No-Confidence in the Dewan Rakyat (parliament), but the King had picked Muhyiddin as PM at the beginning of March 2020 based on a list of MPs, so Anwar is following the same route. The Sabah state election on Saturday (26th September) will be an important barometer of the national political tide. Sabah and Sarawak had traditionally constituted the "fixed deposit" for the erstwhile ruling coalition, Barisan Nasional (National Front). But in 2018, Sabah narrowly voted for a PH slate led by Warisan (Sabah Heritage Party), a new party established by Shafi Apdal, a former Vice President of UMNO who had resigned in 2015 over Najib's corruption. In this week's Sabah state election, Warisan and its PH (Pakatan Harapan) allies appear to have the upper-hand, with Warisan's "Sabah-nationalist" campaign gaining strong support -- especially at a time when the Philippines' House of Representatives had re-staked a historical claim to Sabah. If the Warisan-led PH coalition wins the state election in Sabah, it won't change the federal equation, but will strengthen PH's hand -- and likely lead to more defections to Anwar's side. A number of uncertainties remain: Mahathir hasn't declared support for Anwar, and he is close to Shafi Apdal, so there could be yet another twist if Mahathir again throws his hat into the prime ministerial ring. But if Anwar truly has statutory declarations from more than 112 MPs, then he will become Prime Minister. Anwar's government will be more inclusive of all the races and religions in Malaysia, but he has stressed that it will have a Malay-Muslim majority. Anwar is a more experienced figure with an international reputation, and has built Malaysia's first truly multi-racial party (PKR) in alliance with multi-racial (but Chinese-Malaysian-dominated) DAP. An Anwar government thus promises to be fundamentally different from all that came before -- holding out the prospect of transforming Malaysia into a more meritocratic and race-neutral nation, a massive long-term positive for the country and its economy. Substantially greater integrity and reduced corruption will be the main positive from an Anwar administration. But Penang and its electronic sector (including Inari Amertron (INRI MK), Malaysian Pacific Industries (MPI MK) and Globetronics Technology (GTB MK) ) will be beneficiaries, and the cash-rich Hong Leong group (closely associated with Anwar throughout his career) are likely to benefit too, likely investing much more in Malaysia (having invested mainly in Hong Kong, Singapore and the UK over the past two decades).    

Anwar Makes His Move at Last; Election in Sabah This Week Should Bolster Him Too

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On the 12th September, <a href="https://www.smartkarma.com/entities/7661" target="_blank" data-smartkarma-citation="entities:7661:1">Unisem (M) (UNI MK)</a>'s CEO controlling shareholders and CEO John Chia, together with <a href="https://www.smartkarma.com/entities/20708" target="_blank">Tianshui Huatian Technology Co, Ltd. (002185 CH)</a> (TSHT) (the Joint Offerors) announced a <a href="http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=89524&amp;name=EA_GA_ATTACHMENTS" target="_blank">pre-conditional takeover</a> at RM3.30/share, an 11.1% premium to last close, in an RM1.82bn deal.
Three of the four pre-conditions have now been cleared, with just SAFE's outbound approval remaining. Given guidelines handed down last year which encourage transactions in industries such as high-tech businesses and advanced manufacturing enterprises, this approval should be straightforward.
A binding offer will be subject to a 50% acceptance condition. The Joint Offerors' interest - mainly Chia and his family - hold 24.28%.
A quirk of the collaboration agreement between the Joint Offerors is that TSHT’s holding into Unisem, assuming the Offer completes and the agreement remain in place, is maintained at a 10% gap above Chia &amp; family members. It is the intention of the Joint Offerors to maintain Unisem's listing and not exercise its right to compulsory acquisition.
Dividends declared and paid will be netted off the Offer price. The ex-date for the <a href="http://disclosure.bursamalaysia.com/FileAccess/viewHtml?e=2902163" target="_blank">RM0.02/share second interim dividend</a> is the 21 November.
There is still the risk a firm Offer is not tabled. However, the recent approvals from <a href="http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=90786&amp;name=EA_GA_ATTACHMENTS" target="_blank">China’s Gansu Department of Commerce and from the NDRC</a> would indicate this Offer is on track to become binding. This also potentially suggests an earlier completion, well ahead of the long-stop date of mid-March under the pre-conditional offer.
The deal is trading at a gross spread of 5.8%, having gained 4% in the past two days. This looks a decent entry point here.

On the 12th September, Unisem (M) (UNI MK)'s CEO controlling shareholders and CEO John Chia, together with Tianshui Huatian Technology Co, Ltd. (002185 CH) (TSHT) (the Joint Offerors) announced a pre-conditional takeover at RM3.30/share, an 11.1% premium to last close, in an RM1.82bn deal.
Three of the four pre-conditions have now been cleared, with just SAFE's outbound approval remaining. Given guidelines handed down last year which encourage transactions in industries such as high-tech businesses and advanced manufacturing enterprises, this approval should be straightforward.
A binding offer will be subject to a 50% acceptance condition. The Joint Offerors' interest - mainly Chia and his family - hold 24.28%.
A quirk of the collaboration agreement between the Joint Offerors is that TSHT’s holding into Unisem, assuming the Offer completes and the agreement remain in place, is maintained at a 10% gap above Chia &amp; family members. It is the intention of the Joint Offerors to maintain Unisem's listing and not exercise its right to compulsory acquisition.
Dividends declared and paid will be netted off the Offer price. The ex-date for the RM0.02/share second interim dividend is the 21 November.
There is still the risk a firm Offer is not tabled. However, the recent approvals from China’s Gansu Department of Commerce and from the NDRC would indicate this Offer is on track to become binding. This also potentially suggests an earlier completion, well ahead of the long-stop date of mid-March under the pre-conditional offer.
The deal is trading at a gross spread of 5.8%, having gained 4% in the past two days. This looks a decent entry point here.

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

Equity Bottom-Up

Globetronics Technology / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/10571" target="_blank" data-smartkarma-citation="entities:10571:1">Globetronics Technology (GTB MK)</a> does not only make sensors for smartphones and tablets, it also manufacture quartz crystal timing device and LED. The company currently makes laser powered auto headlights for <a href="https://www.smartkarma.com/entities/21689" target="_blank" data-smartkarma-citation="entities:21689:1">OSRAM Licht AG (OSR GR)</a>, supplying to BMW and Audi and is very likely to set the new standards for auto industry headlights. 
The company supplies around one-third of Epson's total requirement (( <a href="https://www.smartkarma.com/entities/16793" target="_blank" data-smartkarma-citation="entities:16793:1">Seiko Epson (6724 JP)</a> produces around 50% of the digital timing device globally) and in turn supplies 16.5% to the global demand for digital timing device that can be found in cars, gadgets, computers etc. 
<a href="https://www.smartkarma.com/entities/10265" target="_blank" data-smartkarma-citation="entities:10265:1">Inari Amertron (INRI MK)</a> may trade at a premium to Globetronics and Unisem due to a bigger market capitalization and a much higher liquidity but the valuation premium may shrink as Globetronics' exposure to a potentially new blockbuster product (laser powered auto headlights) will give a boost to the earnings and its trading multiple should be higher as well. 
<table class="table table-striped">
<tbody>
<tr>
<td></td>
<td style="text-align: right;">
 Dec-31-2015</td>
<td style="text-align: right;">
 Dec-31-2016</td>
<td style="text-align: right;">
 Dec-31-2017</td>
<td style="text-align: right;">LTM Jun-30-2018</td>
</tr>
<tr>
<td>Revenue Growth YoY (%)</td>
<td style="text-align: right;">-3%</td>
<td style="text-align: right;">-37%</td>
<td style="text-align: right;">41%</td>
<td style="text-align: right;">65%</td>
</tr>
<tr>
<td>PER</td>
<td>                                  25.64</td>
<td>                                  27.33</td>
<td>                                  58.83</td>
<td>                                  23.36</td>
</tr>
</tbody>
</table>

Globetronics Technology (GTB MK) does not only make sensors for smartphones and tablets, it also manufacture quartz crystal timing device and LED. The company currently makes laser powered auto headlights for OSRAM Licht AG (OSR GR), supplying to BMW and Audi and is very likely to set the new standards for auto industry headlights. 
The company supplies around one-third of Epson's total requirement (( Seiko Epson (6724 JP) produces around 50% of the digital timing device globally) and in turn supplies 16.5% to the global demand for digital timing device that can be found in cars, gadgets, computers etc. 
Inari Amertron (INRI MK) may trade at a premium to Globetronics and Unisem due to a bigger market capitalization and a much higher liquidity but the valuation premium may shrink as Globetronics' exposure to a potentially new blockbuster product (laser powered auto headlights) will give a boost to the earnings and its trading multiple should be higher as well. 





  Dec-31-2015

  Dec-31-2016

  Dec-31-2017
LTM  Jun-30-2018


Revenue Growth YoY (%)
-3%
-37%
41%
65%


PER
                                  25.64
                                  27.33
                                  58.83
                                  23.36




Globetronics (GTB): Not Only Sensors but Also Laser Powered Auto Headlights

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Thematic (Sector/Industry)

The global edtech market is expected to grow 17% a year - hitting USD 252bn by 2020, according to research by IBIS Capital. Global tech companies such as Google, LinkedIn and Tencent all have their fingers in the pie. With so many Edtech companies out there seeking funds, how should we pick which ones to invest in?As part of an Edtech series, this first article provides an overview of Edtech firms' business model, and examines the key advantages that traditional education institutions have, against which Edtech firms will be measured:  1. Trust that they can deliver ‘quality’ outcomes 2. Discipline offered within a physical classroom 3. Customized diagnosis by a teacher/instructor 4. Modelling – a universal way by which humans learn 5. Stimulation of various parts of the brain

 The global edtech market is expected to grow 17% a year - hitting USD 252bn by 2020, according to research by IBIS Capital. Global tech companies such as Google, LinkedIn and Tencent all have their fingers in the pie. With so many Edtech companies out there seeking funds, how should we pick which ones to invest in?As part of an Edtech series, this first article provides an overview of Edtech firms' business model, and examines the key advantages that traditional education institutions have, against which Edtech firms will be measured:   1. Trust that they can deliver ‘quality’ outcomes 2. Discipline offered within a physical classroom 3. Customized diagnosis by a teacher/instructor 4. Modelling – a universal way by which humans learn 5. Stimulation of various parts of the brain

Ed or Tech, Edtech Firms Must Cross These Moats

Malaysia

Globetronics Technology Berhad is an investment holding company.  The Company, through its subsidiaries, manufactures and assembles integrated circuits, optoelectronic products, technical ceramic substrates, ESD protective materials, small outline components, and technical plating services and packaging materials.  Globetronics also sells computer hardware and software.

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Globetronics Technology (GTB MK)

Anwar Makes His Move at Last; Election in Sabah This Week Should Bolster Him Too

Anwar Ibrahim, who was Deputy Prime Minister (and Finance Minister) during and after the

Prasenjit K. Basu

Mind The Gap as TSHT Closes In On Unisem

On the 12th September, Unisem (M) (UNI MK)'s CEO controlling shareholders and CEO John Chia, together with Tianshui Huatian Technology Co, Ltd....

David Blennerhassett

Globetronics (GTB): Not Only Sensors but Also Laser Powered Auto Headlights

Globetronics Technology (GTB MK) does not only make sensors for smartphones and tablets, it also manufacture quartz crystal timing device and LED....

Henry Soediarko

Ed or Tech, Edtech Firms Must Cross These Moats

The global edtech market is expected to grow 17% a year - hitting USD 252bn by 2020, according to research by IBIS Capital. Global tech companies...

Valerie Law, CFA

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