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

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> have finally announced that they will merge to form GoTo Group, in what will be Indonesia's largest-ever business deal to date. The new GoTo Group will also seek a dual listing both in Jakarta and the US but it is yet unclear what shape the listing will take at this stage. </p>
<p>This will create an Indonesia-focused digital powerhouse with exposure to Ride-Hailing, Food Delivery, Digital Payments, Digital Finance, and e-commerce, making it a formidable player in Indonesia's booming digital economy.</p>
<p>The merged entity will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but more pertinently for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab,</a> which is in the process of seeking a listing in the US through the largest SPAC listing to date.</p>
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<p>One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 36.1% stake in OVO, it is unclear what comes next although it is likely Tokopedia will look to migrate its customers to GoPay and sell its stake in OVO.</p>
<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek </a>has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <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> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a></p>
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<p>The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. </p>
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<p>There will be significant synergies between the two companies in areas such as deliveries, payments, and financial services, with an ever-increasing use-case for GoPay.</p>
<p><a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it is suggested that it could command a valuation of US$40bn with a US listing, although it is not yet sure what shape or form that listing will take although its looks likely it will be a dual listing by the end of this year.</p>
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<p>A straight IPO rather than a SPAC listing would be the most straightforward and the preferred option, even if it takes a bit longer to execute. The merged entity will be a more formidable adversary for other digital players and especially <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> but also for Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US))</a>,  <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a>, and Bukalapak.</p>
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Gojek and Tokopedia have finally announced that they will merge to form GoTo Group, in what will be Indonesia's largest-ever business deal to date. The new GoTo Group will also seek a dual listing both in Jakarta and the US but it is yet unclear what shape the listing will take at this stage. 
This will create an Indonesia-focused digital powerhouse with exposure to Ride-Hailing, Food Delivery, Digital Payments, Digital Finance, and e-commerce, making it a formidable player in Indonesia's booming digital economy.
The merged entity will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but more pertinently for Grab, which is in the process of seeking a listing in the US through the largest SPAC listing to date.

One key area of overlap between Gojek and Tokopedia is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 36.1% stake in OVO, it is unclear what comes next although it is likely Tokopedia will look to migrate its customers to GoPay and sell its stake in OVO.
Gojek has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).


The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 


There will be significant synergies between the two companies in areas such as deliveries, payments, and financial services, with an ever-increasing use-case for GoPay.
The combined size of the two companies would be around US$18bn under the latest valuations but it is suggested that it could command a valuation of US$40bn with a US listing, although it is not yet sure what shape or form that listing will take although its looks likely it will be a dual listing by the end of this year.


A straight IPO rather than a SPAC listing would be the most straightforward and the preferred option, even if it takes a bit longer to execute. The merged entity will be a more formidable adversary for other digital players and especially Grab (0967655D SP) but also for Shopee (Sea Ltd (SE US)),  Lazada Group (LAZADA SP), and Bukalapak.


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

<p>ForU Worldwide (Foru), the largest technology-driven road freight transportation platform in China, aims to raise up to US$500m via a US listing.</p><p>The company provides freight-as-a-service (FaaS) via its platform to connect shippers and carriers. It digitalizes the entire road freight transportation process, including pricing, route planning, dispatching, transportation and fee settlement. </p><p>As of Mar 2021, ForU had delivered 3.2m loads cumulatively. It had cumulatively served 11,174 large and SME shippers and had approximately 905,000 registered drivers and 580,000 drivers who had completed orders.</p>

ForU Worldwide (Foru), the largest technology-driven road freight transportation platform in China, aims to raise up to US$500m via a US listing.The company provides freight-as-a-service (FaaS) via its platform to connect shippers and carriers. It digitalizes the entire road freight transportation process, including pricing, route planning, dispatching, transportation and fee settlement. As of Mar 2021, ForU had delivered 3.2m loads cumulatively. It had cumulatively served 11,174 large and SME shippers and had approximately 905,000 registered drivers and 580,000 drivers who had completed orders.

ForU Worldwide Pre-IPO - Mostly Negatives

Consumer Discretionary / Industrials

Henry Kwon

Equity Bottom-Up

<p>CPNG's shares declined by 9.3% on May 13, the day following its 1Q21 earnings release, but has since recovered its loss as of close on May 17. A key question should be whether this represents a dead cat bounce, or whether it represents the beginning of a sustainable share price recovery?</p><p>Without reliable technical parameters established, we mainly rely on two factors, namely Fibonnaci retracement levels and a DCF analysis based on current consensus forecasts to determine how much growth CPNG would have to generate in order to justify its current share price levels.</p><ul>
<li>$39.95 represents the stock's 78.6% Fibonacci Retracement level which became resistance since it was breached on May 6 on intra-day basis and confirmed on May 7 close.</li>
<li>Taking current consensus 3-year EBITDA and Free Cash Flow Forecasts, with a 20% target Debt ratio in the mix, a DCF analysis suggests that current share price level would be sustainable on a terminal growth range of 9.6-10.1%. A terminal growth rate of 2% would suggest a $5.00 share price, on the other hand.</li>
</ul><p>In a flattening yield curve environment, we believe the market would not have much objections to 8-9% terminal growth assumptions at a practical level even though analysts would sound alarm bells. However, at this juncture we believe investors should pay heed to whether inflationary concerns will continue to lead to a steepening yield curve, thereby creating continuing headwinds for CPNG's share price performance over the next 3 to 6 months.</p>

CPNG's shares declined by 9.3% on May 13, the day following its 1Q21 earnings release, but has since recovered its loss as of close on May 17. A key question should be whether this represents a dead cat bounce, or whether it represents the beginning of a sustainable share price recovery?Without reliable technical parameters established, we mainly rely on two factors, namely Fibonnaci retracement levels and a DCF analysis based on current consensus forecasts to determine how much growth CPNG would have to generate in order to justify its current share price levels.
$39.95 represents the stock's 78.6% Fibonacci Retracement level which became resistance since it was breached on May 6 on intra-day basis and confirmed on May 7 close.
Taking current consensus 3-year EBITDA and Free Cash Flow Forecasts, with a 20% target Debt ratio in the mix, a DCF analysis suggests that current share price level would be sustainable on a terminal growth range of 9.6-10.1%. A terminal growth rate of 2% would suggest a $5.00 share price, on the other hand.
In a flattening yield curve environment, we believe the market would not have much objections to 8-9% terminal growth assumptions at a practical level even though analysts would sound alarm bells. However, at this juncture we believe investors should pay heed to whether inflationary concerns will continue to lead to a steepening yield curve, thereby creating continuing headwinds for CPNG's share price performance over the next 3 to 6 months.

CPNG: Dead Cat Bounce or a More Sustainable Price Recovery in the Cards?

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

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<p><strong>Based on our updated valuation analysis of JD Logistics, our base case valuation of JD Logistics is $47.6 billion, which is 40% higher than the high end of the expected IPO valuation range of $34 billion.  We continue to have a positive view of JD Logistics IPO.</strong></p>
<p>We based our base case valuation using 2.3x EV/S valuation multiple and applying our 2022 estimated sales of 123.4 billion RMB. We lowered our EV/S valuation multiple slightly to 2.3x from 2.5x previously (May 3rd), mainly due to recent poor weakness of IPO related shares performance combined with lower gross margins of the company in 1Q 2021.</p>
<p>Although our base case valuation suggests a 40% upside from the high end of the IPO valuation of $34 billion, due to the recent weakness of the overall IPO environment, it is highly unlikely that the IPO shares of JD Logistics will shoot up similar to the Kuaishou Tech IPO. Nonetheless, we believe that JD Logistics has excellent fundamentals and it is one of the most attractive logistics companies in China. It also appears that the recent IPO weakness may have led to the IPO price range being toned down a bit, which would be favorable to the long-term investors of JD Logistics. </p>
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Based on our updated valuation analysis of JD Logistics, our base case valuation of JD Logistics is $47.6 billion, which is 40% higher than the high end of the expected IPO valuation range of $34 billion.  We continue to have a positive view of JD Logistics IPO.
We based our base case valuation using 2.3x EV/S valuation multiple and applying our 2022 estimated sales of 123.4 billion RMB. We lowered our EV/S valuation multiple slightly to 2.3x from 2.5x previously (May 3rd), mainly due to recent poor weakness of IPO related shares performance combined with lower gross margins of the company in 1Q 2021.
Although our base case valuation suggests a 40% upside from the high end of the IPO valuation of $34 billion, due to the recent weakness of the overall IPO environment, it is highly unlikely that the IPO shares of JD Logistics will shoot up similar to the Kuaishou Tech IPO. Nonetheless, we believe that JD Logistics has excellent fundamentals and it is one of the most attractive logistics companies in China. It also appears that the recent IPO weakness may have led to the IPO price range being toned down a bit, which would be favorable to the long-term investors of JD Logistics. 


JD Logistics: An Attractive IPO With a 40% Upside

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<p>Following the listing of the logistics business on the Hong Kong stock exchange, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> could potentially present investors with an entirely new investment angle in terms of holdcos.</p><p>After examining JD.com’s holdco structure, we see a limited upside potential for JD.com unless <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> pops over 100% on its trading debut.</p>

Following the listing of the logistics business on the Hong Kong stock exchange, JD.com Inc (ADR) (JD US) could potentially present investors with an entirely new investment angle in terms of holdcos.After examining JD.com’s holdco structure, we see a limited upside potential for JD.com unless JD Logistics (2618 HK) pops over 100% on its trading debut.

Examining JD.com from a Holdco Angle as the Company Prepares to List Its Logistics Unit

China

JD.com, Inc. is an online direct sales company in China. The Company offers a wide selection of products through its website and mobile applications. JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com (9618 HK)

GoTo - Enter the Green Dragon

The confirmation of the merger between Gojek and Tokopedia creates an Indonesian digital powerhouse under GoTo Group, which will seek a dual...

Angus Mackintosh

ForU Worldwide Pre-IPO - Mostly Negatives

ForU Worldwide (Foru) aims to raise up to US$500m via a US listing. The company provides freight-as-a-service (FaaS) via its platform to connect...

Sumeet Singh

CPNG: Dead Cat Bounce or a More Sustainable Price Recovery in the Cards?

We look at Fibonnaci Retracement levels and DCF analysis using consensus forecast to see whether price recovery in the last 2 trading sessions...

Henry Kwon

JD Logistics: An Attractive IPO With a 40% Upside

Our updated base case valuation of JD Logistics is $47.6 billion, which is 40% higher than the high end of the expected IPO valuation range of $34...

Douglas Kim

Examining JD.com from a Holdco Angle as the Company Prepares to List Its Logistics Unit

Following the listing of the logistics business on the Hong Kong stock exchange, JD.com could potentially present investors with an entirely new...

Oshadhi Kumarasiri

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